Guess Who’s Shaping Esports? The Same Ole Fat Cats
WHY YOU SHOULD CARE
Not everyone is happy, but embracing people and dollars from traditional sports is vital for esports, say analysts.
By Matt Foley
Hundreds of video game consoles illuminate flat screen televisions in the Allied Esports Arena inside the Luxor Hotel & Casino. Past the Las Vegas stadium’s seating, perched up above the stage is the suite-level owner’s box, where Allied founder Jud Hannigan entertains guests. And there, wrapped behind and alongside the box is a flashing neon-lit tunnel where the players — yes, athletes — high-five VIPs as entrance music ushers them onto the stage. After spending several days at the NBA Summer League, the atmosphere inside the Esports Arena didn’t feel very different. And that isn’t surprising.
On the surface, esports appear to be 21st century challengers to the love traditional sports have enjoyed for decades, even centuries. But peel back the layers, and it’s the same investors, professionals and media companies that have bankrolled and broadcast mainstream sports and teams that are now increasingly taking control of esports too.
You always want to be up to speed with the new opportunities to sell out buildings
Zach Leonsis, Monumental Sports & Entertainment
Monumental Sports & Entertainment (MSE), which owns the Washington Wizards, Washington Mystics and reigning Stanley Cup champion Washington Capitals, in 2016 purchased Team Liquid, the most successful esports team in the world. It also founded aXiomatic, an esports holding company. At aXiomatic alone, the list of investors includes Golden State Warriors co-owner Peter Guber, Tampa Bay Lightning owner Jeff Vinik and Los Angeles Lakers president and Dodgers co-owner Magic Johnson. ESPN recently hosted the inaugural Overwatch League championship at Brooklyn’s Barclay’s Center, and the NBA has gone all in with its own league-sponsored NBA 2K League. Even Hannigan got his first break in sports administration as an intern in the front office at the century-old New York Yankees.
“The industry first caught our attention when we heard about an esports tournament selling out an arena five years ago,” says Zach Leonsis, senior vice president and general manager of MSE. “From an entertainment perspective, you always want to be up to speed with the new opportunities to sell out buildings.”
The rise of esports shares parallels with the poker boom of the early 2000s, says Hannigan, whose work as a consultant for World Poker Tour in Asia eventually introduced him to the esports industry. “The goal is creating branded live events that generate distributable content and, hopefully, stand the test of time,” he says. But there’s a fundamental difference between esports and poker, he concedes — one that he and many other new investors in the space believe will soon result in a global industry that rivals any traditional sports league: “Sheer market size.” “The numbers are so much bigger than poker ever was,” he says, “that makes it even more exciting.” In 2008, at the height of the online poker craze, 20 million global users played for money, according to market research firm Statista. In May 2018, 40 million people played Overwatch alone, and 380 million users will have viewed esports this year, with that figure expected to exceed 550 million by 2021.
That’s what has got everyone from new media networks like livestreaming platform Twitch to YouTube and Facebook investing in esports. Twitch is far and away the go-to home for esports streaming, but the tech giants are getting heavily involved. In May 2017, YouTube signed a multiyear deal with the esports giant FACEIT to exclusively stream its Esports Championship Series (ECS) league. This, after FACEIT had spent two seasons streaming on Twitch. Facebook has partnered with the Electronic Sports League (ESL) to stream its two biggest competitions: CS:GO Pro League and ESL One Dota 2. The goal? To capture a brand-new audience in physical arenas and in front of computer and phone screens.
It’s an audience that’s only going to grow. “It’s only a matter of time before each sports game has its own eleague,” says Jeff Eisenband, senior editor at ThePostGame and an NBA 2K League analyst. “The NBA is a culture far beyond basketball, and this is a way to connect fans using a second level of the brand.”
Leonsis, whose father, Ted, founded and owns MSE, insists that for him, esports represents more than a way to fill arenas — it’s a way for his firm to align with the largely unknown, increasingly young consumers that traditional sports and entertainment risk losing touch with. It’s “an opportunity to get to know new, young customers that we would have no interaction with otherwise,” says Leonsis. So, in October 2016, shortly after purchasing Team Liquid and founding Axiomatic, MSE announced an over-the-top, direct-to-consumer subscription platform offering fans livestreaming of games for some of Washington’s professional sports teams and other live events. And although the majority of traditional sports fans have yet to cut the cord, this was a long play. For young consumers around the world, many of whom are fans of esports, cable-bound viewing habits don’t exist. “We always try to think, ‘What does the next generation of fan look like?’” says Leonsis. “It’s very clear that cable is not part of their consumer habits.”
What hasn’t changed with esports is the fan’s desire to belong to a larger fraternity of supporters, and that’s why live events at venues like Esports Arena make sense. “This is the new sports for the younger generation,” says Drew “Hashtag” Crowder, a professional gamer and event manager who specializes in producing regional esports events like the first-ever Fortnite gaming competition at the Cajundome in Lafayette, Louisiana, in May. “Making a live event amplifies that sense of community and that rabid kind of sports fandom. It’s just like supporting your favorite team.”
There’s much else too that esports firms can gain from the lessons learned via traditional sports organizations, say industry leaders. “Esports can learn a lot from traditional sports just in terms of corporate partnerships, sales and frankly regular HR, accounting services,” says Leonsis. And those moving from traditional sports to esports bring what they learned — and liked — with them. The Yankees was “where the idea for an owner’s box [in Allied’s Esports Arena] came from,” says Hannigan. “One of my jobs as an intern was bringing [former Yankees owner] George Steinbrenner’s guests up to the owner’s box.”
Still, distrust of outsiders is not uncommon in the world of esports and gaming. It’s an insular universe that, until recently, was largely cast off by the mainstream. Now, like Aaron Judge or Jimmy Garoppolo, everybody wants a piece of the action. “Perhaps more than any other audience, this community values authenticity,” says Leonsis. “They can sniff out the B.S. very quickly.” There’s also skepticism about the involvement of traditional sports bringing bureaucracy to esports, says Crowder.
But that alliance is increasingly unavoidable, adds Crowder. “Money is paramount to everyone running those leagues, and I think that scares a lot of gamers,” he says. “But as long as there’s new money coming in, that means there’s more on the way.”