The next digital frontiers: the eSports revolution and Malta’s role as a Blockchain Island 

Marie-Claire Grima - 20th July 2019 

Matthew Scerri, Senior Manager, KPMG Software, and Mark O’Sullivan, Advisor, Gaming, map out what’s next for Malta’s ever-growing digital sector, and KPMG Malta’s role in its continuous expansion.

Malta has been making a name for itself as a reputable digital hub ever since the early 2000s, when the first laws governing the iGaming industry were passed. Successive administrations have carried on placing importance on nurturing and creating a fertile space in Malta for new digital sectors, most notably, in recent years, with the introduction of DLT regulation, which serves to lay down the law in the unchartered blockchain sphere – earning it its now famous title. Matthew Scerri, Senior Manager, KPMG Software, and Mark O’Sullivan, Advisor, Gaming, mapped out what’s next for Malta’s ever-growing digital sector, and KPMG Malta’s role in its continuous expansion.

While regulation was initially seen to be standing in direct opposition to what blockchain hoped to achieve, Mr Scerri says that people who adopted this view were missing the bigger picture. “The major hurdle blockchain and cryptocurrencies have to overcome is specifically mass adoption, as they would otherwise remain firmly confined within the domain of the tech-savvy. Things get even more critical when smart contracts are considered, particularly considering that these can have autonomous control and can take critical decisions, often being financial in nature. A question often posed by people who do not deal directly with code is ‘how can we trust code to take the right critical decisions?’”

Blockchain

Mr Scerri says that regulation can give the stakeholders within an economy the necessary confidence to adapt such technologies to their day-to-day business and adopt them fully for their needs, which is what will ultimately bring this technology to the mainstream. “This is exactly where Malta’s regulatory framework stands out, as more than just regulating the financial element, it also regulates the technological aspect through the Malta Digital Innovation Authority (MDIA). Regulation gives added certainty and, above all, a set of rules which define a professional approach to a nascent industry.”

Matthew Scerri - KPMG

While the fact that Malta has taken such bold first steps makes it a pioneer, it inherently brings about risks of being the first to face certain challenges. “After setting the platform and attracting a lot of interest, Malta must now consolidate its position by delivering what it promised, and things are very much going on the right track,” remarks Mr O’Sullivan. “Additionally, it is important to keep on building the knowledge in the industry and involving all stakeholders in decisions, as has already been done, as this is a fast and constantly changing space. Given this is a first of its kind, we also need to accept, and embrace, that the legislative infrastructure will need to be tweaked as the industry grows and opportunities emerge.”

Esports is often considered to be one of the next frontiers in the digital economy sector, even though Mr Scerri says the very meaning of the term is debatable. “Personally, I see it as competitive peer-to-peer digital gaming. This is based on a comparison to its counterpart, traditional sports. However, for the purpose of this article, I will keep in line with the popular understanding of Esports, namely professional digital gaming.”

He says that Malta’s recent economic growth has primarily been driven by its digital companies, adding that significant investment in the Esports industry seems to be a natural extension to its already bustling digital games industry and iGaming ecosystem. “The Esports and digital games industries are expected to surpass $150 billion (€134.5 billion) in industry revenues in 2019. Malta has managed to establish itself as a hub for large digital events in Europe, attracting thousands of business leaders from across the globe to each of the events on this little island. The Malta Government can certainly replicate this model with Esports enthusiasts and business minds to propel the country forward in the Esports industry.”

Mark O Sullivan - KPMG

Indeed, Mr O’Sullivan expands on the fact that a number of well-known digital gaming companies already have headquarters in Malta, including 4A Games, the company behind the popular apocalypse series, Metro, as well as Exient, which developed some titles in the Angry Birds and Lemmings series.

“Additionally, bringing things back to Esports events, there are some highly respected indigenous companies that have organised some high-calibre events for a number of years to date. First up there is GMR Entertainment (or gamers.com.mt), who run the yearly Malta Esports Festival, attracting over 350 players, 1,000 spectators at the event and over 1.5 million views through online channels during 2018’s festival. Next up, there is Quickfire, whose most notable event was the Supernova CS:GO Malta held in 2018. This event offered the largest prize pool ever seen in Malta, €150,000. The prize was scooped up by the number one ranked Esports team in the world, Team Liquid. Then there is also interest among operators within the iGaming sphere, who provide a platform for punters to place bets on their favourite Esports teams in similar fashion to a regular sportsbook outfit. Pinnacle and Betway are often considered to be two of the market leaders on this front.”

To strengthen its appeal to prospective Esports companies, Mr O’Sullivan says Malta has made significant strides forward. “Malta Enterprise offers excellent funding options, whilst GamingMalta is constantly driving the conversation forward alongside its Government counterparts, particularly with the forward-thinking Parliamentary Secretary Silvio Schembri. Just recently, GamingMalta led an Esports delegation to South Korea to further Malta’s understanding of the Esports and video games industries globally. Whilst Malta’s Esports industry is somewhat in its infancy when you look at that of many Asian countries, it is fair to say that Malta has a lot to offer this growing industry. 300 days of sunshine, an attractive tax structure, an English-speaking workforce and strong local-based tech talent are just some of them.”

This is an excerpt of the full interview which initially appeared in the June edition of Blockchain Island.


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