For years, esports has developed and grown organically and without much structure, a real Wild West of teams and leagues and sponsors. Game publishers were so happy that people were buying, playing, and talking about their games that they were satisfied to sit back and enjoy the profits. But as the esports industry continues to explode, publishers are reining in some of that power so they can reap even more financial benefits.
A great example of this shift in power is Blizzard Entertainment’s creation of the Overwatch League. By having complete control over its intellectual property and distribution, Blizzard is poised to create structure among the esports chaos. The publisher flexed its muscles back in August it revealed that teams joining the Overwatch League had to ditch their established names for new names tied to a location. For example, instead of being able to use their well-known brand of Team EnVyUs when joining the Overwatch League, the team will be known as the Dallas Fuel.
The shifting power in the world of esports is a good thing for an industry that can be difficult for outsiders to follow. For those inside the esports industry, there may be some painful pills to swallow but adding structure to esports will help it grow and flourish in the future.
So, how does this shift in power affect publishers, leagues, teams, players, sponsors and fans?
How publishers are affected
Without question, the publishers will be the big winners if or when these leagues succeed, which is why it’s such a critical shift in the esports landscape. With ownership of their game’s intellectual property, the publishers’ will be able to define the rules of engagement between themselves, independent leagues, and teams, as well as maintaining control over broadcast rights to grow and expand the brand of their games. Even if a published-backed league like OWL doesn’t succeed right out of the gate, it has enough investment capital to dial it in until it works.
Publishers understand the real power is in the game. Several years ago, publishers may have been happy to informally delegate event organization and promotion to leagues like MLG (which publisher Activiation-Blizzard now owns) or ESL. With the spectacular success of League of Legends (owned and promoted by Riot Games) and the new franchise model represented by Blizzard’s Overwatch League, publishers will continue to exercise commanding influence over other stakeholders in esports.
How leagues are affected
With new models shifting to publisher control, leagues will have to find a way to offer value to esports stakeholders. Publishers will need to feel that leagues offer superior leadership and/or profit potential. Teams and players must have a superior opportunity to earn money than in publisher-owned formats.
For leagues to flourish, they must create brand value at the fan-level and create a profitable ecosystem. Two traditional sports examples come to mind. Anyone can create a professional football league. No one owns the IP of the game of football. However, the NFL stands for strong brand value in the eyes of fans. It is the best expression of the game, and hence, it enjoys unrivaled status. As an example, look at the XFL, which attempted to rival the NFL but lasted just one season in 2001.
NASCAR created an ecosystem that enabled teams, promoters, drivers, broadcasters and sponsors to thrive financially. Again, one could easily form a rival racing series. However, few, if any, could create the financial success for stakeholders that NASCAR has.
To the extent independent leagues can create these types of value through creating a great fan experience, technical support, fair and unbiased officiating and a solid brand name, they will thrive. If not, leagues will be publisher-owned in the near future.
How teams and players are affected
It may feel like the publishers and leagues have all the leverage in some situations, but that’s not the case and for one simple reason – not many people in the crowd are rooting for the game itself. Anyone attending an esports event of any consequence understands that fans won’t be rooting for the game, they will be rooting for the teams and players. That gives the teams and players tremendous bargaining power with leagues and helps check the balance of power.
The ultimate question will be how effective teams and players will be in exploiting their own intellectual property and how valuable that becomes. It will be critical for teams and players to focus on branding, marketing and public relations to build their brands into a powerhouse like the Dallas Cowboys or Tom Brady.
How it affects sponsors
Quite simply, non-endemic sponsors often find esports in its current state as confusing and tough to understand, which gives those who have authentic understanding an advantage. Most don’t know where to put their money even though they know esports has an audience they want to reach.
The shift to a publisher-backed league structure helps create a new level of understanding for potential sponsors. Endemic sponsors like HP and Intel have already jumped on board to sponsor the Overwatch League, and it seems likely non-endemic sponsors will be next.
Expect to see even more big brands establish a foothold in these new leagues.
How it affects fans
Existing publishers and leagues are very sensitive to the expectations of their audience. For the most part, for esports to flourish in the fans eyes, it must continue to be authentic, organic and honest. Publishers and leagues have worked hard to satisfy their audience that competition is fair and true to the roots of each game.
In the near future, fans will be offered more choices as to what esports competitions to watch via streaming or otherwise, more opportunities to attend live events (both large and small) and more interactions with non-endemic sponsors. The quality of the viewing experience will improve as casters add more features to its broadcasts. At event venues, fans will be offered more entertainment options both on the event floor and in fan interactive zones.
The more potential revenue that esports offers, the harder every stakeholder will work for fan loyalty. Publishers, leagues, teams, players and casters will be operating at their very best for the fans they hope to capture and serve. This shift in power is just the tipping point for esports, where it will transition from something that is an underground success to a very valuable, mainstream sport.
The organization and structure publishers are providing are laying the very foundation for the way esports will operate for years and years to come. It might take some time to see just how successful this business model can be, but it has all the appearances of taking esports to the next level.