The influx of money from major sports league team owners has caused more than a few ripples in the e-sports world. So far, the new investors have been welcomed, said panelists at the ’16 E-Sports Forum during a discussion about what is ahead for the industry. “It brings dollars, but ultimately it brings professionalism to the sport,” said Twitch VP/E-Sports & Events Andy Swanson. "I think that’s something e-sports desperately needs to increase its revenues and growth. If you think of the NFL, the PGA -- they are sports organizations that have been around for many years. They understand the role of the league, the players association, how to work with sponsorship dollars, regional ticketing and filling stadiums, how to maximize merchandise, all these things e-sports have been trying to figure out.” Tony Potts of SierraMaya360, which is an investor in Team EnVyUs, said, “I saw the Raptor group come in and purchase a share of Fnatic. Raptor owns a share of the Celtics, but they also own FC Roma. They took part of the Fnatic group and embedded them in the Celtics and Roma and showed them how a billion dollar franchise is run. ... We’re on the cusp, for me, of where Bird and Magic were coming into the NBA. It’s the ability to market, to media, to merchandise.”
FOLLOW THE MONEY: CrossCut Ventures General Partner & Managing Dir Clinton Foy, whose company is an investor in Team Immortals, rhetorically asked and then answered where the new infusion of capital is being spent. “A lot of it is going to salaries of the players,” he said. “Some of these players who are 17-, 18-, 19-years old are making large salaries of $150,000, $200,000, or $300,000, or it could be $1 million in Asia. With merchandise, it could be well over $1 million. There’s a little bit of an arms race. There’s team houses, coaches, trainers, psychologists, drivers. We have a house in Santa Monica, and rent on that is pretty expensive." Swanson then asked Foy, “Do you think the influx of capital will lock up the best players? Or will we still see roster turnover or will careers still be short -- four to five years?” “I don’t see why they can’t play longer,” Foy responded. “Don’t practice 18-20 hours a day. Train eight to 10 hours at most. We care about their longevity and don’t want them to burn out.”
NEW KID IN TOWN: Now that major sports franchise owners are putting cash to work in e-sports, should traditional sports be concerned by the upstart competition? Potts noted, “There are projections that e-sports will pass the NHL as the fourth biggest spectator sport this year.” And Clinton added: “I think traditional sports already are threatened. You see baseball declining, an aging demographic, the average baseball viewer is 54 and growing older. There’s going to be a demographic problem the next 10-15 years. In e-sports, the 14-24 year-old crowd is growing at a 10-20% rate per year. Amazon bought Twitch for $970 million. That’s going to go down as one of the best acquisitions of any large platform in history. It was at 50 million monthly average users then, and within a year grew to 100 million, and it’s grown since then. Track that against traditional TV; you’re seeing Twitch is growing, cord-nevers -- the 15-24 year-olds that just don’t watch TV -- are consuming online.”
WHO’S GOT NEXT? Paradise said the pipeline is full of new games and developers champing at the bit to get into e-sports. “There are many more studios investing at huge levels trying to catch up or get into the game,” he said. “There are a lot of games coming, a massive level, and they all want in.” Swanson added, “We’re going to see a game publisher creating a model that says you need a franchise, it’s going to cost you this much to get a seat at the table, we’re doing it geographically and we’re going to see pro sports organizations that we recognize. That’s what the players, sponsors, and owners want to see, some stability.” Potts: “I think you’ll see more media buys, sponsorships and teams being acquired by names that you know. ... Dan Gilbert is going to make a purchase, and possibly LeBron (James).”
