Sundance DiGiovanni: Esports Has a Massive Advantage

Will the esports industry deliver on its billion promise or will it prove to be a false dawn for the sector and its investors.

The panel of experts discuss how the emergence of esports as a global mainstream phenomenon is driving their own strategies, be it as a marketing vehicle or an investment prospect, while also dissecting the argument of those who doubt the long-term commercial value of the esports ecosystem.

Check out the full video and transcript below!

Eben Novy-Williams: Hey guys, thanks for joining us. The topic of this panel is Esports: Big Buzz or Big Business? which I think is a great question because it’s something that a lot of people are asking whether you’re brand new to the industry or whether you’re one of these five guys who are some of the smartest in esports. They don’t need any introduction, so let’s get right into it guys.

Everybody’s talking about esports. It’s the buzziest thing going right now in sports business, tech, gaming. Lets start with you Craig, you run the largest esports company out there. Is the question now, has it shifted from what is esports to the question you’re getting to now: How do you make this a bigger and billion dollar industry?

Craig Levine: Yeah, I mean looking back, it’s a space that we’ve grown up with, Sundance was there in the early days, it used to be the human-interest novelty of “Isn’t this weird? These kids are making money playing video games.” And I think the discussion’s evolved so much more from that, driving tens of millions of people in viewership and tens of thousands of people coming out to these events now. I think the opportunities become much more apparent that there’s something going on here that everyone’s trying to understand. I think people are still trying to figure out what it is, but a lot of people are paying attention.

Novy-Williams: And is this — 2017 — feels like an inflection point a bit in esports. We have some publishers that are trying to go the franchising route, We’ve had some some big media rights deals. There’s a lot going on on the business side. For the rest of you guys, do you guys feel like this is what we’re hitting this point now where the buzz kind of has to wear off and that we have to start seeing some some returns? Or are we still kind of in the upward growth?

Sundance DiGiovanni: Well I think the key is really sustainability, right? So for operators and organizers, to be able to build businesses that can grow and can scale. I think buzz can run for quite some time. We’ve seen that before, but I think we’re at a place now where the trappings of what a company like ESL can build, and partner with publishers on those things, needs to be more than just kind of services agreements and partnerships — where they’re executing need to be opportunities for ESL to build their core business.

So being part of Activision Blizzard now after running and organizing an event for a decade plus, we see a commitment internally to creating those ecosystems around all of our titles that are applicable. That’s hundreds of millions of dollars potentially being poured into just our owned and operated IP so I think you will see the buzz continue. I think you’ll see very interesting side businesses pop out around this especially in the area of wagering, fantasy, data analytics to create enhanced experiences for the viewers at home, as well as training for players. So I don’t think we’re through the buzz phase yet. I do think though that we’re still in the early days of the building phase of, you know, in terms of building those sustainable businesses of scale.

Novy-Williams: Moritz, he mentioned gambling, he mentioned data analytics. Those are all things that you guys do. How big is the growth opportunity there?

Moritz Maurer: Yeah, exactly. All the areas that he tapped into this is what Genius Sports is doing — data and technology to rights holders and sports. On the wagering side, we’ve been pioneering the growth from the regulated markets around esports betting and it’s started two and a half years ago. Fan experience is a cool thing if you look at esports, data wise it’s not like in other sports where there’s potentially an abundance of sports, or as many methods of scheduling data. We harnessed digital nature of these games to really unlock the potential that is there, and we built a sustainable commercial framework for data in esports.

We think it can be a key part of growing the industry and delivering a commercial vehicle or an angle for rights holders or people in the space to tap into this, and we do this through our products on the betting and on the media side. Also, in return a lot of the technology that has predictive analytics that were driven by our development for the regulated betting markets, they now ultimately find applications for coaching, for finding talent, for cool fan experiences and we think it’s a really exciting space because as I said before, the data is there.

We look at games like Counter Strike where our models are choosing between Duda Cillian, that’s 1 ^ 40 permutations of how long a match can be played. That’s all possible because it’s such a granular level of data there, so that’s really what excites us, especially for me being in this place for a while.

Novy-Williams: And Moritz B., when you look at investors, you talk to a lot of them people are clamoring to get into this space. What is it that excites them the most? What are kind of the reservations that you hear? What are those conversations like?

Moritz Baier: Yeah, and also maybe to just answer the the big question up there actually, so we see viewership or buzz today growing at 20%, but monetization is actually growing at 40%. We have twice the biz growth than we have the buzz growth which is which is nice and what you want to see in a healthy industry.

In terms of investors 12 months ago, maybe esports was still a little bit on the periphery and in the broader gaming universe and now we’ve seen interest not just from big game publishers and advertisers, we see media companies who recognize esports and gaming as really at this convergence of media and fight for eyeballs, we see private equity companies and family offices who are interested in investing in this space. That has not existed, even let’s say 12 months ago.

Novy-Williams: What do you think about the traditional revenue streams for for sports and esports? Obviously media is a big one and we’ll get to that in a second. Ticket sales, maybe not as big in esports. There’s merchandising, advertising, and sponsorship’s a big one. John that’s your job, how different is this landscape that you’ve seen now versus what it was a couple years ago and how big do you think it can get?

John Seiler: I mean for us a couple years ago it really didn’t exist. It was probably on our radar, but it wasn’t something we were pumping any source money into. So we’re always, I think, as a corporate sponsor going to be, you know, a step or two behind the guys who run leagues and run teams and investing, and trying to get in those when it’s early.

So I think for us, and what we’ve seen is, we’re trying not to reinvent the wheel. I’m trying to look at it like if you, say you were you know looking at the NFL in the 90’s or MLB in the 80’s or when some of these leagues were really at that inflection point together subscribing for esports, what would you do with it, and how would you attack it? And so that’s what we’re trying to think through with our strategy, and why we’re pretty excited on the space right now.

Levine: I think what you’re seeing is the old cliche, revenue follows relevance, and to Moritiz’s point, it’s lagging, which is natural. It’s about figuring out sort of the business behind it so all those different pieces of tickets, merchandising, sponsorship, advertising, media rights, all sort of bundled together is how I think the business starts to work. But I think one of the biggest opportunities in esports is still the B2C side, something the game publishers are capturing really well. Digital goods, digital items, increased engagement, but then expanding that fandom to merchandise and ticket sales and virtual services I think is where a lot of the growth is is still going to come from.

Novy-Williams: Craig, I read a really crazy stat the other day correct me if it’s wrong, but that ESL sponsors were told by Nielsen that they were getting 50 times return on their investment versus what they were putting in. If that’s right, what gives? Why are you guys not charging more? Why is it not more profitable for you guys? How do you gotta balance those two things?

Levine: We’ve been fortunate of really pioneering a lot of this, and going back to that point it’s still very misunderstood. So you know there’s massive reach, but there’s unfamiliarity. I think in a lot of the brand’s side and you’re starting to see now that those investments are following so it’s just starting to take a little bit of time to come through there. But yeah I mean typically on a Repucom sort of valuation, or Nielsen now, sort of a four to five x type of price point or return that you see off of an investment and our big events are doing 50 plus so hopefully that’s something that the gap will start to shrink over time as bigger brands start to understand this and how to activate the community. But you know it’s an encouraging point and certainly a sign that makes us excited for the future.

Novy-Williams: Sure, and is that something that all you guys are dealing with in some capacity today? Obviously, the esports audience is there. The numbers, we’ve all seen the numbers. They’re fantastic. Is it more about kind of getting the next step, the monetization piece?

Maurer: I think one challenge here certainly is this definition problem. If you look at esports, or we had a panel yesterday on esports, and it was purely on sports games which is just one part of esports. You look at a collection of different games developed by different publishers, these are communities that don’t necessarily intersect, and that’s something we analyze a lot to see which demographic groups or which culture and regional preferences apply to certain games, to certain game genres to certain platforms (console, tablet, PC) and I think as a brand or an investor going into the space, understanding that you tap into a whole field of sports and multiple communities is a key factor.

Baier: I think one important thing to highlight too with regards to how do you actually monetize all these eyeballs is, it’s a common misconception that those who love to watch esports don’t like to spend too. Today, we’re at levels where we the esports enthusiasts, if you want to call it such, spends about four dollars a year on average — that’s obviously widely distributed — versus you know twenty, forty, sixty dollars per fan per year in other sports.

We will see that rise over time, but I think it’s important to know that those who love to watch esports are actually above average earners in the US, are more likely to have a full-time job — so they’re not the ones that you know sit sit downstairs playing PC all day — they love to spend on mobile, they love to spend on hardware, they love to spend on consumer goods even outside of technology and gaming — so there’s there’s a lot to “harvest.”

DiGiovanni: One of the things that we’ve seen is moving esports from a marketing function, or thought of as a marketing activity at Activision Blizzard, to individual businesses has allowed us to track revenues a little bit more directly. For example, if we have in game items or crates or loot that can be earned and people are buying opportunities to get access to that, that revenue is now being allocated differently — it’s not just under the umbrella of the game. And I think you’re going to see more and more of that as we get a fuller view of what the the true fan experience is for esports.

I think we have a massive advantage because we can get away with a lot of things that traditional sports owners would love to. We don’t need a 70,000 seat arena in order to get 70,000 people into a virtual room watching something. We can charge tickets for that and have people tuned in from all around the globe. Now we can also sell out 70,000 seat arenas. Craig’s been doing it for quite a few years.

And every now and then, you want that moment because the in the room, the experience of esports is tremendous. So I think that with some thoughtfulness and with really understanding the value proposition to that fan, that esports fan, across all the titles that we operate because we have our titles that we would classify as esports titles touch about a hundred million people a month — all in we touch about 400 million players a month across Activision Blizzard games.

So it’s 100 million people who’ve shown an affinity towards Activision Blizzard Esports. And if we can think about each of those fans and the group — so the Overwatch fans, the Hearthstone fans and the Starcraft fans — and create some kind of unified experience across all those games for a viewer, for fantasy, for wagering, for an opportunity to unlock things within the game while they’re watching one of our events, that unlocks the business that we’re talking about for us, and also we believe for our partners.

Seiler: Yeah, I’ll add that the source of some of that monetization, we have to sort of figure out where’s that center of gravity? What’s going to give us enough scale with authenticity that’s going to help us sell a few more beers next year? Since we’re an emerging platforms and an emerging space, we’re still fighting for dollars year-over-year. For us, it’s about making that case that we’re gonna be able to deliver scale like the NBA has, like the NFL has, and also be able to actually sell a beer there.

Novy-Williams: And how vulnerable is esports as an industry? I mean I felt a couple years ago daily fantasy was the big buzz in the tech and sports space and I sat on a few panels and we talked about these billion dollar companies and what the future looked like for them.

Then things came crashing down and obviously that was a mix of business decisions and some legal trouble, but you could see a future for esports where a major match fixing scandal or some kind of digital cheating or hacking. Is it vulnerable in this young stage to losing a lot of its credibility with a few kind of missteps from the industry or are we past that?

Levine: There has already been steps for self-regulation. There’s a group called the Esports Integrity Coalition that’s spearheading a lot of this, certainly working with underlying data providers to help spot trends and flag instances of suspicious activity. I think it’s early and vulnerable from the credibility perspective so the industry is already again starting to self-regulate and take it seriously. I think that’s one of the early steps that in terms of vulnerability that other business feels, is it buzz or real you know, and I think it’s undeniable when you really start to look at some of the data not just about where it is today, but extrapolate where it’s going. You look at the profile of fans, when you look at the more macro changes that are just going on with entertainment, with media, with consumption, the digitalization and democratization of content — esports finds itself at sort of the epicenter of that all.

So I think for us at least there’s always going to be ups and downs, but we believe that where it’s going certainly is something that’s very very real and taking the steps today to preserve that integrity to ensure that there aren’t issues like match fixing or cheating or things like scandals that can impact it long term.

Novy-Williams: John, how does that fit into your calculus? I mean, I’m sure if a major college basketball team was caught point-shaving you guys wouldn’t stop advertising in college basketball,and if the NBA player was caught doping it wouldn’t change the way that you guys approach that sport…

Levine: If?

[Laughter]

Novy-Williams: How different do you guys view esports? Is it more tenuous or is it something that you’re a little more concerned about?

Seiler: No, I don’t think it’s more tenuous for that reason. I think it’s just emerging, and it’s just something that you know nobody assumes the beginning of the year that we’re gonna invest in esports the way they you know we do for baseball or football like said anything else. We’ve run into you know, we’ve been investing in sports for 40 or more years from an official corporate sponsorship standpoint, so we’ve seen everything.

There’s nothing that hasn’t happened in that time that would really scare us off at least for that reason. Now, if it turns out it doesn’t sell beer then you know, we have a problem. But I don’t think the integrity or anything like that is in question for us at this point.

Maurer: And maybe to add on the integrity side, we did a little work on that on that side. We support efforts like from key stakeholders like MLG or ESL to explore opportunities of opening up esports to wagering in a regulated manner when it’s done right as an engagement drive and it’s a positive part of the sport and part of the fan experience.

I think wagering on esports came to its biggest prominence as a completely unregulated industry in the form of skin gambling. For anybody here definition wise it’s just wagering with in-game items at completely unregulated operators where no player identification or any measures to protect anybody really in the space was employed, and ultimately that spiraled into several match fixing incidents that were motivated by liquidity on these platforms.

We did a lot of work together as well like, really increasing the public scrutiny and providing visibility for stakeholders over the sheer size of the market there. That being said, you look at the key stakeholders, the leagues and they already have a drive to basically impose the right code of conduct, to write rules, work of bodies who can help to provide data and give you an idea of what’s going on. We don’t see integrity as a risk and we see betting as a key commercial driver for the growth of these going forward.

Novy-Williams: Craig and Sundance, to expand on gambling for a second, the traditional sports commissioners have spent decades fighting tooth and nail against a more widespread legalized sports gambling in America as operators of two of the bigger league operators out there, what is your stance on on what you think the ideal kind of path forward is for gambling in the US?

DiGiovanni: Well you know our point of view as a publisher that invests hundreds of millions of dollars into our games is, we want to try and extract as much value as possible. Wagering is going to happen. We have to figure out how we’re gonna make sure that it happens in a fair and balanced way and participate in that. Because again, we were looking at this and seeing a lot of the things that the traditional sports leagues have had their arms around or rejected and trying to say ok “This is new. This is a new era. We know this is going to happen.”

People are already wagering on our events and we’re not participating so at some point in time we need to get to a place where there’s protection in place for our player base, there’s tools in place for us to make sure that it’s fair and balanced, and there’s a revenue stream so it’s in our discussion for our long-term plan.

Levine: And I think to add off that right, to Sundance’s point, it’s happening and you’re seeing just the traditional sports leagues now, even their approach is differing. Adam Silver certainly much more progressive on the NBA side right, they’ve even taken stakes and some of the daily fantasy companies so to the extent I think, the number one thing is our fans want it. So it’s about providing the right environment that exists to safely protect players, protect fans, and then participate, so it’s just about how we do that, rather than if.

Novy-Williams: That seems like one area where esports is a bit more progressive than your traditional sports, and there are a number of others. I mean we’ve talked about a few esports teams that have entire business ecosystems around themselves. I’m thinking of groups like Ninjas in Pajamas that sell their own hardware and have their own merchandise line. And we’re kind of starting to see that in traditional sports.

You know you’re seeing incubators, tech incubators pop up with teams and teams kind of putting their their own brand at the center of a much bigger content/tech/media play. What are some other kind of lessons you think that the NFL teams, NBA teams, NHL teams can learn from the way that esports has has grown business wise?

Levine: I think the easiest one is the social media approach of big leagues, like an NFL is an example, right? There’s so much disrupt there with big business I think they’re a little apprehensive to some of the bigger technology and cultural things that are going on and for us, we’re starting off much more with a blank slate.

I think there’s a lot of different blueprints that are out there, so we’ve got the benefit of drawing best practices. But I think across the board there’s not one there’s not one blueprint that exists where we go that’s the one that we follow. It’s going to be sort of a combination of all of them. A couple of new things out there to really cater to a global digital audience for the first time that other sports haven’t really dealt with.

Novy-Williams: John, speaking of social media, you guys have a Bud Light Esports Twitter handle, right? That doesn’t exist for the NFL or the NBA or any other partners. How different is the social media aspect for you guys?

Seiler: Yeah exactly, I mean I think that’s huge. What I was gonna add from our standpoint is access to players is the biggest thing that we really can’t do with many of our other sports leagues — certain ones we can with golf, NASCAR — but the other large leagues we really can’t touch active players except on some very limited exceptions so being able to go direct to the fan in the voice of a professional athlete or esports player is absolutely huge for us. I would love to see some progress from the larger leagues on that front.

And then from a brand standpoint, we have a distinct Bud Light Esports voice which is totally unique to esports for us. We don’t do that with other other properties. So we’ve accepted that it’s a different world, it’s a different consumer that we don’t typically target quite as well with our other sports properties. So it’s been socially a very interesting case study for us, and we’re learning a lot about our own brand and what people want from it.

Novy-Williams: Moritz B., what’s the biggest mistake investors are making right now as they clamor to get into esports?

Baier: Yes, I mean I think first of all they don’t spend enough time really understanding the ecosystem and all the players that are involved because there’s so many ways to invest. I think most are just thinking about teams and then owning a team, but really there’s a much broader universe of players here. You have the game publishers, you know large cap game publishers, but also smaller studios so they’re entering esports and you have the teams and team owners. Some are thinking about creating new teams. You have the pure-play organizers like an ESL for example, MLG, but there’s also an interesting tech deck here.

There are tech startups that focus specifically on esports, for example, providing better training for esports athletes and those that want to become those, communication among esports athletes, so there’s a lot more here than just investing in teams.

And teams today are certainly a rather volatile investment. It’s an ecosystem that’s still very much dominated by the game publishers, and one where the game publishers can exercise a lot of control. But I think tech startups and organizers have a real place in it as long as they can operate across publishers because they can offer experience that no single publisher can give.

Novy-Williams: If teams are so volatile, why are we seeing so many of the big name investors getting involved in that avenue?

Baier: High risk, high returns, right? So I think that I look at team investments as venture capital, something that for example private equity or family offices would certainly shy away from. That’s where the most money can be made today in esports, I believe are team investments, but the most likely return on a team investment is probably zero.

Levine: I think it’s also high familiarity of what is team is very tangible versus trying to figure out what a tech stack looks like for a startup in a space that you don’t really even understand. So I think that’s also been one of the magnets towards it.

Baier: And just one small thing on skin gambling, I mean we talk about this industry and what’s the size of the industry? And I think you know there are kind of numbers floating around, but I guess the most common one is that roughly a billion starting in like 2019, around that ballpark for esports as a market size.

Then you have adjacency, like skin gambling, which was estimated to be a five billion dollar market last year. So how does that get factored into the one billion? I think there’s so much more there that isn’t recognized and in this market which again, makes me bullish about the industry and the growth of the monetization as well.

Novy-Williams: One of the problems that I have as a journalist covering esports is, I feel like there’s so much misinformation there. I don’t know what numbers to trust. I don’t know what projections are realistic, and how some projections are either too bullish or too bearish. Is that something that you guys encounter on a daily basis, on a weekly basis? How much misinformation do you see out there, and is it frustrating?

DiGiovanni: We’ve seen it. It’s also what are the right numbers, right? So for a long time in esports growth there were some vanity metrics that organizations would use like concurrent viewers. It didn’t matter if you had 300,000 people and that was your peak concurrent; it doesn’t matter if they’re all there for one second, but that’s the number you’re touting, right? So I think as we’ve gotten smarter about engagement, we’ve been able to see people come into the space and help measure.

People like Nielsen, you know, who can come up with a report and say Craig, you’re under-charging, charge more. That’s fantastic news because for us what we need is kind of a unified approach to say alright we’re there. What’s the real value proposition for a brand that’s going to come in and sponsor a series of events or a one-off event or a special engagement? So the issue of the numbers is that until they’re verifiable, you gotta ask yourself “How do I slice this? How do I dice it? What can I actually verify?” If there’s nothing then what we typically do is we just ignore it. We’re a public company so everything we put out we have to be able to stand by.

That’s the other thing. Our announcements look much different now than they did when we were an independent company. When MLG was independent, it was the Wild West. We’re like alright, we beat them, they beat us, we beat them. It was whoever had the most viewers at that time. But now it actually comes down to those important conversion funnels: how we’re getting people to spend in our games, how we’re getting people to buy our games, and it’s interesting.

Novy-Williams: By the way. We made it almost 30 minutes into the panel before Wild West.

[Laughter]

Levine: And I think the other point in the numbers is, there’s two parts just to Sundance’s point. It’s the engagement of viewership is something just again with digital platforms, I think all sports and entertainment are now kind of wrestling with them. What’s a view or what’s the value? How does Twitter or Facebook measure versus a YouTube or Twitch? So as an industry that’s going on, and then in terms of market size and dollars and breakdowns, there’s certainly not one clear answer, but there’s certain, I think, general ranges that are sort of accepted through there, so the answer is big.

Novy-Williams: One of the concerns that I have in terms of the growth of esports is just that as monetization continues to evolve, esports in some ways needs to buck the traditions that made it so popular, originally. I mean if your guys are gonna profit off of media contracts, that kind of flies in the face of the of the Democratic free-for-all, free-to-view business model that kind of built the back of esports.

Do you think that the traditional esports viewers are kind of ready for the massive changes that we’re gonna start seeing in the next couple years where games might not be always free to stream on Twitch or Facebook or YouTube, they may start having to pay for pay for that?

DiGiovanni: I think it’s gonna be a case-by-case basis. You saw an announcement recently came out where Blizzard partnered with Twitch for all of our content and esports outside of Overwatch League. The landscape has changed so much that Twitch is no longer the startup that can’t afford to pay media rights, they can now and they are.

Now having said that, that deal means they get everything that’s not on Blizzard’s site. So we know that our fans who are used to seeing us on YouTube or Facebook may be upset, so we need to think about how we’re going to program those channels as well. You have to start somewhere.

Again, the key to turning this into a business is unlocking opportunities like that where you know a platform like Twitch will pay you a hefty sum for exclusivity — for third party exclusivity — meaning that you know it’s on our sites and theirs. If the content is good, and if we reinvest that money into the product and create better experiences around the product, over time the fans will come to accept it. Even though they’re a very vocal fanbase, quality wins out over time, in my opinion.

Novy-Williams: We’ve reached this point with teams — that are largely not profitable from what I understand — at what point do team owners who I think for now are happy to see the growth and understand that they’re in this for the long term and that those profits will come eventually, at what point do they stop saying “I’m happy to see this grow and stretch” to “I need to see return on my investment. I need to see start making profit now?”

Levine: I think it’s too early still. I think it’s all about growth equity at this point, much like traditional sports. I mean valuations are driven by the other revenue, the opportunity that exists. I think esports is so nascent still as the business is being figured out like we’ve been discussing, that if there’s investors out there in it looking for cash flow return, they’re probably going to be disappointed. But as the globalization continues to happen and as infrastructure starts to be put in place and protections and revenue sharing and all these things start to get unlocked, the opportunity there to Moritz’s point is huge. So I think that’s how they’re going to see it

Novy-Williams: If you follow the trend of traditional sports in terms of player rights or obviously in a very nascent stage in esports, and at some point as the money continues to grow that’s going to become a bigger part of the conversation as well. Is there room — as teams obviously need to turn a profit and players are gonna eventually have a larger say and in revenue sharing, is there room for those three groups — the team’s, publishers and players — in terms of, is there enough money eventually out there to make that all work?

Levine: Absolutely, and I think that’s going to be the key, figuring out the framework between all the stakeholders in there and that’s then what’s going to further accelerate clearer definition, clearer structure, clearer brand investment opportunities, better fan engagement. That’s going to be a driver for it all.

But certainly there’s a lot of money in the ecosystem now. You know, top esports players today are making seven figures. That’s not bad so I struggle a little bit to say you know, there’s the underserved part. I mean certainly there’s a big discrepancy between top earners and the bottom so that parity will start to happen again as more sharing happens within it.

Novy-Williams: Awesome. I want to open it up to questions. If there’s anyone out there that has a question I believe there are mics floating around.

Okay, there’s no questions we can keep talking.

Maurer: No, there’s one there…

Audience member: As we’re seeing companies and publishers, taking more ownership with their IP whether it’s franchising or limiting third-party tournaments, how Sundance, from your perspective, do you see your organization evolving. And I would be very interested hearing Craig’s perspective as well as a third-party pure-play organizer, how do you see your role evolve as well?

DiGiovanni: So for us, it’s interesting because MLG’s been folded into this massive company, and we operate as part of Blizzard now. So when Overwatch League launches, we will be operating that, but it won’t be MLG brings you Overwatch League. And CWL which we currently run very similarly, it’s CWL and you see all the MLG personalities and Twitter feeds talking about these events, but our goal as we try to professionalize our esports efforts is for each of our games to be held out as their own when they’re big enough as a league and to focus on that. The games that need to shine through first and be the big draw.

It doesn’t mean that we won’t do interesting events that are MLG themed events, partners like Microsoft or some of the other partners that we have that are not you know Blizzard IP. For us, we believe that we kind of need to fall into the background now.

We did our effort about building the MLG brand, so that when you see an MLG event you know it’s gonna be a quality event, is established. That’ll be just underneath the surface, but it won’t be the leading narrative as we run these leagues. But that’s again because we’re inside of this organization and we’re working with hundreds of folks across the games teams to try and make each of these efforts their own distinct experience.

Levine: And for ESL, I think it’s very clear, just about adding value. So being a value add to the publishers, whether that’s our global reach, whether it’s tapping into our infrastructure events and studios, or content distribution. To Sundance’s point, I think all esports initiatives on the publisher level really start as marketing, and then as they grow and scale from there so getting in early, building the right relationships, and the real answer is people don’t know what the end model is going to be through this all.

Two of the three biggest esports titles today — Counter Strike and Dota — have a completely open ecosystem, whereas you know Riot with League and Activision Blizzard with Overwatch you’re going more of the franchise route, so it’s still early. There’s still a lot to be figured out, and for us and as a league it’s about providing value through that.

DiGiovanni: One additional thought, I think the other piece for this is that if we do what we’re trying to do properly, there’ll be opportunities to work with ESL in an environment where there piece of out of the business that we’re building together, it’s profitable for them, and it’s a growth opportunity. Because in the past what it’s been for many years independent operators basically through skin of their teeth were getting through tosome of these events. It was kind of a spending war to see who could outdo whom in terms of sets and design and everything.

Now we’re at a place where we’ve established that there is a real landscape for this, and we need all the operators to operate in a healthy manner, that’s from as a publisher and as an operator, we need to know where our strengths are, and where we need help. And we need to be able to make sure that when we go out and get help in those areas, it’s a true partnership for both sides.

Maurer: To add to that maybe, we also see there’s a consolidation happening, especially in two games that Craig mentioned. There was a time when there were more competitions than actual relevant competitors in the space. This makes it incredibly hard to create products around it, to create content around it, to get buy-in from someone who would sponsor, to get a cool data product that could run over the course of an entire year that’s on the betting end, on the media side.

So these are challenges that we overcome by partnering, but as we see more stakeholders evolving that consolidate, it’s under the umbrella, and they get more and more gravity as they move forward. This is really a factor that’s aiding esports in its growth.

This element of uncertainty made it hard for teams who sometimes didn’t know weeks ahead where their guys would compete, and also competitions who were in this Wild West really fierce competition all the time with each other. So as I see this these maturing and there’s more structural integrity to it, that’s certainly a big factor aiding esports continued growth.

Audience member: What do you make of the traditional leagues starting to invest in the space? I don’t mean the teams. I mean actually the NBA creating this 2k League and getting their traditional franchises to buy on-board?

DiGiovanni: I think, you know it’s interesting because there’s been a lot of conversation about who we’re talking to, about our Overwatch League, and about infrastructure and facilities. But I think having gotten to know some owners of traditional sports teams, this is right in line with their profile as you’re saying. They’re making speculative bets sometimes, they’re having their sons run the teams or daughters run the team because it’s something within the family.

A lot of the struggles of a traditional sports team and the information that’s been gathered in operating a traditional sports team can translate and help, but there’s a whole new set of information that needs to be applied. So that’s where we see the folks who are coming in being very thoughtful and trying to surround themselves with quality executives to help them run these initiatives. Those are the ones that we feel good about.

Then there are others where there’s more layers to it, and we think we’re trying to help and educate even if they’re not working with them directly, just as it kind of an advisory role as somebody who wants the entire space to benefit.

My concern is that when that initially started to be the way that things were shifting, some of the endemic team owners felt like they were being pinched. Now we see that now the endemic team owners are actually being bundled up into these investments at times, and the reason that’s great with a lot of the teams if is people who’ve been operating in a very lean, very mean environment to try and make their team get to a place where they had resources, now are being given resources.

I think if you can meld those two things together which is one of the things that I will tell traditional sports owners is you know “Here’s Dignitas, Here’s Liquid, here’s Fnatic.” We’re trying to introduce them to as many of the endemics as possible because we think it needs to cross-pollinate.

Seiler: I would say from from my perspective as a brand that’s heavily invested in the NBA already, I’m not convinced that we need to go buy more basketball content through something like 2k League. So what is interesting to us though are live events that may ultimately take place in NBA arenas that these guys own.

So, for example League of Legends was at the Garden a couple months back the per-caps actually fell between — for beer — a Knicks game and Rangers game. So that’s meaningful beer consumption for us, so from a live event standpoint it gets very interesting. But more basketball content, I’m not totally sold on yet.

Levine: And I think on the league side what the sports games offer is different than I think what you see with the fantasy element of League of Legends and Counter-Strike and Overwatch. So I think they’re very different. I think there’s a great opportunity for them to market their game, to grow their fan base, expand familiarity with rulesets and favorite players, but I think there’s still a huge gap and even if you look at how an EA approaches it, it’s not esports, it’s competitive gaming, a very clear distinction versus an Activision Blizzard’s approach to it.

So I think going back to one of the points earlier I give esports is a very big term, you got to really slice and dice and segment it to really understand what you’re talking about. When you cut through that all, I don’t know that there’s the same opportunity there for the sports games, and we’ll see if that’s successful for those leagues or not.

Novy-Williams: Got time for one more.

All right no more questions? Thank you guys. Oh, one more…

Audience member: Thank you. With colleges now investing in to esports, both providing scholarships as well as maybe scoping the industry, how do you see their involvement shaping the potential of your leagues and products?

DiGiovanni: We actually have a division called Tespa which focuses on college campus activation. So we see it as a great proving ground and kind of an opportunity to add another layer in so that you know amateurs can compete at a high level very similarly to how you think of feeder leagues or NCAA activity.

Again though, for us one of the challenges and one of the goals is to make sure that it’s managed and regulated and fair.

Mike Morhaime, who is the CEO of Blizzard, is incredibly attached to our college efforts. It’s a very personal thing for him. We’ve done Heros of the Dorm now a few times. There’s plans for more activities similar to that. It’s just all about giving out scholarships and about team versus team from college campuses.

We love sports. We love esports. We love rivalries, and we think that the college environment gives you a lot of really fertile ground for those rivalries. You can tap into pre-existing school beefs and kind of let them play out so we’re big fans of it.

Novy-Williams: Awesome! Thank you guys. Appreciate it and thank you.

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