eSports:Vive La France!

The French Parliament recently passed its first decree on eSports regulationthat establishes the official definition of an eSports player and sets minimumand maximum terms for all eSports player contracts in the country. (LINK)We see several broader implications on the eSports theme:First, the official recognition underscores eSports’ growing mainstream traction.

With an estimated 850k professional and amateur eSports players in the country anda growing eSports viewer base that currently accounts for 5-6% of the population,France is emerging to become an important market for eSports and we consider thegovernments’ support to be driven by eSports’ mainstream traction.

Second, although the initial decree only contains two articles, we consider thisto be a positive first step in the official recognition of eSports as a distinctsports entity. This lays the foundation for future additions to the decree that couldallow the players to be part of the country’s tax and social benefit system in whichthey would be entitled to the national health insurance, unemployment andretirement benefits. Ultimately, we believe that the social standing of eSports playerscould reach parity to that of professional athletes and France’s recent decreeappears to be moving towards that direction.

Third, France’s latest eSports regulation could set an example for othergovernments to follow. France is the first western country to regulate eSports(second country in the world behind S.Korea) and we think this could potentially set amodel for governments in other major eSports markets such as the UK, Germany, theUS and China to follow by implementing similar measures that enhance regulation andoversight, thereby adding to the further professionalization of eSports.

Fourth, we believe that improved regulation at the national level will likely tofacilitate the creation of additional professional eSports teams and attracthigh-performing players that are critical in driving grassroots support – a keydetermining factor to the industry’s long-term growth in viewership and engagement.

Finally, improvements in regulation paves the path to the Olympics. We havelong argued that improvements in regulation and oversight are critical for eSports togain broader mainstream traction and credibility as a legitimate sports event in theworld stage. The lack of professional structure is a fundamental concern raised bythe IOC to include eSports in the Summer Games, but we think that the steps takenby the French government are accretive to the industry’s long-term outlook andincrease the chance for eSports to eventually gain the Olympic status (LINK).

Key calls within Macquarie’s Global Coverage UniverseActivision, Capcom, CyberAgent, EA, NetEase, Nintendo, Take-Two, and Tencentamong publishers given their IP and benefits from eSports media rights.

Asustek, Lenovo and Sony in hardware & technology as key beneficiaries of higherdemand for gaming PCs and game consoles.

Amazon, Facebook, Google, theScore, Caesars and MGM in media andentertainment due to mainstream traction and ad dollar flow into eSports.

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