ECS Rev Share, Riot’s Alleged Threats, Korean Imports, & Turner Acquisition of Brave Venture | Esports in a Nutshell

Welcome to Esports in a Nutshell. Everything in the world of Esports in a video nutshell. I’m Mark Register. For our top stories this week.

  • At the Intel Extreme Masters event in Oakland the kind, inclusive, troubleshooting team of producers, casters, and engineers put on a spectacular show and represented the best parts of what Esports has to offer. Thank you Will and James for the opportunity to work with a generous team of people.

Sam Cooke reports Twitch & FaceIt’s joint tournament, Esports Championship Series details their plans to open up the tournament’s revenue streams to teams by making them co-owners of the league making them eligible to collect revenue from media rights, sponsorships, and other revenue streams. Players will also be protected by new rules requiring teams to offer vacation time and other minimum requirements. There will also be a governing committee which will have separate team and player representation. 13 teams have signed up, 4 declined, and 3 are still in negotiations.

  • ECS who announced their plans back in April and fully detailed them this week are not the only league to provide teams with 40 – 50% split of league revenue, resources for players to help navigate their contracts and careers, and a governing committee. Professional Esports Association announced in September they are offering the same selling points. Which could make for a Highlander situation between the two.
  • Zooming out for a moment let’s look at all of the major Counter Strike tournament organizers from the largest to the smallest.
  • We have the Modern Times Group umbrella of ESL’s IEM, ESEA, and DreamHack. Below that we have Turner WME IMG’s ELeague. On the sameish level or below we have FaceIt’s ECS. And below that we have, soon to be launched, PEA.
  • FaceIt was kind enough to reach out and explain that teams could compete in ECS, PEA, and any other league they wish to compete in because there are no restrictions between leagues.
  • However Cloud9 owner Jack Etienne says the Counter Strike tournament scene is oversaturated and his team will cut back to only compete in one or two leagues. And he’s not the only team to feel this way.
  • FaceIt’s ECS is on the third rung of this pecking order… for now, as they fight to keep up with MTG & ELeague by partnering up with ELeague when they can, hiring former Bloomberg Media & NBA exec Todd Swidler as CEO, and making these recent changes to their own ECS league. By competing directly with PEA’s main selling points, FaceIt keeps ECS in the running, but gives PEA its potential death sentence before it even gets to launch. With that said, PEA could very well pivot into offering something uniquely different, or could be acquired by MTG or FaceIt, or it may only run one or two seasons. What do you think?

NA & EU LCS teams push back on their 2017 contract with Riot Games, Riot Games gives their own push back, and a lot of money is on the line.

Let’s get into the details.

  • Vince Nairn publishes a leaked letter from 18 of the 20 NA & EU LCS teams written to Riot Games’ Brandon Beck, Marc Merrill, strikingly handsome Whalen Rozelle, and Jarred Kennedy, pointing out problems with job security, player compensation, long term investing, team sponsorships, and insufficient team compensation caused by non permanent league spots and insufficient compensation. Because of that the teams say most of them are operating at a loss.
  • The LCS team coalition suggests that Riot does away with relegation, provide revenue sharing through sales like team merchandise & digital items.
  • The team’s point out that yes, Riot Games has proposed potentially helpful changes but they would not take effect for at least another year.
  • The LCS Coalition is very smart. By moving their battle to a private well thought out and written correspondence with Riot they are able to publically take the high ground of the responsible party moving the fight off of social media and reddit into the appropriate path. But by intentionally leaking the correspondence they are very much keeping this fight very public in hopes they can use the League of Legends community to pressure Riot to give them what they want. Clever girl.
  • Riot may be dragging their feet on this because there are most likely team organization owners they don’t want in their league because they don’t want to work with them. Adrien Auxent points out that in the letter the coalition says Riot Games “is not sure that the current NA Teams are desirable long-term partners.” For instance Chris Badawi & Christopher Mykles’ LA Renegades team. They banned Chris Badawi for a year then forced Christopher Mykles to sell his team in a month after somewhat ignoring the ban and their financial ties with Team Dragon Knights. But that process was swift and without warning.
  • To be fair to Riot, every time they do release a statement or explain in detail their reasoning, the community tears them apart.
  • The most recent public “he said she said” with NA LCS teams suggests that Riot may indeed not want to work with certain teams as NA LCS teams told Slingshot Esports that because Echo Fox was the only team that didn’t push back on the NA LCS 2017 contract, they encouraged Echo Fox to poach their players and threatened them with rejecting the sale of their challenger series teams.
  • Given NRG, Nova, Eanix, and Team Liquid Academy are looking to sell, that’s some big leverage.
  • Riot says “We’ve been fully committed to talks with the NA LCS owners regarding their participation in the 2017 season, there was no discussion of the process of selling slots should teams not wish to participate or of contravening our rules to allow the poaching of players currently under contract.” Many of their players are not under contract at the moment.
  • But all of these public fights with team owners are hurting the value of the entire league. Jacob Wolf reports Tempo Storm bought up Dream Team and their NA Challenger spot for roughly six figures. But last year, most any Challenger team could fetch $1M easy.
  • That doesn’t matter much to Riot, but what does matter to Riot is their $90M a year deal with Major League Baseball Advanced Media.
  • Richard Lewis reports, there is in fact, money in the Banana Esports Broadcast stand as MLBAM is in negotiations to pay Riot Games $90M per year to develop a Riot Games video app for live streaming League of Legends content exclusive to MLBAM requiring users to pay a subscription fee to watch. The service will go into Beta in December, soft launch in February, and debut at the end of 2017. MLBAM’s platform supports Disney, NHL, WWE, Discovery, PGA, and HBO.
  • Given teams have been asking for a revenue share for things like broadcast rights will they see any of that money? How will viewers react to having to pay for something they’ve been getting for free for the last 5 years? How is Twitch going to react to this deal?
  • But let’s zoom out for a second. Riot Games will make $1.8B this year. If their entire Esports division fell off the face of the earth, they would take a hit but they would recoup and continue to go strong.
  • Riot was and is one of the key leaders in Esports. They can lose the battles but if they don’t win the war with the team coalition, that loss will stunt their growth while Blizzard & Valve overshadow them.

Call of Duty’s Infinite Warfare receives an overwhelming backlash from the player community and James Eubanks “Clayster” chimes into the conversation saying being negative will destroy the competitive Call of Duty scene. He suggests that the CoD community should work together on making the changes that he and others feel need to be made instead of gathering in a circle and pleasing each other with affirmation of their mutual hate towards the game developer.

  • James ends his video with “I want sensical, logical debates, I want people to think and speak clearly, and think for themselves… see it from my perspective and maybe we’ll get somewhere.” he contradicts himself… but he redeems himself by saying, “It’s less about loving the game and more about loving the community we built.”
  • It’s easy to have a common enemy, it’s hard to work together in a community and have constructive well researched conversations that help solve problems instead of exacerbating existing ones.
  • To be fair some developers are more open to community feedback than others and your energy may be better spent on playing a new game.
  • But let’s give James’ plan a shot, work together to make the changes we seek. Thank goodness we don’t have this kind of situation in UK and US politics.

Downtown Grand’s sportsbook William Hill offers the first legal wagers in the US for Esports with IEM Oakland’s League of Legends tournament. Nevada Gaming Policy Committee leader Governor Brian Sandoval says “This is a major step toward ensuring Nevada becomes the Esports capital of the world.” The winners of IEM Oakland had 10 to 1 odds… Unicorns of Love.

  • Leading up to the event, ESIC’s Ian Smith & Unikrn’s Rahul Sood presented their suggestions to the Nevada Gaming Policy Committee to help create and implement their Esports wagering framework for Nevada’s sports books.
  • Seth Schorr says next up they are “focused first on MLG, then look at other events. The most important thing is maintaining the integrity of the game, and that the gambler has a fair wager. It is going to be based on the tournament operator, and the integrity controls they have in place to make sure that everything is on the up and up.”
  • Now that the integrity of the game is on the tournament operators we are going to see a lot of new tools used to monitor and enforce fair play.
  • For example, ESEA debuted their Anti-Cheat LAN server at IEM, FaceIt launched their Beta Anti-Cheat LAN server as well.
  • Previously we saw the drug testing enforcement done by ESL.
  • And now we’re going to have a lot of input data on player and team performance with Sportradar and Dojo Madness partnering up to offer round by round betting odds for Counter Strike.
  • A little background on both companies – Sportradar received $44M in funding last year from Revolution Growth with some involvement from Michael Jordan & Mark Cuban; to provide data to the NFL, NBA, & NHL as well as match fixing services for soccer, Ice Hockey, and Jens Hilger’s ESL.
  • Dojo Madness, also founded by Jens Hilger, raised $4.5M to provide an Esports coaching service but now is pivoting to their new business plan with Sportradar.
  • Hypothetically, with round by round betting, teams could induce a slump in their performance to spike the odds then come back to win it with plausible deniability.
  • But with services like Anti-Cheat software, drug testing, SportRadar & Dojo Madness data collection, and match fixing prevention services keeping players and teams in check, it’s unlikely match fixing will become commonplace in larger tournaments.

Fox_Mulder_FBI_Agent Cloud9 Fan posts on Reddit that the President of Turner Broadcasting David Levy spoke as a guest at his university saying about ELeague “I don’t get it, but it is the future. Nerds are taking over the world. It does better than anything else we would put in that time slot and it costs us almost nothing.” He also said Turner is happy with ELeague, it’s growing with each season, and they are still figuring out how to convert more of them to the broadcast.

  • To figure out how to make those conversions, Turner acquires Brave Ventures, founded by David Beck & Jesse Redniss, after working together for the last two years on projects like ELeague. The company is a strategic advisory & investment firm specializing in technology, media, and entertainment evolution. The team will now head up TBS & TNT’s new Network Strategy & Innovation team. Their job will include applying their template to new productions of a linear show, Twitch broadcasts, social media, live interactive games, & short form programming.
  • While Turner’s 16 – 35 year old male demographic viewership is moving up with ELeague, NFL Commissioner Roger Goodell says the NFL will most likely shorten their broadcasts by cutting ads and speeding up video reviews and penalty calls to cut the average game length down from 3 hours and 8 minutes as their viewership is on the decline.
  • So Turner is making the right moves and low cost investments to hook in the younger demographic.
  • The question is when and how will organizations like the NFL adopt and integrate the disruptive movement of Esports into their multibillion dollar cash machine?

And now what fertilizer to use when growing and importing your Esport players.

  • At the LA Intel Buzz Workshop Noah Whinston says, previously it costs about $175k to train and create a LCS ready player and $75k to sign a LCS ready player from another team. But now those costs are leveling out to be even so more teams are looking for undiscovered talent to train them to be LCS ready. Jack Etienne adds, in addition to being a top tier player it doesn’t work unless they also fit with the team and can handle the circus life. This is why having a JV team is expensive but still worth the long term investment.
  • As of this week, 5 of the best League of Legends players in the world are now free agents, former Rox Tigers players Smeb, Pray, Gorilla, Kuro, and Peanut. But Tim Sevenhuysen brings caution to teams who think scooping up top tier Korean talent will give them instant success.
  • Tim writes that “culture is one of the most prevalent explanations floated for this perception [that Korean imports are most desirable. As] Korean culture implies great respect for elders and authorities than Western culture. It is by no means that all Korean players have inherent respect for their coaches. It is necessary for a coach to be able to inspire respect from the players. Many LCS coaches are relatively inexperienced in Esports. More LCK coaches have long histories as players, coaches, or both [which] can command more respect. [Teams] must accept that in most cases, patience will be necessary before Korean imports can produce results.”
  • Tim is correct, patience is necessary for success when importing Korean teams and Noah is correct that it is cost effective to be patient with building up a player for years instead of a quick trade transition.
  • Regardless if players are imported from Korea, traded from another team, or trained from the ground up… all scenarios require patience for the player to blend into the team to become apart of the whole that is greater than the sum of the parts. All Star rosters of individuals don’t win World Championships, cohesive teams win World Championships.
  • Case in point, Korean based, Chinese owned, Longzhu Gaming who was just acquired by Chinese retailer Suning Commerce Group whose 2015 revenue was $19.5B, no big deal, has an all star roster who judging by the numbers, should be more successful than they are but they barely made the relegation cut this year. Reinforcing the fact, you have to have the right ingredients that work well together because no matter how good sushi, ice cream, pizza, Kit Kats, and scrambled eggs are, when you blend them together, their whole is less than the sum of their parts.

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