All about how Franchising esports is a great move
Every time I give a presentation about esports to non-endemics, my audience invariably breaks down into three, fairly equally sized buckets. The first group is excited about this innovative new sector of sports and entertainment. The second group is indifferent, and the third group is downright hostile about the concept of professional, competitive video games. They havn’t noticed that Franchising esports means it is here to stay.
It’s time for the second group to start paying attention, and for the third group to get over it. Esports are here to stay, whether you like it or not, and the Franchising esports movement we’re seeing is proof of that statement.
Thursday morning, Riot Games announced details surrounding the upcoming transition of its North American League of Legends Championship Series (NA LCS) into a franchised model. These franchise spots will have a price tag of $10 million, and will be subject to an open application process in the coming 45 days. This announcement comes on the heels of Blizzard’s reported price tag of $20 million for a franchise spot in the Overwatch League, and China’s LCS equivalent, the League of Legends Pro League (LPL), moving to a franchise system.
In short, the esports industry is about to, very quickly, get its first franchised leagues. Franchising esports will bolster investments in each game and help promote the long-term viability of both League of Legends and Overwatch as spectator sports. The devil is undoubtedly in the details, and precise deal terms are still subject to negotiations, but major figures from the world of traditional sports, media, and entertainment will feature prominently in the inaugural ownership groups. Current esports team owners or investors already include the likes of Peter Guber (co-owner of the Golden State Warriors and Los Angeles Dodgers), the Philadelphia 76ers, Shaquille O’Neal, FC Schalke 04, The Boston Celtics’ forward Jonas Jerebko, and many, many more, with others poised to enter the fray.
The esports market is young (55% of fans are between 21-35), valuable (average household income of $76,000), and experiencing explosive growth throughout the west (the number of US esports fans grew 76% last year). Meanwhile, from 2004 to 2014, the median age of a MLB fan skyrocketed from 46 to 53 and the median age of an NFL fan rose from 43 to 47.
In a world where younger generations are “gamified since birth” and no longer consume media in the same way, they are also increasingly less interested in many traditional sports products. Esports stand apart as a uniquely engaging and therefore valuable form of content. It’s also intrinsically entertaining — 42% of esports viewers don’t even play the game they’re watching. Great reason why Franchising esports is a good move.
It’s not a coincidence that esports are exploding while many traditional sports experience headwinds – these trends are the flip sides of the same coin. Franchising is perhaps the last domino to fall as the esports industry continues to rocket into the mainstream.
Massive audiences? We’ve got em. The League of Legends 2016 World Championships had 43 million unique viewers on just the finals match. More proof of Franchising esports being a good thing.
Sold out stadiums? Been there, done that. That same League of Legends event instantly sold out Madison Square Garden for the semifinals and the Staples Center for the finals, but this isn’t exactly new. Esports events across several different games have sold out sports stadiums all over the world for the past several years.
Prize pools? They’re deep. Dota 2’s The International 6 boasted a $20 million dollar prize pool last summer, and Panda Global’s Victor “Punk” Woodley just grabbed $150,000 for winning the ELeague Street Fighter V Invitational.
Blue chip brands? They’re already here, and more are getting involved every day. Esports events, teams, and players are sponsored by the likes of Geico, Bud Light, Audi, and Buffalo Wild Wings.
Media rights deals? The bidding war has already begun. Facebook, Twitch (Amazon’s streaming platform), YouTube, Turner Sports, ESPN, and more are all in the market for esports content. MLB’s streaming arm, BAMTech, also bought the rights to stream and monetize League of Legends content for a minimum guarantee of $50 million per year, which some are estimating will result in closer to $90 million per year.
The stereotype of the Cheeto-dusted, Mtn. Dew drinking, basement-dwelling gamer is dead and buried. At the end of the day, reasonable minds can disagree about the definition of what constitutes a sport, but, it’s entirely beside the point. Esports doesn’t need to be considered sports. They also don’t need to convert new fans from older generations, although they already are and will continue to do so. Esports fans are being born, entering the workforce, and becoming decision-makers at companies in droves each and every day.
So, whether you’re excited, indifferent, or angry about everything you just read, it’s time you prepared for this eventuality. The most popular video game in 2050 will be as internationally ubiquitous as soccer, structured in a franchised league akin to the NBA, and will have a massive fan base to go along with it.
Or, put more simply, esports are here to stay. So Franchising esports is a good move.
Bryce Blum practices at ESG Law, where he represents seven of the current ten NA LCS teams. Bryce is also an Executive Vice President at Catalyst Sports & Media, which is advising multiple parties with respect to potential franchise investments