Esports is big business. Yet in Japan, home to many talented players, it has yet to reach the same money-making heights as elsewhere.
The recently founded Japan Esports League has big-time sponsors like Twitch and Mainichi News, one of Japan’s biggest newspapers. Japanese pro soccer team Verdy also has an esports team in the league, but the country’s esports scene hasn’t taken off.
One big reason could be a cash prize cap. According to the Nikkei Asian Review, there is a 100,000 yen ($895) ceiling on cash prizes that can be legally awarded at esports events in Japan that are seen as geared towards selling a particular product (here, video games). Nikkei explains that this is due to a law combating “unjustifiable premiums and misleading representations.”
Having sponsors pony up the cash instead of the game companies is one possible way around the cap. For example, Dwango held an event for mobile game Monster Strike, with players competing for prizes totalling 20 million yen ($179,772) that was reportedly fronted by sponsors.
Lupinko at NeoGAF points out that pro-gamer Saint won a 3 million yen ($26,926) prize at last December’s King of the Iron Fist Tournament in Tokyo. As you can see in these Famitsu photos, the top finalists walked away with prizes that exceeded the 100,000 yen cap.
Namco partnered with pachinko-slot makers Fields and Yamasa for the tournament, but it’s unclear which company put up the prize money. Kotaku reached out to Namco’s spokespeople for clarification, but has yet to hear back.
Lawyer Shohei Furukawa says having sponsors put up the prize money is dicey. “The decision about who is providing the products or services is made comprehensively, so even if you separate the payers [of prizes] in practice, it is possible that they will be considered part [of the organizers],” Furukawa says.
Japan’s Consumer Affairs Agency was asked if cash prizes for a competitive event built around a specific game could be considered a way to entice people to either spend money on that product or its services. The agency said “yes” and reiterated that cash prizes cannot surpass 100,000 yen ($895).
“If it weren’t for that law, we could hold as many big-prize events as we like,” says former Famitsu editor Hirokazu Hamamura, who is now heading up a game company called Gzbrain and is also the director of several esports associations in Japan. According to him, the Consumer Affairs Agency’s clear definition on the cash prize cap “spooked” sponsors. The result is a knock-on effect, and smaller cash prizes then hinder the whole Japanese esports scene.
Esports organizers are examining different ways they can loosen up regulations or even create new ones for esports. According to Nikkei, it’s not possible for players to pool money, because that might be considered gambling under Japanese law. So that’s not an option. One place Hamamura is looking is shogi, or Japanese chess, which has big payouts for professional matches. “We’re looking to the Japan Shogi Association as a model,” says Hamamura. “We hope to explore the possibility of establishing a licensing system for professional gamers.”