Esports was recently recognized as a national sport in Ukraine. How can “just a game” be compared to a regular workout routine? Channel Ukraine 24 talked about this with the founder of one of the largest esports media holdings in Eastern Europe, Oleg Krot.
ESPORT IS NOW THE OFFICIAL KIND OF SPORT IN UKRAINE. HERE IS WHAT WILL CHANGE.
- Cybersport is a topic that is not widely discussed in Ukraine. Although now esports is recognized as a national sport in Ukraine. What does it mean? For me, football is a national sport. While esports can hardly be called one. Is it not?
- I think we need to move away from the idea that sport is only about physical training, sports equipment, achievements, jumping, and so on. Because sport is better perceived in the context of competition and competition do not necessarily have to include physical skills.
Esports is a fairly popular and competitive thing. Recognizing him as a sport only gives him the same opportunities that standard, familiar sports have.
- If I play World of Tanks, am I an athlete?
- It depends on how well you play. If you simply play football, you are not a professional athlete either. But if you train, prepare for a competition, and make it part of your serious preparation, then you're an athlete.
Just like in traditional sports, in esports, we can distinguish between the amateur level, purely entertaining, and the professional level.
- Who lobbied for the recognition of esports at the national level?
- There are three federations in Ukraine. One was created by Arthur Ermolaev, the second - by Vanya Danishevsky. The third is the Ukrainian Esports Association, which I am a member of and which includes all the major players in Ukraine, including Sasha Kokhanovsky, me, Roma Romantsov, Vitaly Volochay from Maincast, Oleg Rybalko, Zhenya Zolotarev from NaVi. These are really the guys who are the most “old-school” in esports. But my opinion is that our association, which was created in the summer, had a slightly less impact on the process of adopting esports as a sport. Of course, each of the people who are in the association made an effort.
For example, 5-6 years ago I had an active attempt to make esports a national sport. I even learned about such a sport as petanque, how they carried out this whole thing, what documents they prepared. We began to communicate with ministers, but they did not see any profit in this for themselves.
- And who is interested now, by the way?
- It was a joint initiative. I took a little part in this project. This is more the contribution of Vanya Danishevsky and Artur Ermolaev, a considerable contribution of Alexander Kokhanovsky. They’ve made the biggest part. Then all the rest.
- Which of the ministers was interested this time?
- I think that it was a Ministry of Sports, with which I communicate little, and, honestly, I do not know all the functionaries there, and Mikhail Fedorov, the Minister of Digital Transformation to the same extent. He is the one to show a really sincere interest in all innovative things. Of all the ministers with whom I had the honor to communicate, he seemed to be the most interesting in terms of being a person who can really bring something interesting and new.
- What new does it give Ukraine and what new does it give the athletes themselves?
- These status allow you, firstly, to have government support. It’s not about “give us money and we’ll do something,” but that the state has certain objects. If the state can help allocate them to host Ukrainian esports championships, that's great. Indeed, the Ministry of Youth and Sports includes the Palace of Sports and the NSC «Оlimpiyskiy». If the operator WePlay Esports, Starladder, or Maincast hosts the Ukrainian championship, it will never attract enough sponsors to rent the NSC «Оlimpiyskiy». But now, Olympiyskiy is not in use. Why not give it to us, so we could hold an esports tournament there, we will popularize it, include programs for social rehabilitation in the program of this tournament, programs for people with disabilities. Roughly speaking, we cannot hold a commercially effective local Ukrainian event using the Palace of Sports or the Olympic Stadium. But if the state helps, we can. It makes sense.
- I can understand how football matches are organized at the Olimpiyskiy but how a cyber tournament ca be organized there?
- There actually was a cyber tournament at the Olympiyskiy. Held by Starladder. They did a very cool job. They held a Counter-Strike championship if I'm not mistaken. They installed monitors in the center of the field, seated people around the perimeter made thematic zones in the backstage area.
There were several events at the Palace of Sports. The Palace itself as a concert venue is perfect for esports. You have tribunes, there is a central console where you can hang four screens, additional screens, in the center, there is a small arena for esportsmen. You can arrange thematic zones in extra rooms, places for interviews, for autograph sessions of these teams. Bring top stars, they will talk to the local audience and give autographs. It should be great.
- Ok, it’s clear what athletes get, the venues. But what about the state, what is the profit for the state?
- It gets the ability to interact with people, I think this is the number one thing the state should think about. Because denying, for example, youth's passion for computer games or denying the professional level of this process, we just lose contact with young people and that's it.
If the state supports it, then it can influence the messages that esports carries. This means that the ideas that the state wants to convey to the audience will be easier to convey - if the state does not deny the interests of this audience, recognized throughout the world, harmless, and in many respects even useful. Through this communication, the state will try to talk with the audience, for example, about a healthy lifestyle.
The state gets the ability to interact with people, I think this is the number one thing the state should think about.
ESPORT AUDIENCE IN UKRAINE
- Around 20 million people in Ukraine watch football. How many people watch esports?
- If we take Ukraine specifically, then, according to rough estimates, around 2 million. Less than football, football is much more popular in our country. But esports is gaining momentum quickly. And do not forget that the football programs, the popularization of football in Ukraine has a history of many, many decades. If we are talking about the history of esports, then we are talking about 15-20 years tops.
Over time, rather in the 10-20 year range, esports has a chance to surpass football in key metrics. I mean in the number of people who watch the championships, who participate in some youth leagues; in the amount of money in the form of salaries, in the form of advertising contracts to market participants.
The aspect is in the history and greenness of esports. If we look at a young man at the age of 20, then for sure he is fond of computer games. If we look at a 30-year-old man, not a 100% chance, but most likely. 40 years - hardly. 50 - probably not. 60 - not at all. At the same time, we understand that all these ages love, understand, and, to some extent, are ready to watch football, basketball, classical sports. They just don't understand esports. When they were growing up, there were no computers or they had no access to these computers. Therefore, every year esports will receive more and more fans.
If you ask me why do I think that he is likely to surpass the classic sport, I’ll say that it’s due to the simplicity of integration. In order to do classic sports, you need to make serious physical efforts. To repeat Messi's shot on goal, you need to devote an insane amount of time to training. At the same time, in esports, when you watched Dendi “pump” in the forest (I understand that this is not an understandable phrase for everyone, but, roughly speaking, how he develops his hero during a game match), then you can do the same thing right on spot in no time.
I played basketball and football with my friends when I was over 30. And gathering 5-10 men at one point in Kyiv is almost unrealistic. There’s a bunch of excuses, like children, wives, work, fatigue, I’m physically not ready, it’s hot outside, can’t find the right place, something else. But almost everyone has a computer. You get into some program for group chats, you text your guys “go-go”. I do like this. Even my wife plays. We play Heroes of Newerth, it's like Dota 2.
- Sitting at the computer is not very good for your health, unlike football on the street, for example.
- I would hardly put “sport = physical activity”. Because a fad for physical activity is not equal to the fad for sports. If we are frank with each other, then professional sports are not about health at all. The amount of strength, injuries, drugs that have to be taken in order to become the best of the best does not correlate with the word “health” at all.
It seems to me that esports, among other things, must take the position of promoting a healthy lifestyle: “Guys, don't smoke, don't drink, work out in gyms”.
I came to California, where we work quite a lot now. I started to lose weight and went for sports. Because I saw old men running along my street. Well, that's from my point of view, because there they are, 65-70-year-old young guys, who are considered active and who really look better than me. They are thinner, fitter. When I was pulling out a 25-kilogram dumbbell, I saw my grandfather taking the weight one and a half times more. And I realized that in fact, I am in a place where the fad for a beautiful body, good physical health, is somewhere in a very high position.
It seems to me that esports, among other things, must take the position of promoting a healthy lifestyle
WHAT ARE THE BENEFITS OF ESPORTS HOTELS?
- Recently, esportsmen purchased the Dnipro Hotel for $40 million. Is it possible to recoup invested funds?
- With just an esports, no. The hotel is declared as Esports Ready Hotel. It doesn’t mean that it will make money on esports only. This is an ordinary hotel, which will have all the necessary hotel-related services. They just want to give the hotel additional value by being gamer-centric.
From my point of view, it is very difficult to predict how big an effect this will bring. But this is how business works, you believe in something, you invest - and you either lose or you make money.
- You are a co-founder of a huge holding. Could you buy the Dnipro Hotel yourself?
- For the esports holding? Definitely not. The fact is that this topic is close to me. We have a project in the holding that will be implemented over the next few years. We would have started implementing it at the beginning of this year, but, unfortunately, COVID messed things up.
We decided to build two small esports hotels next to our arenas. We have an esports arena at VDNG, and since VDNG is located on the Kyiv’s border, there are vacant lands nearby that are great for the construction of a small hotel. Rather, it would be a boutique hotel with no more than 150 rooms, about 20 training rooms for teams, a gym, a swimming pool, and all the necessary spa infrastructure.
We perfectly understand the mathematics of this process. For example, we know how much WePlay Esports currently spends on the accommodation of athletes in other hotels. Accordingly, we could immediately transfer all these contracts to our hotel. In addition, we understand that with the launch of the arena, the number of people who will need to be accommodated in Kyiv will grow exponentially. That is, this amount of money from WePlay Esports will go to this hotel. And this amount of money makes the hotel profitable on its own, albeit with a small margin.
Considering the above, here’s what we saw in our business plan. Okay, it serves the arena, it is also an Esports Hotel, we can advertise it on Booking for our target audience. You have a youth-class hotel when coming to Kyiv. We definitely didn't want to make it Esports Only, we wanted to make it for young people, for gamers. Additionally, we would use it for our arenas, to accommodate players who constantly come to Kyiv to play. Or for the talents.
- And how much have you invested in such a hotel?
- We invested $ 3.5 million. This is a small boutique hotel that would meet all the requirements.
We decided to build two small esports hotels next to our arenas
STARS, FEES, TOURNAMENTS, AND COMMUNITY
- There are famous football players in Ukraine. Are there any famous esportsmen in Ukraine?
- Sure thing. In fact, Ukraine is well known in the world as an esports state. By a big and strange coincidence, Ukraine is home to several of the largest esports operators, organizations that hold tournaments, develop software, and make production for the world's top events.
We also have great guys in esports. Let's start with the fact that first Ukraine’s esports stars were Lesha “White-Ra” Krupnik from Odesa, Mikhail “HoT” Novopashin in Warcraft III. Now everyone knows that “s1mple” from Kyiv is the best Counter-Strike player in the world.
- In the whole world?
- Yes, given that Counter-Strike is now collecting the most excellent views in its history, this is a great achievement. Team NaVi was the first champion and this is The International, the Dota 2 World Championship.
We have a very large number of esportsmen who have not only reached the world level they are the best at the world level.
- What esports stars come to Ukraine?
- Firstly, these are the hosts. Since there are three quite powerful operators, WePlay Esports, Starladder, and Maincast, either players who participate in tournaments or presenters regularly come to them because the broadcast usually needs to be done in two languages. And English speaking talents come from all over the world.
- And who are they, do we know them?
- If we are talking about Dota or CS, then Slacks and Sheever are very famous hosts who are adored by the audience as well as respected by the players. Kyle Friedman now works in Kyiv, a fairly well-known person in the world of esports.
- What is the budget for one tournament in Ukraine?
- It all depends on the tournament. If it’s a big one, from several hundred thousand dollars to a million and a half. More than a million and a half simply does not make sense economically. If we are talking about small events, they can be held for $100-200 thousand.
- And how many of these tournaments can be held in Ukraine?
- Considering the number of different games, not only football but also basketball, hockey, cricket, we can say that such events can take place almost every weekend or two or three times a month. Football or basketball games can be held every weekend. Likewise, we can get to the point that there are 2-3 esports tournaments per week.
- Are there people who come from one country to another to watch esports?
- Of course. If you are a fan of Manchester United, you go to see the team live.
- Ok, but, I’m looking at players on a pitch, not on the screen.
- It’s not only about watching them. Athletes come and do autograph sessions. Many of them, especially the most media ones, communicate with the audience, you can meet them in person, you can talk to them. They definitely are media personas.
- Is that some kind of esports-tourism? Or is it kind of a party?
- It’s both tourism and party. You come to a rock concert, listen through the speakers, just like you listen through speakers of your computer, what's the point? This is the feeling, this is the atmosphere, this is being in a group of people, just like you, who are addicted to it. After all, people ultimately want emotions, they want to see, not how a person was hitting the ball, they want to see the energy of the crowd, they want to hear the atmosphere of the stadium, they want to make these funny waves.
- How much does an esports player earn if he plays at a decent level?
- It’s a very big difference, just like in show business. If we are talking about a semi-professional, it is $700, $1000, $2000. It all depends on your media presence. If you give interviews, stream some tutorials on how to play, lead the audience, brands work with you, then you can earn $10,000, $15,000, $20,000. If you just went out to play, lost, got upset and didn't give any autographs, that's another story.
- So an esportsman should be a media personality? Right?
- Definitely. Just like a football player or a basketball player. Many of them earn not so much from their salaries as from advertising contracts. It's the same story. There is Twitch where you can stream, attract an audience, get paid for advertising. There are brands that are ready to integrate with you. There are esportsmen (from what I know) whose salaries are around $45,000 - $50,000.
- What are the prize fees?
- Those are tens of millions of dollars already. $15-17 million if you get the first place. This is still a rare case. Once a year in Dota 2. But championships, where the total prize fund is $1 million, where $300-400 thousand is given for the first place, this is already an ordinary thing.
- Can this be compared with the fees of athletes at competitions?
- It depends. There are megastars who receive $ 25million a year. There is no such thing in esports yet. But, yes, there is already a tendency to that.
In fact, Ukraine is well known in the world as an esports state
- Are Ukrainian oligarchs interested in esports? Do they invest money?
- I don't know of a single case. In my understanding, an oligarch is a person who once, by hook or by crook, privatized a certain amount of state property and was able to build his own business due to this.
- Well, sometimes they can be into something trendy.
- As a rule, these are old-school people that they are more accustomed to investing in real estate, some things they understand better. Real estate, some kind of factory to buy or, in some cases, to invest in something abroad. They are most likely dealing with core assets. None of the oligarchs have specialized media assets.
- I wonder how much the WePlay company actually earns? What is the yearly income, for an example?
- Last year's turnover was about $30 million, we earned $1.4-1.5 million. There are just a bunch of indicators that vary: before taxes, after taxes, and so on. That is, our margin is still small, but the turnover is growing. The most important thing is that we understand how to increase this margin.
We build arenas for a reason, we understand what events we make money on. We understand that if every time we don’t rent a room and don’t drive a bunch of equipment there, mount and dismantle it every time, and we have it as a ready-made unit that can work every weekend perfectly, then of course we understand that costs will lower, profitability will remain, the amount of produced content will grow. Accordingly, the profitability will grow, and so on.
- If we consider the total income of Ukrainian players, how much is it?
- If we are talking about companies located in Ukraine, including NaVi, Maincast, Starladder, all the big functionaries, then they can run up to $100 million approx. Maybe not $100 million but maybe $70-80 million in revenue.
- How fast is this number growing?
- We have an increase of 700% year-on-year in the last three years. Largely through investment. We channeled money from our profitable businesses into WePlay growth. Due to this, the company was able to produce more content and due to this, it is easy to grow.
- So this is a fast-growing business, isn’t it?
- It sure is.
- What ads are more expensive now, the TV ads or ads on esports media?
- As for a Ukrainian brand, TV ads would be more expensive. Big time. Because TV is still perceived by Ukrainian brands as something that is more mainstream, more popular than esports.
Esports audience growth will continue mainly due to an increase in the number of people who are interested. 10 years ago, the esports audience was not even close to 100 million people. Tens of millions of people maximum, they were very fragmented. As of the end of this year, I think we will have about 500 million. Forecasts show that in three years the audience will increase by 50-70%. This means that the price of advertising, the number of advertising displays, will rise, plus many brands do not take esports seriously, because it is still small. Therefore, the audience will increase, profit will increase proportionally, multiplying it by the coefficient of interest from the large brands.
It seems to me that the revenue growth rate will be much higher than the viewer’s growth rate. We all say that the number of viewers will grow 1.5-1.7 times in three years, which means that еру revenue will also grow 2 or 3 times. Meaning, it might be 30-35% per year.
- How do you see Ukraine in esports in 10 years?
- Ukraine has big chances to become one of the most developed countries in terms of esports. For business reasons in the first place. My partner and I can often joke about the role of the state in innovation. We have a good joke that Ukraine has a very good Internet because of the Ministry of the Internet. And when one says "there is no such ministry," we answer "that's the point".
But despite this, I think that, if we have more initiatives like the initiative of the Ministry of Digital Transformation, it will be great. Everything will develop faster, and the joke about the Ministry of the Internet will not be so relevant.