This week the ‘eSports IQ by Alex Fletcher‘ features the following content: Understanding celebrity investment in eSports; The shareable gameplay rush; Cheerleaders in eSports?; Does VC style investment scale in eSports?
Understanding celebrity investment in eSports
News that three prominent professional athletes, across two of North America’s major sports, joined the NRG eSports organization, as investors, has generated quite a buzz across the sports and eSports worlds. Most have pointed out, and rightfully so, that the investment is only the beginning of a rapid intersection of traditional sport and digital sport. The underlying assumption is that this set of pro athletes (Shaquille O’Neal, Alex Rodriguez, and Jimmy Rollins) will bring more than just financial resources to bear. For example, having been exposed to the pressures of competing at the highest levels since very early adulthood will enable them to provide guidance, mentoring, etc. to players within the organization. A valid assertion, but one which overlooks the biggest impact Mr. O’Neal, Mr. Rodriguez, and Mr. Rollins could have on the entire eSports landscape: unionization leadership.
— SHAQ (@SHAQ) 17. März 2016
Even though all three new investors in NRG are new to the world of competitive video games, it’s only a matter of time before each is able to make strong parallels with their background in pro sports. And while neither is a lawyer by trade, history as members of the National Basketball Association Players Association (NBAPA) and Major League Baseball Players Association (MLBPA), combined with personal celerity and ties to the sports business world, will position them as key voices on issues related to unionization. Whether this immediately involves the interests of labor (players) or ownership is yet to be seen. Even if it the latter seems to make the most sense, it wouldn’t be surprising to see players benefit from their input. Regardless, organization is badly needed on both fronts, so there are few downsides to either scenario.
The shareable gameplay rush
With the emergence of video games as both social and competitive experience, the space for sharing gameplay snippets is picking up heat; case in point, the recently announced $4.5 million funding round for Forge Incorporated. And Forge is not alone, with other startups like Leet focused on related areas. The big picture: massive success of live streaming is proof that share-ability remains a key hallmark for video game communities, and specifically in the world of competitive gaming. Given that unscripted, live content is king for today’s gamers, the market opportunity for capturing in-the-moment gameplay could loom large for companies like Forge; particularly since the ability to seamlessly grab-and-share game moments bodes well for increasing overlap with platforms like SnapChat and Facebook.
Cheerleaders in eSports?
Occurring in parallel to the growth of eSports is evolution of its entertainment packaging. In this case, Unicorns of Love (UOL), an EU team in Riot Games’ League Championship Series (LCS), recently included a cheerleader routine during one of their matches. The routine itself was innocuous but could represent an inflection point. In that, as more and more casual audiences begin to consume competitive gaming events, it’s worth understanding just how much non-competitive entertainment is beneficial to the in-person experience. Especially since, the notion of spectacle in traditional sports has pushed it to the forefront of entertainment choices for billions across the globe. For eSports, it’s a question of which complimentary features should surround its competitive epicenter. Obviously, cheerleaders are just one angle so it will be interesting to see if any others emerge as part of a shift towards spectacle.
Does VC style investment scale in eSports?
Sudden news that investors for Team Ember pulled the plug on funding has caught some in eSports by surprise. Buoyed by venture capital investment, Ember made waves in December 2015, by publicly releasing salaries for players on its North American League of LCS Challenger roster, as part of a discussion over transparency in eSports player compensation. The organization, run by former Riot Games employees, was also public about its approach to talent acquisition and development. Marked by the tagline, “Better humans become better athletes,” it seemed as though Ember was laying the foundation for long-term success in competitive gaming. Obviously, this wasn’t to be.
Yet, Ember’s funding collapse raises some extremely pertinent questions about the sustainability of venture capital (VC) style investment in eSports teams. Regardless of the level of patience or lack thereof, exhibited by Ember’s investment team; it’s unclear how acceptable return multiples, to which VC’s are accustomed, can be achieved in eSports without proven revenue models? Some pointed to early stage tech companies as a parallel to eSports organizations, but this rings hollow upon closer investigation. Unlike the tech industry, eSports has yet to develop a set of viable exit paths for VC style investment, e.g. M&A or technology asset liquidation. Plus, accelerators for delivering a competitive product to market that customers will pay for, or at least grow to love, are not widely understood for eSports teams. And, at the end of the day, throwing money in the face of this reality will do little to change it.
- Why More Money Equals More Problems in eSport – entivagroup.net
- Teams in eSports are Becoming Serious Business – entivagroup.net
- Ember’s investors back out, team will release all players except Contractz – dailydot.com
- Forge raises $4.5M to make editing and sharing gameplay clips easy – venturebeat.com
- Shaquille O’Neal, Alex Rodriguez among investors in NRG Esports – espn.com
— eSportsMarketingBlog (@eSportsMBlog) March 25, 2016
About ‘eSports IQ’
The ‘eSports IQ’ is compiled by Alex Fletcher, the founder and president of Entiva Group, LLC, and features insights on the latest emerging trends in eSports. By curating invaluable content from a wide range of information sources you get the leading edge in the business of eSports. The complicated past (and future) of esports on TV
Past eSports IQs:
- Week 11: ‘Audiences vs. Viewership in eSports’ and more insights
- Week 10: What does eSports on TV really need?
- Week 9: ‘Cineplex takes a shot at eSports market’ and more insights
- Week 8: ‘The potential of eSports and gaming as mainstream’ and more insights
- Week 7: ‘Vodafone partners with G2 eSports’ and more insights
- Week 6: ‘MP & Silva has been named the global marketing rights partner of Garena’
- Week 5: ‘ESPN continues investment in collegiate eSports’ and more insights
- Week 4: ‘ESPN eSports must exhibit hyper focus’ and more insights
- Week 3: ‘eSports is growing but has not started scaling yet’ and more insights
- Week 2: ‘Deloitte joins the eSports numbers debate’ and more insights
- Week 1: ‘Sport property continues commitment to eSports’ and more insights