Exclusive: Traditional Sports Invade eSports
Story of the Week: 2015 could be considered the year eSports went mainstream. If the 1st Quarter of 2016 is any indication, the attention, interest, and investment being made is even more astonishing. One of the more interesting trends occurring this year is traditional sports trying to get a piece of the eSports pie.
Utah Jazz forward Gordon Hayward tweeted this to Lebron James:
My Take: You’re probably thinking no way this is possible. But Hayward wasn’t referring to basketball but to the most popular eSport game in the world, League of Legends. Jeremy Lin plays popular eSport DOTA 2 after road games and he’s well versed enough to join the commentary desk during a live broadcast. Former NBA Commissioner David Stern invested in eSports fantasy betting site Alphadraft, which was acquired by Fanduel 4 months later.
Below are 25 examples from the traditional sport ecosystem investing in eSports — and 5 who I think will make the plunge.
Involvement: Owner of Echo Fox
Investment: $1M for Gravity Gaming. Others Unknown
Entered eSports first by buying League of Legends team Gravity Gaming for a reported $1M and renaming them Echo Fox. Just 1 month later, expands to Counter-Strike and Turner’s E-League with purchase of Torqued. Not content with forming teams for existing leagues, he then partnered with Twin Galaxies, Daybreak and Twitch for the 1st H1Z1 eSport team. This past month alone, Echo Fox entered the Fighter genre by signing a top Street Fighter pro Julio Fuentes and the 2nd FPS team with a brand new Call of Duty team.
My Take: From who I’ve spoken to in the industry and following Rick’s enthusiasm for the space, there is a key differentiator he brings to the scene instead of just writing a check: Passion. This is the guy that:
- Donated his 3 NBA Championship Rings to help fund #Right2Game which supports the growth of pro gamers around the world
- Met with a top CSGO pro at CES and convinced him to start a team
- Called pro gamers “Athletes” on The View
Attending eSports events, soaking up knowledge and willing to be educated makes Rick a great model for future team owners.
Shaquille O’ Neal, Alex Rodriguez, Jimmy Rollins
Involvement: Invested in NRG eSports
The trio of NBA/MLB stars invested in NRG eSports, which was created by Sacramento Kings co-owners Andy Miller and Mark Mastrov. NRG holds spots in both LCS and E-League.
My Take: Shaq’s investment is a no-brainer with him also owning a percentage of the Sacramento Kings, many investments, and involvement with Turner’s E-League at CES. Jimmy Rollins is an avid League of Legends player. Alex Rodriguez….guessing the investment was less than any of the condo’s he owns.
Involvement: Investment in Alphadraft
Investment: Part of $5M round
After signing a lucrative contract with the Knicks, Melo launched VC fund M7 Tech Partners. Continuing the trend of NBA players leading eSports investments, M7 joined David Stern and others in Alphadraft.
Involvement: Owner of Rise Nation
One of the first pro’s to invest in eSports after buying Rise Nation in April 2014. Rise Nation are currently competing in the Call of Duty World League.
Involvement: Joins Management team of FlipSid3 Tactics
This past month, the Indianapolis Colts Defensive Tackle joined the leadership team of FlipSid3 Tactics, which is involved in many eSports genre’s. FlipSid3 has one of the top teams for my “2016 Best New eSport” Rocket League.
Involvement: Investment in Sportsradar
Investment: Part of $44M Round
Sportsradar is one of the largest providers of sports stats and betting related data. This year they’ve moved into eSports covering titles from Valve, Blizzard, and Riot.
Ownership: Dallas Mavericks
Involvement: Investment in Sportsradar and Unikrn
Investment: Part of $44M Round, Part of $7M Round
In the past year, Mark Cuban has invested in both Sportsradar and Unikrn, which is an eSports wagering service.
My Take: Expect Cuban to bring his same passion to eSports as he did the NBA. I would also expect another eSports investment in 2016.
Andy Miller, Mark Mastrov
Ownership: Sacramento Kings
Involvement: NRG eSports
Investment: ~$1M (*Team Coast acquisition estimated based on previous LCS slot prices)
Purchased LCS slot last November and launched NRG eSports. Has also moved into Counter-Strike in Turner’s E-League and expect another title added this year.
My Take: NRG has two interesting opportunities: The King’s new high-tech arena is well suited for the eSports technological requirements that are greatly lacking in the current event space. The ROI for Brand partnerships increases with potential involvement from the star athletes coupled with NRG’s participation in the LCS and E-League.
Ownership: Cleveland Cavaliers
Involvement: Courtside Ventures
Investment: $35M Fund in partnership with Bruin Sports Capital and WPP
Courtside Ventures will invest in early-stage tech and media startups with a focus on sports. Particularly of interest is eSports and VR.
Ownership: Co-owner Memphis Grizzlies
Involvement: Co-owner of Immortals
Investment: ~$1M (*Team 8 acquisition estimated based on previous LCS slot prices)
Purchased Team 8 and rebranded to Immortals in the LCS. Immortal’s Chairman is Clinton Foy, a Gaming industry veteran and partner at Crosscut Ventures, which has eSports investments in Mobcrush, Instant eSports, Super Evil Megacorp, and Vulcun.
The Kraft Group
Ownership: New England Patriots, New England Revolution
Involvement: Investment in Skillz
Investment: Part of $15M Round
Invested in Skillz, a mobile real money skill-based gaming company creating “eSports for Everyone”.
Ownership: Milwaukee Bucks
Involvement: Investment in Skillz
Investment: Part of $15M Round
Invested in Skillz along with The Kraft Group.
*I’m not including Dietrich Mateschitz, founder of Red Bull and owner of Red Bull Racing and the New York Red Bulls. Red Bull practically created the blueprint for eSports branding and marketing.
In addition to individual players and athletes, sports teams are also looking into eSports. The Euroleague, Europe’s top Basketball league, is exploring a parallel eSports league with its top teams.
- Jan ’15: Top Turkish team Besiktas signs League of Legends team Aces High
- May ’15: Bundesliga 2015 runners-up Vfl Wolfsburg signs 2 FIFA Pro’s. Signed 3rd Pro in 2016.
- July ’15: Spanish Basketball team Saski Baskonia signs 5 Pro’s across 5 eSports titles
- May ’16: Sampdoria signs FIFA Athlete
- May ’16: West Ham United is first EPL team to sign a FIFA Pro
- May ’16: NFL’s Miami Dolphins are exploring an eSports investment
- May ’16: FC Schalke 04 buys Elements EU LCS spot in most significant Pro team investment to date
Updated June 9, 2016
- June ’16: Valencia CF become La Liga’s first team to enter eSports
- June ’16: Manchester United rumored to be bidding for Overwatch team
Updated July 6, 2016
- July ’16: Manchester City becomes second EPL team to sign FIFA Athlete
My Take: Don’t expect bottom line contribution from these deals anytime soon. These are good moves from a Marketing and Fan Engagement perspective with minimal investment compared with traditional marketing. First movers in the space benefit from a young and eager audience.
The last piece of the Sports pie, venues are also looking to fill their empty calendar with eSports events. Here are the Sports venues holding events this year:
Madison Square Garden (New York)
Event: LoL 2016 World Championship Semi-Finals
Staples Center (Los Angeles)
Event: LoL 2016 World Championship Finals
Barclays Center (New York)
Event: ESL One
Oracle Arena (Oakland)
Event: ESL IEM
SSE Arena at Wembley Stadium (London)
Event: ECS Season 1 Finals
*ESL and Riot have both held many events at European and Asian sports venues
My Take: These are great headlines but in the near term there isn’t enough eSport event inventory to compare with a traditional sports calendar. The 5 venues combined will only have a total of 9 days booked for 2016 currently.
Kobe Bryant: Rick Fox is in. Shaq is in. Who’s missing? Seriously, based on this anecdote on Kobe’s future as a VC, it would not be surprising. Ex-Lakers seem to be a trend.
Paul Allen: Somewhat of a long shot but Allen does own the Portland Trailblazers, Seattle Seahawks, and the Seattle Sounders. His investment arm Vulcan Capital makes much larger bets like Uber, Alibaba, Magic Leap, Palantir, and Flipkart, but did invest in Sportstream which aggregates a fan’s favorite team’s social media content (acquired by Facebook). He’s only got $17B to spend.
Kyle Long: Kyle Long would a great addition to eSports — the guys loves gaming. He jokingly said his big arms come from years of holding a Xbox controller. He even streams on Twitch and is hilarious. Maybe his dad, Hall of Famer Howie Long, can pull a Shaq-like move and help bring eSports to TV on Fox.
Chris Kluwe: I’m not sure if Chris Kluwe will be next, but I think he should be next. The former NFL punter’s Twitter name is @ChrisWarcraft, a reference to World of Warcraft he former massively popular multi-billion dollar online franchise. This past week he penned a well written article on why eSports needs a league and why he should be commissioner.
Gary Vaynerchuck: Yes Gary Vee is not a pro athlete — but he does love basketball, the Jets, and hangs out with plenty of sports stars. He’s a prolific entrepreneur and investor in companies like Uber, Twitter, and Snapchat. A few weeks ago, I caught this tweet between him and Steve Arhancet, the owner of Team Liquid. In “Daily Vee 036” he briefly talks about Twitch and eSports in the beginning and ends with references to Call of Duty. Just this past Sunday, another Tweet between him and Mike Rufail, owner of Team EnVyUs. All coincidences? I don’t think so.
Others: Steve Nash, Amar’e Stoudemire, Baron Davis
Ex-ESPN host Colin Cowherd flip-flopped from “I hate eSports” to “I’m going to invest in eSports” very quickly. With all of the spotlight in just the first third of 2016, you’ll see plenty more names added to this list by the end of the year.
M&C Saatchi Launches eSports Division
M&C Saatchi Sports and Entertainment launched a new eSports practice and partnership with the eGames at the 2016 Rio Olympics.
My Take: Based on the fragmentation of the eSports landscape and top players on teams coming from different countries, I’m not sure of the viability of eGames at the Olympics so soon (I previously said I expect an eSports Olympic event in the next 10 years). Further, I’m not sure if eGames provides the best advertising ROI based on the number of platforms and sponsorships available.
I do believe that sports marketing companies, ad agencies or anyone that works with brands should start exploring the brand opportunities that eSports affords. Whoever gets in early has a chance to cement a leadership position within the industry.
However what I’m seeing is that many companies are approaching this from a “it’s just another sport” perspective. Just a word of caution: This is a crucial mistake.
Geography and eSports
Top eSport team EnVyUs will build a studio, arena, training facility, LAN center, and offices in their home town of Charlotte. IMG launched their eSports training facility in Florida with Complexity’s Call of Duty team being the first to participate.
My Take: As eSports grew on digital platforms, there was no need for a sense of physical location. Viewers don’t care if an event takes place in Poland or Palm Springs as long as they can watch and engage with the community. The League of Legends World Championship at the Staples Center in LA this year will more than likely feature 0 North American teams.
While location hasn’t been important to date, you’re starting to see the early development for this. IMG’s eSports training facility in Bradenton, Florida was known for years as the top training destination for Tennis players. Charlotte has been one of the fastest growing regions in the US and in the last 25 years went from 0 to 3 professional sports teams. Vegas is also looking to establish itself as a base for eSports.
It’s going to take some time to equal a Yankees/Red Sox geographical rivalry but the seeds are being planted.
Machinima Forms Mach 1 Agency for Brands and eSports
Well known MCN for hardcore gaming, comic, and “superhero” content, Machinima is now launching an in house ad agency to help brands navigate the next wave of entertainment content.
My Take: I’ve said before that there’s a lot of education needed for large brands and agencies to understand the vast opportunity that eSports provides. Any additional help in this area will only benefit all parties involved. This new strategic capability is fascinating for a few reasons:
- A few years back, Machinima primarily made the majority of their revenue from Advertising. However that has been increasingly challenging as of late with programmatic and direct influencer deals taking share. Even the value of influencer deals are starting to come into question (although some fault here lies with setting a high bar for costs).
- In addition to Advertising and now an agency, the company has also diversified into licensing and production: Exclusive deals with go90, Vimeo, and The CW airing their eSports documentary.
- Ill be curious to see results on how the Preferred Media Solutions behavioral targeting compares with YouTube’s current interest, affinity, and in-market targeting capabilities.
SPONSOR SPOTLIGHT: DOLBY
Dolby makes it’s first foray into eSports by sponsoring a $10,000 Overwatch tournament at the eSports Arena in Orange County.
My Take: Always great to see a new Brand invest within eSports. This is interesting for a few reasons:
- It may not be a coincidence but Dolby’s Atmos 3D Audio technology is integrated within Overwatch and let gamers “play by sound” like hearing distant footsteps. Sponsoring a tournament open to the public helps message this unique feature.
- For Overwatch to get a Brand partner just days after launch shows the massive potential for this game. I believe Overwatch will be big in 2017 and another eSports franchise for Activision-Blizzard.
- Dolby’s Headphone technology is integrated into many gaming headsets; most notably Astro and Turtle Beach which have long supported eSports. This opens the opportunity for mainstream brands like Beats, Bose, Shure, Skullcandy, Sony, and JVC to also target this audience.
Monster has also announced a partnership with the original eSports pro Fatal1ty.
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