Oct 21, 2019

Inside the esports investment boom

Trophy of a video game controller

lllustration: Sarah Grillo/Axios

Ever been at a party where you just felt you didn't belong? Now imagine that there are over 13,000 people at the party. That was me recently at Philadelphia's Wells Fargo Center while filming an "Axios on HBO" segment about professional esports.

The big picture: It was the final match of Overwatch League, which mimics traditional pro sports leagues by having geographically based teams. Over its first two seasons those teams have all played out of an Activision Blizzard-owned arena in LA, but next year, they'll move to home venues.

  • There are widespread concerns that pro esports is an investment bubble, with too many new leagues going after the same dollars.
  • Those worries were largely absent from the Wells Fargo Center. Probably because it's hard to be vexed in the midst of cosplay.

Bobby Kotick, CEO of Activision Blizzard, said that he doesn't view Overwatch League as a marketing cost for the game itself, but instead believes it could eventually rival or top traditional U.S. sports leagues.

  • When I asked why he scheduled the finals on a Sunday afternoon against NFL games, he just shrugged and said, "We have a different audience."

Angela Ruggiero, a four-time Olympic ice hockey player and current head of Sports Innovation Lab, said that esports players exhibit many of the same traits as traditional athletes, including performance deterioration with age.

  • She's also a former IOC member who predicted that esports will become part of the Olympics, although likely via a proprietary game overseen by a dedicated, nonprofit federation.

Andy Miller, owner of the San Francisco Shock and other esports teams, says he paid a $20 million franchise fee for Overwatch and that his esports org expects to be "very close to profitable if not profitable" next year.

  • Miller, a serial tech entrepreneur who also owns a piece of the Sacramento Kings, isn't too worried about saturation or staying power of individual games: "That's a big risk, but there's a history there. ... Look at Counter-Strike. That game is 20 years old and they're having a sold-out tournament in Brooklyn."

The bottom line: The big difference between pro esports and traditional sports is who's in charge. In esports, the publisher is king. The commissioner works for the CEO, not for the franchise owners.

  • It's a model that makes sense for now, kind of like how console-makers once controlled game development. Well, until a group of Atari developers created Activision in an act of decentralized rebellion that today's Activision Blizzard would be wise to remember.

Go deeper: Read Axios' deep dive on the business of sports

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