The business of eSports is changing. Specifically, the approach to running team enterprises will undergo drastic changes in 2016. As the number of cheering fans, the popularity of video gaming as entertainment outlet, and number of corporate sponsors leveraging eSports as marketing vehicle grows; the eSport team business landscape will evolve accordingly.
Where’s the structure?!?
The recent debate surrounding making player salaries public in eSports can be traced to, not only a lack of precedent but also, the absence of structure across professional gaming. The discussion started with Team Immortals CEO Noah Whinston proposing a public database with the salaries of professional League of Legends (LoL) players. Mr. Whinston (pictured in Figure 1) did stop short of advocating public salaries as a cure-all for bigger issues, i.e. player representation and unionization, but didn’t shy away from defending his position.
Figure 1 – Courtesy of Gamespot.com
“Without player agents or a union, things are slanted in favor of team owners when it comes to salary discussions and public information can help level the playing field.”
— Noah Whinston, CEO of Immortals
Unfortunately, better allocating the growing eSports pie cannot occur without a structured approach. While factions of team owners, players and other stakeholders are actively involved in the dialogue, true progress results from organization. Whether this takes shape as an open committee, organization or otherwise is irrelevant. The goal is to appropriately define and sustain a better regulated and sanctioned system. This will, obviously, require input and involvement from the publishers of various eSport titles. However, the initial impetus need not lie on a Riot Games or Valve. Instead, the greater community can establish a precedent and pull publishers into the fray.
Currently, leading segments are too far scattered across the eSports landscape for a “meeting of the minds,” to occur. There is no overarching body that pulls the sum of experience(s), perspectives and viewpoints together towards establishing an agreed upon way forward. While Twitter conversations and Reddit posts are invaluable to the eSports experience, they are only one part of advancement. The other part is an ordered grouping dedicated to evolving competitive gaming. The future of eSports team business depends on this coming to fruition.
Birth of competitive rivalry
As the stakes for successfully running an eSport team rise, there will be more focus on developing effective formulas and models. Teams will be compelled to adopt the right set of best practices and strategies as more feel the pressure or opportunity to improve position. This will result in the first wave of competitive rivalry across eSport team businesses, and initiate the progression of more widely accepted management practices. In contrast to current conditions, where individual teams are focused on solvency, external moves by other teams will be monitored and evaluated to gain a competitive edge.
Towards that end, newly formed organization, Team Elemental, has already provided a blueprint for their planned success; marked by the byline, “Better humans become better athletes.” Elemental’s philosophy for its four eSport teams includes a focus on the holistic health of its players, regional talent and transparency. Only time will tell how effective those tenets prove to be, but should Elemental succeed, they will serve as case study for other teams to emulate. Specifically, how eSport teams view the effect of proper player development on winning and the bottom line.
The changing marketplace for professional talent
More money is being invested into eSport teams now, than at any point in the past; a fact that is both positive indicator and cautionary detail. Better paid players will result in attracting and retaining talented gamers at the professional level. A necessity for the higher levels of professionalism and competition needed to draw continued non-endemic sponsorship, badly needed within the industry. While no one will argue that players should make less, there are concrete realities associated with how and why there are higher salaries.
“These teams have millions of dollars and are artificially inflating player salaries in what is at present an unsustainable business model.”
— Stephen “Snoopeh” Ellis, former eSports pro, on the effect of angel and VC funded teams
Due to the recent influx of angel investor and venture capital (VC) money into eSports teams these new levels of player compensation do not match current revenue generation. Consequently, there is a chance they are unsustainable and could harm the long-term collective growth of the entire eSports ecosystem. The rise in private investment levels also threatens to artificially inflate the value of talent, and price smaller organizations out of business. Investors seek a strong return on their investment (ROI) and, facing the lack of mature eSports revenue models, could very quickly pull the plug from multiple teams. This would have a disastrous effect on the overall health of a still nascent industry.
2016 and beyond
Teams and their players are at the heart of eSports. As the businesses behind teams evolve, so will eSports marketing; with the synergy between both reflecting their current state and future direction. Moving forward, eSport teams must focus on maturing their business models to match the current rise in player salaries. Other issues must be addressed through organized support networks that touch both teams and players. Actions towards that end, especially over the next 12 to 18 months, will affect the complexion of eSports for years to come.
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Alex Fletcher is founder & president at eSports Group, where he helps customers meet their eSports advisory & consulting needs. When Alex isn’t glued to a screen, he spends time with his wife, their two dogs, and pretends to learn Polish. Feel free to stalk him on Twitter – @FletchUnleashed