Caveat Emptor: Exclusive Esports Franchises are a Mistake
(This is my first article posted to LinkedIn. I have previous articles that can be viewed here.)
If you’re a student of business trends in esports you’ve most certainly had the word “franchising” bouncing around your brain for the first quarter of 2017.
Yes, a tsunami of investment has been (and continues to be) flooding the esports space. Yes, pro sports teams have entered the scene and many more have signified interest. And yes, top tier advertisers are finally recognizing that the esports demographic is one of the most important targets on a global scale.
However, it’s arguable that none of these latter trends have the drastic ability to change the face of our beloved esports as much as franchising. Franchising has many potential benefits as far as making esports easier to understand and safer to invest in. It can provide new revenue streams, predictability and industry growth. Many herald this imminent movement as our departure from the “wild west.” However, if done incorrectly, franchising can damage diversified team brands, splinter the scene and fracture any healthy cohesion the esports space has.
Many titles, one space
Recently, my friend Bryce Blum wrote a solid piece for ESPN wherein he noted that esports is an umbrella term that should not be always be used when a specific game reference is more appropriate. I couldn’t agree more. However, I do believe there is a large segment of competitive gaming enthusiasts that identifies as fans of multiple competitive games and thus fans of “esports.”
One of the common threads that binds these multi-gaming consumers together is the team business model. It is my opinion that multi-gaming teams are both intelligent as a business model and beneficial to the overall ecosystem.
Diversified teams = smart business
As aptly noted by Noah Winston in a recent interview, teams are wise to develop a strong corporate culture that incentivizes fans to follow them across titles. For over a decade my company (Complexity Gaming) has been honored by thousands of fans who have followed us across games. Gaming diversification is in our DNA. We are passionate about esports; not just a single title. At our core, we are gamers who refuse to be limited to the confines of any specific developer or game. This philosophy enables a team business to market to a broader audience and achieve more attractive metrics which appeal to mainstream sponsors. It also increases the company’s odds of surviving in this volatile space because it is not beholden to any specific title that could become irrelevant in the quickly moving marketplace. (No video game lasts forever!)
Diversified teams = healthy ecosystem
Whatever cohesion that exists in esports is largely due to multi-gaming team organizations. Fans rally behind the teams and are often exposed to other esports games because of this loyalty. Quite often, the only consistent thing across the larger ecosystem is the fact fans, press, sponsors and investors can recognize familiar team names. When teams begin investing in a new gaming division, it’s usually a sign that particular title is becoming a viable esport. There are, of course, exceptions to this general rule, but for the most part it’s a very good thing that you see top brands diversified across the space. These teams are the glue that binds the global competitive gaming space into something that is both tangible and more than the sum of its parts. They are the thread that binds us.
The danger of exclusivity in esports franchising
As rumors circulate about franchising in Activision Blizzard’s Overwatch League (“OWL”) and Riot’s League Championship Series (“LCS”) so have whispers of exclusivity. Exclusivity, for the purposes of this article, means that a team participating as a franchise in one of these leagues could only participate in this respective league and play this respective game. This, in theory, would apply to both endemic esports teams and the traditional sports teams who are being courted by both developers. For example, if Cloud9 or TSM chose to purchase an OWL franchise, they could no longer be allowed to field Vain Glory teams. If the New England Patriots or Dallas Cowboys owners purchased an OWL franchise, they could not field Dota2 teams or fighting game players.
It’s my strong opinion that such strict exclusivity should be avoided by both endemic esports teams and new entrants to our space. The call of “caveat emptor” should be blasted to new investors from the highest peaks of our digital kingdoms. I sincerely believe it would be a travesty to have notable ownership groups like the Rams, Cowboys, NY Knicks, etc, locked into one video game or even one publisher. As esports leaders, we’d be negligent in our consulting if we don’t warn these investors that placing all their “eggs” in one game’s “basket” is a horrible long term strategy for their investment. I’d also be incredibly saddened if CLG or Immortals were forced to choose between a LCS franchise and their CS:GO rosters. Leading endemic brands should not be strong armed into abandoning their business models as part of the franchise entry fee.
Not anti-franchise; anti-exclusivity
Please understand me here. I am not anti-franchise. I think there are incredible benefits to be reaped by the greater ecosystem if franchises are done properly. I’m eager to evaluate my options for purchasing one in the near future. (Although I might be risking my chances of being selected just by writing this opinion piece.) My argument isn’t anti-franchise. It’s anti-exclusivity. I know there are viable arguments to be made for some type of exclusivity and I’m sure both Riot and Blizzard will make them. Perhaps there is a middle ground where some sub-set of a gaming team can be exclusive to a franchised league. However, for the continued growth and health of our ecosystem, I’m adamantly against a strict form of exclusivity.
As we venture through the delicate task of forging the future of esports, we must all take time to contemplate the greater vision we desire. Without a doubt, franchising will play some part in the unfolding story. In general, I am excited about the clarity and stability it can provide, but in our rush to leave the “wild west” phase of our history let’s not be too eager to abandon our heritage. If we remove the thread that binds esports together, there’s no telling what will unravel. Plus, there’s no going back if we do.
Councilman Gdańsk City Council 2024 - 2029 | Member of the board "All for Gdańsk" Association
7yMy biggest issue with this is that it lacks a proof of concept. 20m is a lot of money to drop on a franchise spot if you're not guaranteed it will be around for the next 5 years. It's a bargain if it is around for 10, but we all know how quickly esports moves - and it might all fail after 1-3 seasons. Should that be a case, 20m looks like a lot more money. If at least we had a proof of concept that showed that they ran a few seasons, and that this is taking off or moving in the right direction then it might be an easier pill to swallow. For now, it's dropping 20m on a hunch.