Esports

"How do esports teams make money?" That's the No. 1 question we hear from those outside the space. Something new to that end that multiple teams are rolling out -- paid membership programs. Cloud9, Team Liquid and Envy have all announced programs aimed at giving additional value to their most passionate fans. We know that gamers will subscribe to support and engage with their favorite influencers, and perhaps these teams can tap into that desire with a similar strategy.

-- Trent Murray

RIOT IN TALKS FOR EXCLUSIVE LoL MEDIA RIGHTS DEAL

• Riot Games is in discussions to sell an exclusive English-language media-rights deal for League of Legends esports, SBJ’s Adam Stern reports, in what would be a major move for the game publisher that has often focused on a non-exclusive streaming strategy.
  
  
• The company currently airs the three major LoL global events, plus its North American series, on multiple streaming platforms like Twitch and YouTube. However, Riot has entered into an exclusive deal in China with streaming platform BiliBili.

• Riot confirmed to SBJ that it is currently exploring an exclusive English-language deal (first reported by esports journalist Travis Gafford). "We are evaluating a number of options for our various rights packages,” the company said. “For example, in 2019, we signed an exclusive deal for the Mandarin broadcast of the League of Legends World Championship with BiliBili, which later sublicensed those rights to several other major streaming platforms in China.”

• The interested players are not known yet, but given that LoL is the most-watched esport, Riot is likely to only align with major entities. There have been increasing entrants into the streaming space in recent years, but Twitch and YouTube remain dominant forces. Upstarts like Mixer from Microsoft have either found little traction or shut down.

• Media rights is currently the second biggest bucket for annual revenue in esports, according to Newzoo, with $163.3 million expected globally this year, up 3.3% from last year. Rival publisher Activision Blizzard signed an exclusive, three-year, $160 million deal with YouTube that started this year.

PETITTI HITS THE GROUND RUNNING AT ACTIVISION BLIZZARD

• New Activision Blizzard Esports hire Tony Petitti has gotten to work behind the scenes, getting close with team owners and working with them on a range of initiatives, sources tell SBJ's Adam Stern.
  
  
• Petitti was poached from his senior position at MLB by Activision Blizzard CEO Bobby Kotick in August to become president of sport & entertainment, overseeing esports, consumer products, film and TV. Since then, Activision has said nothing publicly about Petitti’s new role and he hasn't done interviews.

• However, sources say that Petitti has been very active in getting to know and work with team owners in the Call of Duty League and Overwatch League. Those sources said that he has been working on everything from revenue generation to league structure/schedule and certain aspects of Activision’s media relationships, which include its exclusive streaming deal with YouTube.
  
  
• Two sources said that Petitti has been getting things done at an impressive clip, including quickly green-lighting one project that had been on the back burner for more than a year. Petitti came in just before former Activision Blizzard Esports President & CEO Pete Vlastelica departed, but it’s unclear whether they had the same autonomy to make decisions for the esports division.

• The development is welcome news for franchise owners, who are looking for Activision to partner with them as they try to turn a profit from their pricey investments to get into the OWL or CDL. OWL franchise fees went for around $20 million, while CDL franchise went for around $25 million. Activision declined to comment on the record.

ESPN SHIFTS APPROACH WITH ESPORTS COVERAGE

• ESPN will shutter its dedicated esports vertical, The Esports Observer's Kevin Hitt confirms. Rumors of a major shift in terms of how ESPN will cover esports have been circulating for weeks. A company spokesperson tells TEO: “We recognize esports as an opportunity to expand our audience, and we’ll continue to do so through coverage from the broader team for major events, breaking news and coverage.”
  
  
• The move to cease the vertical is directly related to layoffs announced last Thursday at ESPN. Esports writers Tyler Erzberger and Emily Rand announced their departures on Twitter, as did editor Sean Morrison and video producer Thomas Tischio. Writer Jacob Wolf last week said he would not be returning after his contract expired in January and senior editor Darin Kwilinski abruptly announced his resignation last week.
  
  
• ESPN still has licensing agreements for various games like NBA 2K, F1 Esports and others that will see the company produce and broadcast esports competition.

PLAYFLY REBRANDS CSL TO INCREASE FOCUS ON ACADEMICS

• Playfly will combine the assets of its recently acquired esports properties WorldGaming Network and Collegiate StarLeague, TEO's Trent Murray reports. The company will sunset the WorldGaming Network brand, and with it Playfly’s efforts in the amateur esports space. The newly combined resources of these two assets will form CSL Esports.

• CSL has worked with more than 1,800 schools across North America. Now, new CSL Esports CEO Rob Johnson says the company aims to create “life-changing educational opportunities through esports.” In addition to operating its own tournaments, CSL Esports will shift its focus to provide infrastructure to colleges, universities and high schools looking to build out an esports system.

• Johnson explained that part of CSL’s vision is to create a “path to pro” for collegiate esports -- but not in the traditional sense. While some players are recruited from college teams to join pro esports rosters, it is not the most common path. The reality is that much of the high-profile talent are in the 16-18 year-old demo and can circumvent the college track. 

• Instead, CSL will equip students to join the esports workforce, whether that’s playing on a team or working behind the scenes. A robust collegiate esports infrastructure will allow students to learn about remote stream broadcasting, commentary, event management, training, etc. Additionally, CSL will work with schools and with its parent company to create revenue-generating opportunities for its clients, such as connecting them with brands looking to engage with the collegiate esports market or exploring esports opportunities for alumni.

In addition to operating tournaments, CSL Esports will shift its focus to provide infrastructure to colleges

FNATIC RAISES $10 MILLION, PLANS CROWDFUNDING CAMPAIGN

• London-based organization Fnatic raised a $10 million internal financing round led by venture and growth capital investor Beringea. The organization plans to use the investment proceeds, which brought its total funds raised to more than $35 million, to continue growing the brand and fanbase. Fnatic fields teams in games like League of Legends, Counter-Strike: Global Offensive, Rainbow Six Siege, Dota 2, FIFA, Fortnite and PUBG Mobile.

• Later this month, Fnatic will launch a crowd equity campaign to raise at least $1.3 million from dedicated fans and supporters. The campaign will enable fans to become minority owners starting at a $26.50 stake. The organization stated that the funds raised through this campaign will be allocated to its efforts in finding and growing young gaming talents.
  
  
• Fnatic Chair Lucien Boyer tells TEO's Tobias Seck that the concept is similar to club membership programs in traditional sports, especially in Europe. He added that Fnatic is not just looking for capital going towards youth development, but also a group of passionate supporters who are eager to contribute by sharing their opinion on matters or helping in product development through beta testing.

 SPEED READS

• NRG co-owners Andy Miller and Hector Rodriguez announced they are rebranding the Chicago Huntsmen of the Call of Duty League to OpTic Chicago. TEO's Kevin Hitt notes the Optic brand's return to the CDL will rally the hundreds of thousands of fans and likely give the league added attention as it heads into Season 2.

• Canadian esports and media company Enthusiast Gaming is preparing for an expansion into the U.S., revealing this week its intention to be listed on NASDAQ, writes TEO's James Fudge. Enthusiast operates entities like Luminosity Gaming, the Vancouver Titans (OWL) and Seattle Surge (CDL). The company, already listed on the Toronto Stock Exchange, hopes that a NASDAQ listing will help raise its profile and create more acquisition opportunities, investments and better access to American investors.

• DarkZero Esports, an organization that currently competes in Rainbow Six Siege esports, but is looking at expanding to new titles, named Tommy Padula head of partnerships. Padula has had stints at Madison Square Garden and MGM Resorts.
  

• Riot Games has secured a partnership deal with personal finance company SoFi that will be focused on supporting local League of Legends talent development in North America. The company will provide $250 investment accounts to all players participating in the Honda Scouting Grounds -- a combine-style event that allows teams to scout rising talent in the region.

• Brazil-based esports organization FURIA is building up a poker lineup after announcing a sponsorship by PokerStars, TEO's Victor Frascarelli reports. Initially signing poker players who will stream their games under FURIA’s banner, a competitive team is also underway to enter face-to-face and online tournaments.

SBJ offers must-read newsletters covering Betting, College Sports, Esports, Football, Marketing and Media. To stay in the know, read SBJ’s newsletters online or manage your newsletter subscriptions.

Not a subscriber? Sign up for a free trial to read our newsletters.

Something on the esports beat catch your eye? Tell us about it. Reach out to either Adam Stern (astern@sportsbusinessjournal.com), Trent Murray (trent@esportsobserver.com), Kevin Hitt (kevin@esportsobserver.com) or David Morgan (dmorgan@sportsbusinessdaily.com) and we'll share the best of it. Also contributing to this newsletter is Austin Karp (akarp@sportsbusinessdaily.com).

The League of Legends World Championship wrapped up this past weekend with Damwon Gaming bringing the South Korean LCK league back to the summit of the sport. More than 3.8 million peak concurrent viewers were recorded as watching the event digitally, according to Esports Charts, a record high for finals matches. That includes 1.157M peak viewers for English-language broadcasts. However, the full numbers from Riot Games, including global average minute audience, haven't been released yet.

-- Adam Stern

LEAGUE OF LEGENDS CONTINUES DOMINATION OF PC GAMES INDEX

• League of Legends is the most relevant game in the esports ecosystem for the sixth consecutive quarter, according to an analysis by The Esports Observer's Tobias Seck. The ranking comes via TEO's Q3 PC Games Impact Index, a metric that quantifies six key performance indicators such as player base, viewership and competition prize pools to determine which game titles have the most impact on the esports industry each quarter.
  
  

• While League of Legends’ impact on the esports industry is undisputed, the current circumstances made it possible for an unexpected game to ascent to the top tier of esports games: Activision Publishing’s Call of Duty: Modern Warfare. The game’s rise was primarily fueled by a strong performance of the Call of Duty Leagues’ inaugural season, which was won by the Envy Gaming-owned franchise Dallas Empire, and its $4.6 million playoffs prize pool.
  
  

• Activision Blizzard’s other franchised esports league, the Overwatch League, had a less successful season contributing to Overwatch’s (ranked No. 8) underwhelming impact on the industry. Other losers of the current situation include Valve’s Dota 2 (rank No. 5) and Ubisoft’s Rainbow Six Siege (rank No. 13). Dota 2’s ranking usually spikes during Q3 every year as its most important tournament, which traditionally features esports’ largest prize pool, The International, is held in the period. This year’s competition has been postponed until 2021. Rainbow Six Siege’s most significant tournament, the Six August Major, was canceled, which contributed to the game’s steep fall from a Tier 1 ranking in Q1.
  
  

• As the PC Games Impact Index takes a game’s competitive scene into account, the current ranking is significantly impacted by COVID-19 policies that caused suspensions, postponements and cancellations of several major esports events globally.

ESPORTS OLYMPIC HOPES DASHED BY IOC MISSIVE

• Esports' collective desire for legitimacy as a sporting competition was dealt a blow when the International Olympic Committee sent a message to all winter and summer federations stating that it would not recognize any global governing body at this time.
  
  
• Esports is desperately looking for validation on a global scale in order to give the genre of competition the positive optics it needs to emerge from its current standing as a fringe entertainment property. If esports were able to shed the stigma that some hold that it isn’t a real sport, it would encourage growth and opportunity and the chance to scale more quickly.
  
  

• SBJ’s Olympic reporter Chris Smith sees the IOC’s reluctance to move forward on esports as a behavior not just reserved for that particular genre, but other traditional sports, too. “The addition of esports to Olympic competition would seem to be a match made in heaven," Smith said. "The esports industry would immediately garner both a global spotlight and a massive boost to its legitimacy, while the Games would have a direct line to younger audiences and, perhaps, newfound relevancy. Despite that upside, there’s little reason to believe we’ll see esports in the Olympics any time soon."
  
  

• As one would suspect, the prevailing feeling is that the IOC sees the commercial ownership of the competitive titles as a large hurdle in allowing esports to become an Olympic event.
  
  

• “The industry is a remarkably fragmented space, and the ‘sports’ within it are owned and governed by for-profit corporations,” Smith said. “The IOC didn’t need to negotiate a business relationship or secure a license to add surfing to the program, but that’s what it would take for video games to enter the fray. Figuring out the nuts and bolts of such an arrangement would itself be a significant challenge, as publishers would likely be reluctant to give up much, if any, control of their IP."
  
  

• To complicate the matter, the IOC has expressed a strong condemnation of violent video games. The reality is that those types of games are by far the most popular, so the IOC would need to look to other titles such as sporting simulations. “Could I see a future where the Olympics feature sports games like FIFA or NBA 2K? Sure. But the first step is for the esports community to establish an global governing body, the very thing the IOC just said it won’t (yet) recognize,” Smith said. “Without that framework in place, the rest remains a long-term hope."

NFL TAPS NERD STREET TO OVERSEE NEW HBCU TOURNAMENT

• The NFL is set to launch a new recurring Madden tournament for historically black colleges and universities (HBCUs). The Madden NFL 21 x HBCU Tournament will be held in partnership with the Central Intercollegiate Athletic Conference (CIAA), Mid-Eastern Athletic Conference (MEAC), Southern Intercollegiate Athletic Conference (SIAC), and the Southwestern Athletic Conference (SWAC). Each conference will host a qualifier tournament to send its top four competitors to a final competition held during Super Bowl week.
  
  

• The league has tapped Philadelphia-based esports organizer Nerd Street Gamers to oversee all aspects of tournament operation including bracket management, scheduling, and event broadcast.
  
  

• NFL Head of Gaming & Esports Rachel Hoagland told Sports Business Journal that the league is working with Madden publisher EA to expand Madden esports across college campuses. “The NFL over the past couple of years ... has been working closely with [HBCUs] on a number of different programs. We thought, as we talked internally over the summer months, that given the growing importance of esports on college campuses was just a natural extension of the work that's already being done to provide opportunity and access to the league and more broadly make esports and gaming more inclusive.”
  
  

• According to Paige Funk, Senior Director of Marketing at Nerd Street Gamers, that desire for accessibility is part of what made the company excited to take on this project. “We've been in talks with the NFL about esports programming for a while now ... When the HBCU idea came up, it was a perfect fit for both of our missions and an alignment of what Nerd Street and the NFL is trying to do with esports, which is to provide more opportunities. We all know gaming is extremely popular ... and that esports, while it's on the rise, a lot of people who are into video gaming don't know how to break into esports and don't know where the opportunities lie to compete or to pursue a competitive path.”
  
  

• While esports is somewhat more accessible than traditional sports given the lower physical barrier of entry, Funk explained that the industry is still unavailable to those without access to proper equipment. “Unlike in soccer where a pair of shoes may not necessarily make you a faster runner, in esports the equipment, and the lag and access to good WiFi all is critical to your success.”

SPEED READS

• Esports companies and games are becoming an increasingly enticing option for international luxury brands. U.K.-based fashion brand Burberry has jumped on the catwalk with Tencent Games in a partnership designed to integrate its products into online mobile game Honor of Kings in China. The companies are keeping plans under wraps, for now, but TEO’s James Fudge writes that they will include interactive digital content targeting China’s “fashion-forward, digital-first customers.” Burberry joins Gucci, Louis Vuitton and BMW as luxury brands that have already entered the space. 
  
  

• iRacing this week formalized its relationship with longtime unofficial endorser Dale Earnhardt Jr. by making him an executive director. iRacing and NASCAR had a coming-out party in the esports space this year by averaging more than 1 million viewers per event for the Pro Invitational Series that Fox Sports aired during the early stages of the coronavirus pandemic shutdown. Earnhardt told SBJ Esports that “what happened this year with the Pro Invitational Series was beyond my wildest dreams, and it’s really what you hoped would happen one day but never expected it.” One of the things Earnhardt said he is looking forward to the most is now working with iRacing on some of their other forms of motorsport beyond stock cars including open wheel and international series like Australian Supercars.
  
  

• Online chess has seen a historic surge in popularity this year due in part to the COVID-19 pandemic keeping everyone indoors, but also thanks to significant exposure on some of the biggest channels on Twitch over the summer. The chess boom recently even caught the attention of CBS Today in a piece highlighting professional chess player and Twitch streamer Alexandra Botez. Now, chess Grandmaster Magnus Carlsen has teamed up with digital platform chess24 to launch a 10-month, $1.5 million competitive chess tour. The kickoff event, taking place later this year, has already secured a title sponsor in Nordic trading platform Skilling. 

• Activision Blizzard, which owns and operates the franchised Overwatch League and Call of Duty League, reported $1.95 billion in revenue for the third quarter of 2020, up 52% year-over-year. Primarily driven by the Call of Duty games series’ engagement and financial performance, its net income increased by 196% year-over-year to $604 million. The game developer operates three business segments: console games-focused Activision Publishing (Q3 revenue of $773 million), PC games-focused Blizzard Entertainment (Q3 revenue of $411 million), and mobile games-focused King (Q3 revenue of $536 million).
  
  

• Beasley Media Group has named Adam Hobbs as the executive director of marketing & branding for its Overwatch League team the Houston Outlaws. Hobbs comes to the Outlaws after a stint as the head of marketing for Madison Square Garden Company’s Counter Logic Gaming. Hobbs is the latest addition to the Outlaws’ front office team, joining former player Matt Iorio and Robyn St. Germain, who last month were named general manager and executive director of sales & global partnerships, respectively.
  
  
  

SBJ offers must-read newsletters covering Betting, College Sports, Esports, Football, Marketing and Media. To stay in the know, read SBJ’s newsletters online or manage your newsletter subscriptions.

Not a subscriber? Sign up for a free trial to read our newsletters.

Something on the esports beat catch your eye? Tell us about it. Reach out to either Adam Stern (astern@sportsbusinessjournal.com), Trent Murray (trent@esportsobserver.com), Kevin Hitt (kevin@esportsobserver.com) or David Morgan (dmorgan@sportsbusinessdaily.com) and we'll share the best of it. Also contributing to this newsletter is Austin Karp (akarp@sportsbusinessdaily.com).

With the League of Legends World Championship crowning its champion this weekend, the “hot stove” season will be in full swing, which has already seen seven-figure deals being signed by a couple of players. However, that trend looks to be the opposite in both the Call of Duty League and Overwatch League, as entire rosters have been jettisoned in what is being described as a salary reset.

-- Kevin Hitt

WHAT TO MAKE OF 100 THIEVES' RETURN TO CDL

• There is a lot to unpack with the news this week that L.A.-based esports outfit 100 Thieves will be returning to the Call of Duty League next season (pending league approval), writes TEO's Kevin Hitt. The team withdrew from the Activision Blizzard-run league after 2019 when the publisher went to a city-based model and a higher franchise price point. Here are three things to pay attention to with regard to the move and its effect on the CDL:
  
  
• The sale makes sense, as 100 Thieves is a very popular brand in esports. It already owns a state-of-the-art esports training center in L.A. -- the 100 Thieves Cash App Compound -- and brings the league a fan base that numbers in the seven-figure range.
  
  
• A downside? This could be a zero-sum move for the CDL, which is likely to lose the OpTic Gaming brand for at least the 2021 season. OpTic is one of the most-recognizable esports brands and non-participation in CDL would be the potential loss of hundreds of thousands of fans worldwide. It would behoove CDL to have OpTic, but how that is going to happen is still up in the air, as Activision Blizzard has stated there are no plans for expansion for 2021.
  
  
• Another question becomes: What will happen to the Chicago Huntsmen? The team is under the operational control of NRG Esports, whose owner recently acquired OpTic, but no one owner is allowed to have two CDL teams. Will there be a rebrand for the franchise? Unlikely, say CDL insiders, so it remains a mystery as to how the OpTic brand will make its way back into the CDL.

TOTINO'S EXTENDS DEAL FOR CALL OF DUTY

• Totino's has extended its sponsorship of Activision's Call of Duty video game ahead of next month's launch of Black Ops Cold War, as the General Mills-owned pizza rolls brand continues to build its presence in gaming, SBJ's Adam Stern reports.
  
  
• The brand has been making several plays in esports and gaming in recent years, including working with former pro gamer and 100 Thieves co-owner & CEO Matthew "Nadeshot" Haag. Totino's is now set to announce a renewal of its deal with CoD that includes getting special in-game items by purchasing the pizza rolls.
  
  
• Totino's Director of Marketing Justin Conzemius said that the brand renewed because "as a non-endemic brand in the gaming space, we’ve always been strategic in the partnerships and collaborations we pursued -- it’s important to us to align with organizations and games that organically fit with our brand -- and we know our consumer loves Call of Duty."

Totino's has found success in the gaming space with its branding around Call of Duty

TENCENT BACKS INVESTMENT IN ESPORTS SOLUTIONS FIRM

• Versus Programming Network (VSPN), a key player in China's esports solutions market, has raised close to $100 million in a Series B financing round led by Tencent and intends to use the proceeds to improve its esports products, continue building a diverse esports ecosystem and increase its reach, reports TEO's Tobias Seck. Investment management firm Tiantu Capital, trading firm Susquehanna Int'l Group and video-sharing app developer Kuaishou also participated in the investment round.
  
  
• With a total audience three times as big as the U.S., China currently is the biggest esports market on the planet, and Shanghai-based VSPN has partnered with over 70% of Chinese esports tournaments. VSPN was founded in 2016 and now has more than 1,000 employees, partners with several premier leagues and tournaments, runs an esports content production business and operates branded-esports venues in Chengdu, Xi’an, Shanghai and Seoul, South Korea.
  
  
• Tencent’s investment will likely open further doors for VSPN, as the conglomerate has deep connections in the esports space, including its ownership of Riot Games, which develops League of Legends. In cooperation with its new investor Kuaishou, VSPN aims to build an esports short-form video presence to diversify its current content creation and distribution strategy.

NEWZOO DATA: SUBWAY SURFERS LEADS Q3 MOBILE GAMES

• Subway Surfers was the most-popular mobile game in the U.S. on the App Store during Q3, according to the latest data from Newzoo Pro, analyzed by SportsAtlas’ Michael Cupello.
  
  
• Measured by MAU (Monthly Active Users: number of unique users to play the game at least once in the given period), Subway Surfers came in with more than 2.5 million more MAUs than the next closest game, Mario Kart Tour (4.18 million). Additionally, Subway Surfers raked in more downloads than any other game on the app store, outpacing the top 10 by more than 2 million at 5.72 million.
  
  
• The next three games -- Mario Kart Tour, ROBLOX and Call of Duty: Mobile, respectively -- were separated by a thin margin. Of this group, ROBLOX earned the most Q3 downloads at 3.14 million.
  
  
• Minecraft, Pokémon Go, Magic Tiles 3, Hole.io, Aquapark.io and Trivia Crack rounded out the top 10 in MAU. Of these games, on average, titles like Minecraft, Pokémon Go and Trivia Crack received fewer downloads, as they have been available longer. 

SPEED READS

• Electronic Arts has teamed up with Learfield IMG College to launch Level Next, an intercollegiate esports league that could enable as many as 2,500 schools to participate in Madden NFL esports, notes Venture Beat. The multiyear program will feature at least one of EA’s esports franchises per season, kicking off with Madden NFL 21 on Nov. 9. The league is "designed to unify competitive play at universities across the nation, and the first eight-week tournament will have a $150,000 prize pool."
  
  
• Female-first dating/social networking app Bumble and esports organization Gen.G today announced the search for an all-women Valorant team. The move is an expansion of the two sides' existing partnership, which started last year and saw the creation of the first-ever all-women professional Fortnite team in Team Bumble.
  
  
• Team Liquid is continuing a busy 2020 by extending its partnership with Marvel Entertainment through 2022. The companies will continue to collaborate on co-branded merch releases which, over the first year of the deal, has included lines themed after superheroes including Captain America, Spider-Man and Black Widow. Players competed throughout the year in jerseys that matched those themes.
  
  
• Cloud9 is looking to capitalize on recent momentum for women in esports by signing the all-female team MAJKL as a sister team to its existing Valorant roster. MAJKL was the recent winner of the first professional-level all-women tournament and will now compete under the name Cloud9 White. AT&T will expand its sponsorship deal with Cloud9 to become the presenting partner of the team.

SBJ offers must-read newsletters covering Betting, College Sports, Esports, Football, Marketing and Media. To stay in the know, read SBJ’s newsletters online or manage your newsletter subscriptions.

Not a subscriber? Sign up for a free trial to read our newsletters.

Something on the esports beat catch your eye? Tell us about it. Reach out to either Adam Stern (astern@sportsbusinessjournal.com), Trent Murray (trent@esportsobserver.com), Kevin Hitt (kevin@esportsobserver.com) or David Morgan (dmorgan@sportsbusinessdaily.com) and we'll share the best of it. Also contributing to this newsletter is Austin Karp (akarp@sportsbusinessdaily.com).