Esports executives sound off on the role of competitive gaming in today’s industry landscape
As esports winter takes hold, many companies in the industry have had to take a hard look at the role of competitive gaming within their business strategies. Almost every leading esports organization has felt the need to diversify or die — although exactly how far to expand beyond competition remains a point of debate in today’s esports boardrooms and front offices.
With esports leagues widening their revenue sharing opportunities as brands threaten to pull away from the space, 2src23 has been a year of reinvention and reconstruction for the esports industry. To take the pulse on the current role of competitive gaming in esports, Digiday spoke to executives at six prominent esports organizations.
Here’s what they had to say — along with some context, courtesy of Digiday.
Arnold Hur, CEO of Gen.G:
“This is a controversial opinion but I would say that the traditional sports franchise model in esports is largely dead. We’re witnessing a transformation to a digital revenue-first model where the primary driver for revenue is in-game skins and a more open ecosystem that allows more teams to participate. The best example that is setting the standard here is the Valorant partner model where the interests more closely align between the publisher, the teams and gamer fans. It’s already breaking records for digital skins revenue for teams and I hope that we can see that same kind of integration with brands and media platforms for the scene as well.”
Digiday analysis:
Hur’s comments reflect the conscious way in which most esports organizations have eschewed the high-performance, victory-boasting branding that once defined the industry’s top companies. Five years ago, every esports organization was the best in its class and wanted everyone to know it — because that’s what attracted brands’ sponsorship dollars. But as brands start to scrutinize the ROI of esports partnerships, Gen.G and other companies have repositioned themselves less as traditional sports teams and more as agencies, stressing their ability to connect brands with the gaming audience regardless of the success of their competitive teams.
Joshua Brill, head of marketing at Fnatic:
“We literally celebrated our 19th birthday yesterday in the office, and T1’s like two years older than that. It’s probably no coincidence that we’re both around 2src years old, so we have a competitive advantage of a kind of rich history of winning. That legacy allows us to lean into it more than, I assume, a five-year-old org that maybe has won a few titles, but still can’t be defined by it in the same way. A lot of it is investment into the infrastructure.”
Digiday analysis:
Of today’s top esports orgs, two teams that still stress victory and competitive performance as a key part of their brand identity are Fnatic and T1 — which happen to be two of the longest-operating teams in their respective markets. These companies’ ability to focus on competition — at least more so than some of their peers — shows how esports teams might be able to take on more of the traditional sports model as they grow older and develop more of an organic fan base.
That said, both T1 and Fnatic have plenty of revenue streams beyond pure competitive gaming — Brill admitted that prize money still accounts for just a small portion of Fnatic’s revenues — and a T1 representative declined to participate in this story, citing the team’s declining results while star player Lee “Faker” Sang-hyeok is out due to an arm injury.
Justin Kenna, CEO of GameSquare:
“Anybody who goes to esports events, or consumes that content — they get it, right? You go to a Counter-Strike event, and in the stadium, it’s incredible. I didn’t grow up a gamer, and I love it. So, esports is not dead. Esports is going through a very natural moment of growth and consolidation. And it’s a complex environment, where you have so many different publishers with different priorities and objectives, but we very much believe in the future of esports.”
Digiday analysis:
In spite of the mounting skepticism from some corners, most leaders of the esports industry are still bullish on the long-term future of competitive gaming. Many esports executives are still confident that the organizations that survive the next year or so of consolidation will reap the rewards once esports truly becomes the future of competition.
Jasmine Skee, CEO of Guild Esports:
“Since I came in as CEO, we did a lot around diversifying our revenue. When I started, it was all about prize money and sponsorship. Since then, we’ve launched Guild College, we’ve launched Guild Studios and now we have a revenue share opportunity, with Pixels, around our content.”
Digiday analysis:
Earlier this month, Guild announced a partnership with Pixels AI, a digital advertising company, intended to increase the visibility of Guild’s homegrown video content and make it more attractive inventory for potential advertisers. The move reflects how esports orgs now explicitly view themselves as media businesses more than competitive teams: “We’ve changed our content strategy to really set ourselves up like what we call a newsroom,” Skee said.
“I think it all comes down to community. There is a community that Misfits established, a passionate video-game-centric audience that really cares about gaming and gaming culture, in the same way that Bleacher Report’s historical basis was in newsletters that were very focused on traditional sports. It had the credibility of the people who cared about sports, and that credibility ultimately carried the brand in the transition to focusing on community. We’re doing something very similar.”
Digiday analysis:
Before joining Misfits, Toles served as chief content officer of Bleacher Report for two years — and his decision to draw parallels between Misfits and his former employer, rather than a more traditional sports team, shows the direction Misfits is headed. Like Guild, Misfits sees itself as a media company, and other media and entertainment companies as its competitors.
Andy Miller, CEO of NRG:
“You have to have something else. I think, maybe, you can have a small business, but not one that’s profitable. I don’t know — if you’re bootstrapped, maybe, but it’s hard to compete. But I think we are all amassing a pretty sizable audience. Look at NRG: We have our teams, we have Full Squad Gaming, which is bigger than our teams for views every year. We had an agency called Ader, which we don’t have anymore. There’s no denying the size of the audience or the appeal of gaming and gaming-adjacent stuff, but if it’s just monetizing the pure esport aspect of it, that’s very challenging.”
Digiday analysis:
There’s no denying that NRG is still interested in the competitive gaming side of esports. After all, the company acquired a spot in the League of Legends Championship Series earlier this year. But the purpose of that acquisition was openly to bolster the other, more profitable sides of NRG’s business using the natural fandom and engagement that come around participating in one of esports’ top leagues. Competitive gaming isn’t a business in itself for NRG — it’s a means to an end.
https://digiday.com/?p=512888
