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Hangin' With ... ESL America CEO Craig Levine

ESL America CEO Craig Levine
Esports is an exploding industry and ESL America CEO CRAIG LEVINE has been in the game since the beginning. He founded and owned the first professional gaming team in North America (Team 3D), co-founded event services company ESS Agency and co-founded technology solutions company E-Sports Entertainment before it was acquired by ESL in Nov. ‘15. Founded in ’00 and based in Cologne, Germany, ESL organizes esports tournaments all over the globe and counts over 5 million registered members. In July ’15, Swedish digital entertainment firm Modern Times Group purchased a 74% stake in ESL for $86M, which has pushed the esports company to new heights. As a former professional gamer, Levine has a unique perspective on esports and SBD Global spoke with him about ESL’s impact and esports’ future worldwide.

On ESL events’ effect on esports …
Craig Levine: This is different. There is still a frenzy around it. I think everyone just reads lots of numbers ... talking about the market size and you hear the viewership numbers that Twitch gets or an ESL event or Riot Games achieves and you sort of lose context of it. ... What does 90 million live video sessions mean? That’s enormous, that’s huge. You lose that, even if a million people tune in for something ... we lose the magnitude of that. So these live events started to, for big brands, help us to feel more real and to understand that this demographic is an audience they want to reach ... more than an anonymous-seeming number on paper. And that is going to be a key piece to this industry. ... There’s different business meanings for everyone, so it’s important that people start to understand the market to make sense of how it makes sense for their business. ... We were the first ones in the western world to pioneer this idea of stadium events. It started for us in an event in Poland four years ago, and all of the sudden it becomes very real when you’re in a stadium of 10,000 people watching other people play video games and go crazy like it’s the Copa America. It makes the millions of people in viewership numbers feel much more real.

On what has shaped esports in recent years ...
Levine: About three years ago is when things really started to change. That was with the introduction of live streaming. With YouTube, Facebook and Twitter ... live streaming became a popular outlet. With it, we now had a platform to put great content out there and for the audience to find it. Also for game publishers, for the first time now, with the movement of free-to-play games whether its Candy Crush or League of Legends, it was micro-transactions. So no longer is the game about the annual box sale. The business model for them has adapted and esports fits real well in engagement and retention for these guys. Whereas before a game publisher would spend about 90 percent of its marketing budget just before the game is released and pretty quickly they are moving on to the next one, sort of like a Hollywood movie spend. But with free-to-play, the idea now is: “If I can get you to log in one more day a month, I can make five more dollars per person.” Or: “How do I get you to spend an extra $2” and over a scale of 50 million free-to-play users that’s big business.

On what makes esports attractive to investors ...
Levine: From an investor perspective, for a brand, they need to invest in the space because that’s where the audience is. And for VC or private equity-type funding, which is going crazy in the world of esports, that’s a key component, who the audience is as well as the year-over-year growth. And I think the other interesting piece is what the audience represents. It’s millennial, it’s digital, it’s global, it’s all these key things that I think from a business perspective has a lot of recipe for success. Whether you’re a media company ... inevitably looking at esports as a way to get younger, or ESPN who has experimented on ESPN3 as well as ESPN Linear, I have to believe all these guys look at this as a way to grow their digital platforms. I think esports is that intersection of live, digital, global and millennial which is very attractive to investors.

On the effect of Modern Times Group on ESL ...
Levine: They’ve been a great partner of ours. They’re a very entrepreneurial company, so they are very supportive of what we’re doing. We’re growing like crazy, we’re expanding geographically all over the world. So for us, having someone capitalize the business and support our growth has been instrumental. Since that [deal] we’ve rolled out expansion of operations in Australia, Brazil and continue to eye other markets in the world. We’ve even acquired horizontally into DreamHack (the world’s largest digital festival which has been held in Sweden, France, Romania, Spain and England) ... that has allowed us to take a bigger perspective to the ecosystem and see how we can create value at all different points. There is also the business guidance they have given us, with their help we were able to launch esportsTV which is the western world’s first 24/7 linear esports channel. There is a lot of expertise they are bringing to the business, in terms of how we think about distribution and adding more sophistication to our thinking overall.

On the challenges facing esports ...
Levine: It’s how do we get more non-endemic or brand partners to help support esports, and to recognize this is a millennial audience not interacting in traditional ways to previous generations and that this is a passion point for them. And they need to understand it to activate properly within that audience. But it is their support that allows us to coordinate big events or expanded league operations for popular games and just deliver good content. ... From an investor perspective it’s a little bit of a wild west. There’s a relatively low barrier to entry for things. The digital environment that our sport operates in is inevitably more accessible than traditional sports. Those pieces together make it attractive, but it will also be a little bit challenging for some of these guys to be successful but that’s the nature of venture funding. We’re big believers in esports, and as much as it feels like we’ve arrived, there’s still a long way to go when you look at the market potential of what we could be. There’s a lot of speculative things out there, some of which will succeed but most of which will fail. A company like ESL, we’ve been around for 15 years but you see more and more new companies coming and starting up in the space.

ESL One Manila in April '16 had a prize pool of $250,000
On what ESL has on tap in the near future ...
Levine: We’ve got a huge event coming up July 8-10 in Cologne, Germany called ESL One Cologne, it’s going to be the world’s biggest Counter Strike tournament of the year. Last year we set all sorts of viewership records and we think we’ll break those and continue that path. So more and more its this message of: "This is getting bigger, these events are happening, it’s becoming a cultural element all around and for us, we’re building good partnerships." We recently announced a partnership with Comcast Xfinity, so they’re now supporting a lot of our programming and activities. We continue to lead the conversation with non-endemics to help them understand the market and hopefully integrate them in a meaningful way.

On how and when esports will get the respect it deserves ...
Levine: It takes time, it’s sort of a cultural or generational thing. If you ask someone 30 years older than me, they’re never going to come around to what this is. But for the new generation of people, gaming is going to be a passion point. Parents will connect with their children in a similar way that I grew up going to Shea Stadium with my dad and going to a Mets game, you’ll play video games generationally. We’ve started to see that at our events already, where parents are bringing their sons or daughters to the event with them. Even to think in the last 12 months how far we’ve come, ESPN has an esports vertical, Yahoo has an esports vertical. You’re seeing it, it’s happening. But those that take the time to understand it I think recognize pretty quickly what this is all about and develop a quicker appreciation. And there is probably just certain generations or waves of people that never will, and that’s OK.

Hangin' With runs each Friday in SBD Global.

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