A few weeks ago, the Philadelphia 76ers became the first NBA franchise to acquire two esports teams, as it bought the United Kingdom-based Team Dignitas and merged it with Team Apex. And today, Philly is naming former Eidos game studio executive Jonathan Kemp as CEO of the squad.
Team Dignitas has competitive esports teams playing League of Legends, Overwatch, Counter-Strike: Global Offensive, Heroes of the Storm, and Smite. Esports is a growing market worth $493 million, and now major sports organizations like the 76ers are taking notice.
The deals are part of a big expansion staged by 76ers owners Josh Harris and David Blitzer. They have acquired seven professional sports franchises between them: Crystal Palace of the English Premier League, the Philadelphia 76ers, the New Jersey and Albany Devils, the Delaware 87ers, and the Scranton/Wilkes-Barre RailRiders.
I sat down with Kemp, who ran global publishing at Eidos, and Greg Richardson, chairman of Team Dignitas and former CEO of Rumble Entertainment. Prior to Rumble, Richardson was a partner at Elevation Partners, a $1.8 billion private equity fund focused on digital media. Here’s an edited transcript of our interview.
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GamesBeat: What’s your perspective on the esports space?
Greg Richardson: Having been in the game business for—I guess I got into it 25 years ago. I watched competitive gaming grow up. I’m sure you remember it well. We started playing FIFA on our couches, two on two, screaming at each other. It mattered who the best was. Every game company I ever worked for, we always had tournaments. But I don’t think any of us understood it could be a stand-alone business in its own right.
StarCraft comes along in 1998. We all read about what happens in Korea. It’s this cultural phenomenon we half understand, because we got how fun it is to play those games, but half it’s complete de novo for us. It becomes the national pastime in Korea. Then fast forward another 10-12 years. This business created itself, frankly. I don’t know another business I’ve been involved in where, in this case, the players basically decided they wanted this industry to get built.
They didn’t wait for the publishers or for some entrepreneur to show up. They just said, “We want to see who the best is. We want to see the best teams. We want to see our favorite games. We’ll aggregate it together, online and offline, and we’ll make it happen.” Now we’re in a situation where you have nearly a quarter billion people who will watch an esports match this year, really without any outside capital or publishers exerting catalystic influence. It feels like an amazing opportunity. This giant audience cares deeply about it, and yet we haven’t been able to come in and say, “How do we cement this thing that people have decided they care so much about?”
As an investor you get excited about those opportunities. What are the ingredients we need? How do we take these people and build this into a $10-20 billion business, giving the fans what they want? What structures and rules need to be in place to create an enduring league, just like with traditional ball-and-stick sports? Jonathan and I want to be part of helping to define that and figure it out in a way that will make the fan interest go from here to five times here, build a real business behind it.
GamesBeat: How did you start noticing esports?
Jonathan Kemp: Greg’s point is why I’ve ended up here. The passion from the fans is something you don’t see elsewhere. It’s unique. This industry has grown up organically, grown through that fan engagement, to the point where it is now. It’s an exciting space to be.
For me, you have this dynamic and exciting marketplace. You have a very cool ecosystem of teams and players and fans. Now we’re bringing in the sports expertise, the broad management team. That, for me, was a huge opportunity. We can talk a bit more about my background around sport and gaming, but the crossover I saw was so significant that I knew I had an opportunity to add value.
GamesBeat: Do you have to know your sports history, sports in general, to know where the strategies and opportunities are at this point?
Richardson: In some respects you do. There are lessons to be learned around the kind of owners came in, the way players were treated over time, how brands were built, how fan engagement developed. We think about how big the ball-and-stick sports are today, but that wasn’t always the case. Arnold Palmer recently passed. He’s very fairly recognized as someone who catalyzed modern sports. He was the first guy in an individual sport who stood up and said, “Wait, I’m not just grateful to be here. Maybe there’s a way to step back from this and make it a bigger business, which rewards me and my sponsors and everyone else.” That seemed to energize the NBA to change, the NFL, and on and on.
Yes, we have to look for a lot of lessons in what has historically occurred in sports and what works today. But we also have to recognize that this is a different animal. The fans, the games, the fact that you have publishers who own these franchises and the intellectual property, the way it’s delivered digitally—there are enough differences that if you don’t recognize them, if you just think you can hire someone out of ESPN or a sports league and they’ll create the future of esports, you’d be making a mistake.
Kemp: Also, that growth has been so exponential. Other sports grew organically over such a period of time. Word of mouth was involved. In the U.K., sports have grown up from neighborhoods playing neighborhoods, villages playing villages. Now you have this growth that’s exponential around the ability to determine who is the best player, which is the best team. You can do that almost instantaneously. Historically, with traditional sports, that was a much more time-consuming experience.
Recognizing what we can learn that has happened historically in sport generally is important, but at the same time we need to acknowledge that there are fundamental differences. We need to be appreciative of those differences.
GamesBeat: It seems like everyone had to learn how to be a spectator in games. There’s such a difference between hardcore fans who appreciate spectating and the rest of us who can’t follow these games.
Richardson: You hit on both the opportunity and the challenge. The opportunity is you have these people—Twitch now says their average viewer spends 90 minutes a day. That’s a pretty engaged audience, especially when you have 100 million people like Twitch does. That’s a big opportunity.
The challenge, though, is that these games are complex. They weren’t necessarily built to be spectator sports. They’re not easy to explain. We don’t have the legacy of parents teaching the subtleties of football to their children. We as an industry have to figure out, how do we make this more entertaining? How do we create games that are easier to spectate? How do we explain what’s going on in a way that brings in an audience?
Kemp: For a lot of those fans, it’s aspirational. It’s achievable. You see somebody play these games and you think that could be you, with whatever amount of time and practice and skill. It doesn’t look a million miles away from something you’re able to do. Whereas I ruled myself out of playing professional football fairly early on in my life. [laughs] You have that great ability to inspire people. People have this aspiration. That’s a big, important part of this.