In case you missed it: E-sports has arrived. Over the last decade, competitive video gaming has transformed from a closet industry into one of the largest sports in the world. Today more people watch e-sports tournaments than Major League Baseball. There is even talk of including competitive gaming in the Olympics as soon as 2024.

But for all its rising popularity, e-sports has curiously lagged in Japan. Of the top 100 highest earning pros, none are Japanese. (By way of comparison: nine are South Korean and 33 are Chinese). Japan has never won a significant championship in the last decade, an honor even countries like Greece and Egypt can claim.

Why should the country that practically invented video games fail so badly at professional competition? The answer is something I have coined “Super Mario Syndrome.” Simply put, the early success of video games in Japan simultaneously created market conditions that smothered e-sports.

Console debt

Super Mario Syndrome has two key elements, the first of which is console debt. The success of Japanese hardware manufacturers like Nintendo and Sony firmly entrenched their razor-and-blade business model. Starting with the original Famicon, manufactures sold consoles at a loss, making up the difference with highly profitable games. This business model encouraged disposable gaming experiences. Each year, new titles needed to sell to make the razor-and-blade model work. A hit gaming wasn’t enough. Japanese developers needed a hit franchise.

However, this business model is antithetical to e-sports. While “Super Mario Brothers 2” makes sense, “Baseball 2” does not. Sports, by definition, aren’t sequel-able. Competitive activities must be relatively stable to encourage mastery — and e-sports are no different. “Counter-Strike,” arguably the most successful e-sport, has been around for 17 years! In contrast, there have been 198 Mario games released over the same time span.

Because e-sports’ core gameplay must remain stable, these games rely on a new business model: “microtransactions.” Most income earned by e-sports publishers comes from digital good sales, similar to the mobile gaming market. But Japan’s AAA publishers were slow to shift to this new revenue model. Consequently, only one of the top 10 e-sports, “Smash Brothers,” was created by Japan. And in further support of my point: “Smash Brothers” is the only e-sport to not feature meaningful microtransactions.

Because e-sports weren’t born in Japan, they weren’t embraced domestically. In fact, Sony and Nintendo actively fought them out of the market as foreign competition. Consequently, fewer Japanese gamers grew up playing today’s top e-sports, shrinking the base of potential pros and fans.

Commuter lockout

The second element of Super Mario Syndrome is commuter lockout. Japan’s commuter culture gave rise to one of gaming’s biggest innovations: handheld consoles. Gunpei Yokoi, creator of the original Game Boy and Game & Watch, conceived his invention watching train riders. And with Japan’s massive commuter base, portable gaming took deep route in society. Even today, Japan is one of the largest mobile gaming markets in the world.

But portable gaming is also antithetical to e-sports. To create a high skill cap, e-sports titles must be extremely complex. This complexity, at least to date, is simply not possible on portable devices. Even “Vain Glory,” arguably today’s best mobile game, struggles for popularity — despite years of development work and tens of millions in venture capital. Because Japan prefers to play portably, its universe of e-sports talent is further constrained.

As we’ve seen, Super Mario Syndrome’s dual pillars of console debt and commuter lockout limited domestic adoption of e-sports. And with fewer players, e-sports’ talent pool and community support dwindled. As a result, today Japan performs poorly in global gaming competitions.

So is Japan stuck in e-sports limbo? Before addressing this question, it’s worth refuting a recent argument explaining Japan’s poor gaming performance: anti-gambling regulations. The thesis argues that because gaming is lumped with gambling, domestic prizing for tournaments is limited by anti-yakuza laws — preventing gamers from committing to e-sports. Unfortunately, this argument misunderstands the fundamental mechanics of the e-sports market today.

Firstly, prizing is not significant income for all the but the very best e-sports pros. In 2016, the median yearly winnings of a pro player, before fees, fell under $700. In short, tournament don’t keep the lights on for most gamers.

Marquee tournaments, like The International for DotA 2, do have huge payouts of $20 million or above. But these tournaments are international; accepting competitors from all countries. Japanese anti-gambling regulations don’t restrict prizes earned abroad; Japanese could access these marquee prize pools, if they could win.

So where do most e-sports pros earn their income today? Streaming and coaching. The biggest Twitch stars draw tens of thousands of concurrent viewers, earning huge sponsorships. And as the co-founder of the world’s largest e-sports coaching platform, Gamer Sensei, I can attest to pros taking home six figure incomes from private seminars. Nothing in Japanese regulations prevents this stardom; it is the lack of an e-sports audience holding Japan back.

Thankfully, Japan’s future in e-sports looks much more hopeful. New domestic infrastructure is springing up to train pros to compete on global stage. Universities like OCA in Osaka and Tokyo School of Anime are now offering e-sports training programs — some of the first of their kind in the world. As president of Gamer Sensei, even I was impressed by what I saw happening at OCA when I visited earlier this year. There’s nothing like a championship team to spur domestic fans; think of the Nadeshiko. And serious academics like professor Akira Baba of the University of Tokyo are taking notice, helping to foster industry and community partnerships that will grow viewership support.

I believe Japan has the potential to claim its place on the e-sports global stage. The road ahead may be challenging, but structurally Japan has many advantages: wealth, relatively fast internet, and adaptive consumers. I look forward to the day I can root for Japan in the Overwatch or League of Legends grand finals. For now, I’ll keep supporting teams like V3 and Cyclops Osaka as they continue their steady ascent into the global ranks.

William Collis is the cofounder and president of Gamer Sensei and author of “One Game to Rule Them All.”

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