LAST AUGUST, police in Australia’s Victoria province arrested six young men competing in the popular online video game Counter-Strike: Global Offensive. The authorities, who had tracked the suspects for six months, said they had deliberately lost at least five tournament matches after illegally betting on their own defeats, in Australia’s first police investigation into esports match-fixing. If convicted, the men face up to 10 years in prison.

With most sports on hold because of the coronavirus pandemic, watching the world’s most talented gamers do battle online has never been more popular. The average number of viewers on Amazon’s Twitch platform has roughly doubled in April from a year ago. Fans use Twitch and rival services such as Google’s YouTube and Microsoft’s Mixer to watch professional gamers clash in anything from Electronic Arts’ best-selling FIFA soccer franchise to Activision Blizzard’s violent Call of Duty shooter.

As money pours into the nascent industry, the temptation for players to break the rules is growing. Corruption is rife, with gamers caught cheating and illegal betting syndicates trying to fix matches. Because much of the action takes in a virtual world that spans multiple jurisdictions, it can be harder to stamp out than graft in regular sporting competitions.

“It won’t be possible to fully eliminate illegal betting and match-fixing,” said Stephen Hanna, an Australia-based director at the Esports Integrity Commission, or ESIC, which was set up by the industry to fight corruption in its midst. “It’s about limiting its position in the market to the greatest extent possible.”

Esports has developed from a narrow community of enthusiasts doing battle via PCs in suburban bedrooms into a global business. Major sponsors including Coca Cola, Louis Vuitton and BMW are piling in, drawn by the opportunity to reach the kind of young audiences who have been turning away from traditional media. The ethnic diversity at the top of esport leagues and their truly global audience add to the appeal for big brands.

Tournaments such as The International and Fortnite World Cup are usually live-streamed from big arenas, and the winners can earn several million dollars. Most of the money, however, is made from betting: Wagers on esports are expected to surge to $13 billion this year from $5.5 billion in 2016, according to a report by research firm Eilers & Krejcik Gaming and advisers Narus. That makes it one of the biggest sources of growth in a sports betting market that Zion Market Research estimates is worth about $135 billion.

Betting firms including Betway, Hillside Sports ENC and Tipico are already active in esports, one of the few things that are still open for bets — if you’re not into Belarussian soccer. While most stadium tournaments are off the cards for now, you can still place money on dozens of competitions that are streamed live, with players competing remotely.

Just as in traditional sports, there are many ways to game the system. Players have been bribed or pressured into losing matches on purpose by illegal betting syndicates. Nikhil Kumawat, an Indian gamer known as “Forsaken,” used software to cheat and improve his winning chances. Lee “Life” Seung-hyun, one of South Korea’s best gamers, was banned for life in 2016 and sent to prison for 18 months after throwing two professional matches.

Governments have been trying to stamp it out. Sweden last year introduced a regulation to fine betting firms that offer odds on matches in which the majority of players are younger than 18, to protect the integrity of the sport and reduce the incentive to fix matches. Similar measures are in effect in Spain and the US. (Many successful competitive gamers are teenagers — last year’s Fortnite World Cup winner was 16 years old).

The industry is under pressure to become more professional and transparent as media companies deepen their involvement. — Bloomberg

SHANGHAI — Apple Inc.’s discounts on the iPhone 11 in China and the release of a new low-price SE model have put the company in a better position than rivals to weather a coronavirus-related plunge in global smartphone demand.

While China, which accounts for roughly 15% of Apple’s revenue, appears to be a rare bright spot, investors will be keen to get a picture of global demand when the Cupertino, California-headquartered company reports second quarter results on Thursday.

The iPhone maker has shut retail stores in the United States and Europe following the COVID-19 pandemic, and China is the only major market where it has been able to reopen all shops.

Consumer spending is expected to be muted as the pandemic has crippled economies and Apple, the world’s second-most valuable tech company, is better armed with the launch of its new price-conscious iPhone model, analysts said.

“Apple is better positioned than most to experience a rapid recovery in a post COVID world,” Evercore analyst Amit Daryanani said in a research note. “We see demand as pushed out, not canceled.”

He added that the launch of the $399 iPhone SE suggested that Apple’s supply chain was getting back on its feet after weeks of shutdown earlier this year.

Analysts expect Apple to report a 6% drop in revenue and an 11% fall in net income in its fiscal second quarter, according to Refinitiv data.

On the other hand, Chinese brands such as Oppo and Vivo who have steadily moved to offer high-end models to challenge iPhones, stand to lose marketshare as bargain hunters choose Apple.

Earlier this month, several online retailers in China slashed prices of the iPhone 11 by as much as 18% — a tactic Apple has used in the past to boost demand. And while initial social media reaction to the new iPhone SE was muted, analysts said they were seeing a pick up in demand.

The cheaper iPhone SE could tempt iPhone owners to opt for a newer device, something they might have otherwise delayed in a weak economy, said Nicole Peng, who tracks the smartphone sector at research firm Canalys.

“People want to avoid uncertainty in a downturn,” she said. “Having a brand like Apple that can showcase quality and make people less worried about breakdowns or after-sales service can bring in buyers.”

CHEAP IS GOOD
Early data suggests that the Chinese smartphone market is recovering rapidly in the aftermath of the virus, and Apple has emerged relatively unscathed.

Sales of iPhones in China jumped 21% last month from a year earlier and more than three fold from February, government data showed, meaning March-quarter sales in the country were likely to have slipped just 1%.

To be sure, a recovery in Chinese demand won’t offset sales lost in the United States and Europe. And the company is yet to launch a smartphone enabled with 5G wireless technology like those offered by Asian rivals, a disadvantage for Apple so far.

But those same expensive 5G models may not sell well in the current climate of frugality, analysts said.

“If there are no massive subsidies (in China), I doubt there will be many smartphone users who will be eager to upgrade to 5G,” said Linda Sui, who tracks the smartphone sector at research firm Strategy Analytics.

Sui expects iPhone shipments in 2020 to be down 2 percentage points at the most, versus double digit declines at Chinese firms.

Apple also has revenue from its services business to fall back on. It has leveraged its large iPhone customer base to boost services revenue from music, apps, gaming and video.

“Apple’s Services segment should remain resilient in today’s work from home environment, thereby demonstrating the durability of Apple’s model,” Cowen analyst Krish Sankar said. — Reuters