Franchising – the model that changes the future of Esport

‘franchise’ – a business model that is said to contribute to changing the face of the Esports industry in the near future. This modely In 2018 there will be 2 big players in the current game industry – Riot Games and Blizzard Entertainment – introduction to their professional arenas. This is the first time that investors will buy a permanent position in the field of e-sports; because now the growth and development of this industry in the next few decades is undeniable. When a series of Esports games were born with hundreds of large and small tournaments taking place all over the world, bringing in millions of dollars in profits every year for publishers and tournament organizers. That is why business investment in this industry in any form is a goose that lays golden eggs.

Rob Moore said that the growth of esport has allowed investors to reach a younger male audience that was not easily accessible before. Moore owns Phoenix1 and was formerly president of Paramount Pictures. Phoenix1 manages the Overwatch League (OWL) Los Angeles Gladiators team on behalf of Stan and Josh Kroenke, owners of the LA Rams, Denver Nuggets, and Arsenal football club.

“There used to be a sense of instability in esports, because apart from the teams at the top of the top, as a sponsor you wouldn’t know if the relationship with a certain team would survive. three months or three years,” Moore said. “Esport has really evolved from just a few gamers hosting tournaments to experienced people in the business with huge investments trying to turn it into something lasting.“

A new and more stable period

Fans in the US are used to this franchise model. The New England Patriots and New York Yankees are permanent names in the leagues they participate in. Regardless of form, they will still be there – unless the owner decides to move.

But since 2012 at launch, League of Legends Championship Series (LCS) of the Riot Games chose the same model as the European football system, i.e. each season the team with the lowest score will be relegated to the lower league, while the strongest team in the lower league will be promoted to the lower league. above. This is what makes investing so risky, even with very famous names in sports like FC Schalke 04, a high ranking German football club. Their League of Legends team lasted two seasons in the European LCS before falling to the Challenger Series. (This would have been a disaster for Schalke. But the club, unlike other investors, remained with the team, and they once again won the right to participate in the 2018 LCS Spring Split. .

For teams new to the NA LCS, the danger Schalke faces is now gone (Riot has plans to apply a similar system to the European LCS in 2019). The new franchise system offers long-term financial benefits to participants, especially those in good form. The 2018 tournament will have 10 participating teams sharing profits, putting part of the money from promotion and sales into a common fund. Riot will be adding more of their revenue streams, such as tournament broadcast profits and prize money. The players will receive 35% of the amount, while the team and Riot will receive 32.5% equally. The higher ranked teams after each season will get more shares.

The fear of being eliminated from the tournament is also gone, but teams that have placed 9th or 10th five times in eight seasons will still be eliminated. Riot has not yet said how it will choose a replacement team then. The Challenger League will be canceled, replaced with the Academy League teams of each team in the main LCS.

Talk about Blizzard Entertainment, The OWL will follow the traditional path of sports tournaments, with 12 teams representing each region competing in two large Atlantic and Pacific regions. Teams are required to take their names independently from the main branches in eSports. The result is team names that are very similar to traditional American sports teams: Florida Mayhem, New York Excelsior, Boston Uprising, etc.

With the advent of this new franchise system, investors have a greater incentive to get involved in esport, and many names have already done so. Team Envy, which manages the OWL Dallas Fuel team, received an eight-figure investment from Hersh Family Investments, a Dallas-based oil and gas company.

Several traditional sports franchises have invested in teams that play in the LCS. In January, the Milwaukee Bucks announced the opening of its FlyQuest e-sports franchise, and the team has entered the new LCS with support from the Warriors, Cavaliers, and Rockets. Jacob Wolf from ESPN reported in September that the Texas Rangers have acquired a majority stake in OpTic Gaming, which already has a seat in the LCS, and will manage the Houston Outlaws in the OWL. Moore believes more sports teams will follow this path in the future.

“People who invest and look at building property value over a 3, 5, and 10 year period, those are the types of people that have invested in this space, and I think they will continue because of the potential.” economic dynamics behind franchising sports franchises,” said Moore. “For a lot of traditional sports organizations, they look at this audience and say, ‘Oh, they’re spending more and more time watching and playing video games. We also want to be a part of it.’”

Connect with young audiences

Esports especially attract young people, because they are increasingly moving away from traditional broadcast channels. Limelight Networks, a CDN service provider, did a survey and found that more American audiences between 18 and 25 watch e-sports than all other sports combined. In 2016, Mindshare North America identified 65% of esports viewers between the ages of 18 and 34. Citizens of the new century are watching less and less TV, a platform on which sports are inherently and are relying on, instead, they watch more online content – ​​especially esports.

NBA commissioner Adam Silver said in September that he wanted a Twitch-like experience of watching the NBA game to better appeal to a younger audience, and Twitch has signed a broadcast deal with the NFL and NBA Gatorade. League.

Traditional sports teams will “see esports as a very effective opportunity to reach a young, mostly affluent, and growing population,” said Ari Segal, president. and CEO of Immortals, the organization that manages the LA Valiant in the OWL.

“A lot of the owners of traditional sports teams have children and grandchildren, and they are slowly realizing that they are playing and watching esports equally, maybe even more than they do traditional sports,” he said. Segal said. “They see that this type of audience is growing very rapidly in esports, as well as seeing why such audiences are increasing or decreasing in other types of sports.”

For Dallas Fuel, this new system is an opportunity to improve the corporate side of the team and grow the esports industry as a whole. Owner Michael Rufail said joining OWL gave him many new ideas for how to run his own organization. A former professional gamer himself, Rufail sees the franchise as paving the way for the growth of the industry, especially in terms of management.

“This is great, giving us another perspective on how esports teams should operate,” Rufail said. “We can greatly stimulate the growth of esport by formalizing the business activities involved, especially when considering the activities of the team and the way the team operates as a business. ”

Rufail says franchising will be the foundation for esports to become an industry in its own right. Traditionally, esports like Starcraft 2 struggled a lot after their heyday, and slowly faded away. With new ways to reach audiences and more money pouring in, Rufail says that video games will no longer be hampered by their short lifespans.

“There are a lot of titles that have proven they can last,” Rufail said. “There are a lot of titles that have been around for years, and are still doing really well. I think for the rest of my life, I’ll still be able to watch Overwatch events take place. I believe so.”

However, there are still many concerns about this new model. Overwatch’s esports scene is still relatively young, and OWL will need a massive increase in views if investors are to profit from the $20 million they spent to buy a spot in the tournament.

Although franchising brings stability to a certain extent for the LCS, it is also a barrier for fledgling investors who want to create a team of their own. It’s a problem that has existed since traditional sports leagues like Major League Soccer, but has been solved only by gradually increasing the number of teams participating in the tournament. But even if the league is expanded, there is still a risk that the departure of promotion and relegation of the original model will lead to stagnation.

The upcoming 2018 will bring many threats to the esports industry, but at the same time there will be many opportunities for eSports to rise to new heights.

“When you look back at esports about five or 10 years ago, 2018 was most likely the year where esports really evolved into large-scale competitions with an existing sporting spirit,” says Moore.

Source: dotesports