SBJ/October 16-22, 2017/Leagues and Governing Bodies

PUBG explosion shows fickle nature of esports

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Editor’s note: This story is revised from the print edition

A funny thing happened this year as investors dove into esports, chasing eight-figure franchises in the Overwatch League and the “League of Legends” League Championship Series: A new game came out of nowhere to win the hearts and minds of fans.

Launched in beta mode by Korean developer Bluehole Studio in March, “PlayerUnknown’s Battlegrounds” is a bona fide juggernaut, and its rapid ascent raises fresh questions about the wisdom of relying heavily on any single game for long-term esports profitability.

Known simply as PUBG, the game immediately attracted players and viewers who liked the simple but engaging concept: 100 players all dumped into the same battle space, Hunger Games-style, with the last player alive winning.

Since it launched, it’s second only to “League of Legends” in Twitch viewership, quickly leaping over “Overwatch” and mainstays like “Dota 2” and “Counter-Strike: Global Offensive.” Esports organizations are quickly developing PUBG teams, and tournament organizer ESL will run a $200,000 purse PUBG tournament in November. The game has sold 15 million copies worldwide.

“If I’m honest, PUBG just decided to show up at the party unannounced, without even knocking at the door — just proper kicked the door with the hinges out, showed up and said, ‘I’m here, and I’m not going to be ignored,’” said Michal Blicharz, vice president of pro gaming for ESL.

All this happened while sports industry investors were busy talking to Overwatch publisher Activision Blizzard about $20 million franchise deals, and League of Legends publisher Riot Games re-organized its top American circuit to better appeal to investors, who must pay at least $13 million for a new spot or $10 million to retain a spot.

Meanwhile, esports teams are creating PUBG teams for a few hundred thousand dollars at most.

To be clear, it remains to be seen whether PUBG can sustain its popularity, or whether it’s even a direct competitor to Overwatch or any other esports titles. There’s an industry feeling of a rising tide lifting all boats as esports finds new fans.

“If this was a zero-sum game, I guess I’d be more threatened,” said Randy Chappel, managing director of Hersh Interactive Group, which recently infused Team Envy with an eight-figure investment to facilitate the fees for Overwatch and possibly League of Legends, along with supporting the other five teams it runs. “But the pie is growing so quickly that the attention and awareness of all these things is exciting.”

But PUBG’s rise is a cautionary note, experts said. Esports properties want investors to believe they’re building an industry that will look a lot like traditional sports, with stable franchises, enduring fan connections and high barriers to entry for competitors. But gaming may be more accurately compared to the music industry, where even the most sophisticated industry giants must always be aware that an obscure talent can strike a chord with fans and quickly become relevant.

“Seventy percent of the esports market is predictable, in terms of what games come up, what to invest into, and 30 percent consistently surprises the industry, regardless of how deeply rooted in the industry you are,” Blicharz said. “I’ve been in esports for 15 years and didn’t see PUBG coming.”

The coming weeks and months will be crucial for the future of PUBG and its place in the esports ecosystem. As a small publisher, Bluehole must scale its operations to foster a vibrant competitive scene and keep making the technical improvements to the game to keep fans engaged (it’s still technically not a completed product).

“There’s a lot of things to love about PUBG, and the question is, will they make the right decisions in order to maintain a large player base and to maintain a large fan base for the esport?” said Bryce Blum, executive vice president of esports at Catalyst Sports & Media, which advises brands, investors and teams on esports strategy.

Meanwhile, Blizzard and the OWL’s 12 charter franchise holders, along with Riot Games and the League of Legends teams, have extensive resources and an extraordinary incentive to make their investment pay off.

Hector Rodriguez, CEO of OpTic Gaming, which has secured a spot in the Overwatch League, believes Overwatch is on the right track despite the low viewership during this lull before play starts in December. “Given the opportunity and the structure it’s being given, I think we’re going to see some interesting stuff happen with it,” he said.

To account for the game unpredictability, esports teams are structured as platforms that can dive into new titles with relative ease. In recent weeks Team Liquid, Team SoloMid, Noble and Team Dignitas have acquired PUBG teams, and Rodriguez said OpTic is looking into it. At this early stage, the investment is much more in effort than dollars, said Team Liquid co-CEO Steve Arhancet, matching the risk with the uncertainty facing PUBG.

But some of the new investors have staked their entrance in esports on a single game, like Comcast Spectacor and the Kraft Group, both single-purpose Overwatch buyers.

“You can never force something to be a spectator esport,” Rodriguez said. “It either has it or it doesn’t, and in esports the audience will always let you know if you’re on the right track.”


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