GamesBeat: How do you help distinguish between the temporary games, because of the pandemic, versus things that might be more permanent in this digital shift? Also, how do you plan for the more permanent side of things?
Sitrin: A couple of things there. You make an assumption there that I’m not fully in agreement with, which is that there’s something that’s temporary and something that’s firm. I believe that the world of esports has been changed. While it won’t be exactly what it is now at some point in the future, many things will stay the same.
Let me answer your first question and then I’ll give you some more detail on that. We’re very clear about when, if I think about those three layers–there’s the fun celebrity, there’s the combo of celebrity and authentic, and then there’s the authentic. Part of it is branding and how we talk about it. We’re very clear about all those three layers. The reality is that what people want is to be entertained. There are many ways to be entertained. It’s true in many different shows and sporting events. Sometimes it’s just the best players in the world playing. Other times it’s more of a celebrity combo. Sometimes it’s purely a celebrity level. We’re clear and transparent about what it is we’re doing with that.
What we’re trying to do, though, is expose the people at those most broad, accessible types of experiences–we’re trying to show them that there’s entertainment at all these different levels. That’s why, when you bring in people to expose the authentic esports side, you can bring them in through some of that celebrity stuff. We’ll do that the opposite way as well. For instance, we had the FIFA Stay and Play Cup that I was referencing. During the last day we had Ian Wright, who’s one of the most famous footballers in European history, an incredible personality. He was part of the broadcast team. At the same time we also had Msdossary, who’s one of the greatest esports FIFA players ever, a world champion, and he was part of the broadcast team. Even though it was a very fun execution with these 20 footballers from all these teams across Europe, we did a lot of content in there that was part of the authentic esports experience. We’re trying to say to people, “There’s something more than just watching your footballers play.”
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Part of it is how we schedule the year. We want to be able to give the people at the top of the experience, the top of the funnel–we want them to have opportunities to go deeper down into that immediately. One thing we’re working on right now is scheduling. We just did, the Sunday before last, five hours of programming on ESPN2 with Madden. In a five-hour period we took people down that path. The first hour was a celebrity competition, the Madden Celebrity Tournament. That was very broad and had a lot of famous people, famous outside of esports. It was the very first thing we did in the program.
GamesBeat: How do you make this engaging?
Sitrin: The next thing we did is we had some content, not a competition, but really storylines around people, the Road to Madden Bowl. We aired two episodes, half an hour each. Those were episodes that had been created previously, although we hadn’t aired them yet. It was about, “Hey, if you don’t know a lot about esports, let us get you into the personalities of who’s playing and what they’re playing for.” This is very similar to an approach that, say, NBC would take with the Olympics. How do you get people who have no interest in rhythmic gymnastics or curling to care about and want to watch that? Well, you tell the backstory. You tell the stories of the sport. It’s around storylines.
We told that for an hour, and then we did an additional three hours of the Madden last chance qualifier, one of our authentic esports competitions. That was very programmatically planned out so that we could take people, bring them in through the celebrity, then walk them down that experience to understanding the people of esports, and then immediately delivering an authentic esports experience. That’s what we’re going to try to continue to do. Obviously, with a partner like ESPN, they were supportive. They were willing to give us five hours of TV broadcast time.
To answer the second part of your first question, as far as whether this is permanent or not, here’s why I don’t think things will necessarily just go back to what they were pre-COVID. First of all, we at EA have developed technology that I was telling you about, the fully cloud-based broadcast. We never would have done that or invested in that were it not for the current situation. But now we have it. So what does that mean?
In the past, if we had wanted celebrities to participate in what we were doing, we would say, “Hey, please fly to this location. We’ll need you for half a day or a full day. Then you’re going to be part of something.” Most celebrities would say, “I don’t have the time to do that, and you’re going to have to pay me a lot of money because I have other stuff going.” Now we’ve shrunk that barrier to getting involvement down to something as simple as, “We’re going to have a competition for who’s the top dog out of all the NFL, and all you have to do is play for a half hour once a week from your home. You don’t have to do anything else. Do you want to be a part of that?” The number of people that are going to say yes is very high. We’ve lowered the barrier as far as what’s required for them to participate.
When we get to some new normal, I don’t think it’s going to be going back to what it was. We’ve now broken through from a technology point of view. And the second thing is, there’s a lot of broadcasters who, up until the coronavirus, had waded into the pool of esports. Some of them were up to their waist. A lot of them had just put a toe in the water. What has happened as a result of the virus is they have waded further into the pool. They’re liking what they see. They’re liking the fact that this is programming that’s doing quite well and exceeding their expectations.
While they might walk a little bit back out of the water when they have the NBA and NFL to show again, I don’t think they’ll walk all the way back to where they were in February of this year. They’ll be deeper in the water than where they were before. That means more availability of people that are famous from esports to use in the broadcasting ecosystem and more distribution that’s opened up and will continue to be there as a result of what’s happened over the last month, and what will likely occur here for quite some time. That’s my view on the question of temporary and permanent. I think more things will be added to the permanent column than existed at the very beginning.
GamesBeat: I was looking at the Newzoo estimates as well, how it’s broken down estimates for physical and digital revenue. They did take down the estimate for esports this year in revenues. It’s a bit lower now. In some ways, it didn’t seem low enough to me, because–just looking at the way the revenues are coming in for esports now, the physical seemed like it was dominant. Ticket sales, merchandise sales at events, meet-and-greets, those sorts of things were generating a lot of revenue. Newzoo didn’t drop that to zero, but I do wonder how esports is going to be able to compensate for that as it goes all digital. Is there a way to increase digital revenue in the absence of that physical revenue?
Sitrin: I can’t speak for Newzoo. They can explain their methodology. As you know, anything that’s a forecast has to make some set of assumptions. I don’t know what their assumptions are. What I can say is that EA has not built an esports business based on live event revenue streams, ticket sales, in-person types of experiences. Many companies have built more of their revenue streams on that, so I think it makes sense that there would be a shrinking overall revenue in the industry. There’s no doubt that sponsors, who have money, will probably be more conservative about how they spend. I’m sure that also had some effect on Newzoo’s thinking.
But as it relates to what I can speak to more definitively, which is EA, we are not seeing a shrinking of our sponsorships as of now. Our viewership numbers are higher than they were before, and we’ve built our business based on viewership as opposed to in-person. We never chased, “Hey, let’s get 15,000 people in a big auditorium.” Instead, we were chasing great competitions with viewership. Our goal has been about increasing the broadcast hours.
I just came out of a meeting this morning where, as a result of us pivoting–the cost of running a live event is quite a lot higher than the cost of creating an online competition. In making the switch to address the fact that we can’t do live events today, we were able to take the money we were getting a certain number of hours out of, broadcast hours, and now we’ll get a ton more broadcast hours. As long as the viewership stays at the levels it’s been at, which is higher than what it was before, we actually have greater revenue potential at EA than we had previously.
Now, maybe viewership hours won’t stay the same. Maybe there will be more competition as Hollywood starts ramping back up and the sports leagues start ramping back up. But at least for EA, our strategy of focusing on broadcast from the beginning has insulated us a bit from that reduction in esports revenue from non-broadcast revenue streams.
GamesBeat: If everyone in digital has this challenge — how do you generate a ticket sale from a digital event? I don’t know if you’re able to get toward that, whether it’s a pay-per-view kind of thing or something else.
Sitrin: I think you’ll see a lot of people experimenting with different models. Right now we’re more focused on growing our audience size and monetizing through media rights, monetizing through sponsorship, monetizing through license fees. We’re not pursuing a model where we’re trying to directly charge those who are watching for the experience. Others may try that. I can’t speak to what others may do.
Right now, we’re looking at an increase in our viewership, like I said. If you look at, say, a Madden event prior to the coronavirus and an authentic Madden event now, we’re seeing almost a two-time jump in viewership. When you look at an event–this is the biggest spread we’ve seen so far. There was a La Liga event in late March. A normal La Liga event, compared to this one, a celebrity-driven La Liga event, it was like a five-time increase in viewership. Some of them aren’t as high as that. Sometimes it’s more like a 50 percent increase. But that’s still a huge amount.
We’re still trying to figure out the ingredients that are bringing people in to see the product, the broadcast product. But it’s some combination of ties to the real-world sport — that certainly helps — and the accessibility of our games themselves. We’re trying to push our broadcasts to be more entertainment-driven than to be what I’d call traditional sports broadcast delivery. Again, what the world needs right now is greater entertainment value. That’s why you’re seeing things like Ian Wright joining us, bringing more fun to the experience and less sports announcers sitting behind desks doing play-by-play in the traditional sense.
It’s an evolution to make our content more accessible on top of games that are more accessible to an audience that’s broader. That’s definitely changing our viewership and in a very positive way.