EPTAs the "fore-runner" of e-Sport tourneys, shouldn't there be more info on their financials? Maybe not?
Financial Concerns - Page 2
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mizU
United States12125 Posts
As the "fore-runner" of e-Sport tourneys, shouldn't there be more info on their financials? Maybe not? | ||
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Bagration
United States18282 Posts
On October 29 2011 03:56 mizU wrote: Does anyone know if GSL is making money? As the "fore-runner" of e-Sport tourneys, shouldn't there be more info on their financials? Maybe not? GSL should not have any financial problems barring truly extraordinary conditions because they are able to broadcast their tournaments through TV. This allows them to earn more revenue through higher viewership, and higher advertising revenues than from simply streaming. For example, it would be impressive for a streaming tournament to have more than 50k viewers, and the ad rates for Twitch Tv is $2 per 1000 people who view a commercial (I believe 50% of ad revenue does go to Blizzard for tournaments with $5k or more prize pool though). So the tournament earns about $50 per ad shown. GSL should not have any problem reaching hundreds of thousands of viewers through TV broadcast, and the ad rates for TV are far higher than livestream. This mean much more revenue, even with 50% of ad money going to Blizzard. Second, GSL is a product of GomTv, which is a large media company in Korea. Once again, the financial fallback is in place, similar to IPL. Finally, GSL is also a very established product and enjoys strong sponsorships from well-known companies (Pepsi, LG, Samsung, etc). | ||
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Bagration
United States18282 Posts
On October 29 2011 01:05 Palmar wrote: Without having any relevant insider knowledge, I think Sundance is on top of things with MLG, he knows he's running a business, and he knows he can't run a business without money. Just look at MLG's relatively low pricepools, and you'll see that they as an organization are taking a more careful approach to their finances than upstarts like IPL and NASL. It's understandable, MLG is already a recognized brand, but the others desperately need to get their name out there. I'm willing to bet Dreamhack is not run with major losses either, as another established organization, they almost definitely already have the financial infrastructure in place to support their events long-term. Remember that both MLG and Dreamhack have been around for a while. So I don't really think there is a problem at the moment, the best run organizations and leagues will survive. It may be necessary for someone like IPL to take losses for a season or two in order to establish themselves in the scene, because no matter how you look at it, MLG is the major player in North America, Dreamhack in Europe and GSL in Korea. What I think will happen is that we'll see less tournaments, as you can't run 10 different big leagues realistically, it doesn't even happen in sports much more popular than starcraft. But less tournaments isn't necessarily a bad thing, it just means those that are out there will be bigger and more prestigious. MLG appears to be a financially sound company and that is of course a huge relief. But its prize pools are also very low in comparison to its competitors. While it is still able to draw huge hype and attention with a $14k tournament, the problem of financial viability then falls upon the pro players: Many cannot support themselves on such low prize pools. If a player wins 3 MLG circuits, a huge accomplishment now that the GSL partnership is in place, the player still only makes 15K (assuming going to Korea for Code S is not an option), and possibly less considering travel and lodging. Or let us assume a player wins 4th place at all the circuits, once again a very respectable and consistent performance. But the prize pool for 4th place is so low ($1400) that it may not even cover the player's travel and lodging! Of course MLG is raising the prize pool next year, which is very good to hear, but I do not expect it to be substantial or else MLG will lose money as well. | ||
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Primadog
United States4411 Posts
On October 29 2011 03:44 cz wrote: And if we were to attract these people, what exactly would they do differently? What's so special about business-minded people as opposed to what we have now - what would be actual, observable differences that increase profits (or decrease losses)? Here's an example to consider: Why is it Team Liquid, the center of the StarCraft Universe, running a team that lost a bidding war against EG? In what universe was that a possibility? What does EG has that TL lacks? Given the inherent advantages that is Team Liquid banner, why does TL has a smaller financial foundation? That even when Huk is willing to accept a lower salary, TL does not have a budget for it. Why is it you can never buy a TL shirt because it's always sold out? Why is it TL has 3 sponsors to the dozen of EG? This is not a slight against TL, you can see examples of this everywhere. Business people are necessary evils because our industry have not properly utilized even our existing, hardcore userbase. The late-night anime industry brings in billion yens in revenue. Did you know that it is largely sustained by about 100,000 "otaku" population? That's about the size of the hardcore viewership in SC2, but there's a strong disparity between how much discretionary spending by ESPORTS fans compared to any other industry. This is because we have consistently failed to produce stuff people are willing to pay for, a lack of economic innovation. It's not because StarCraft fans have no money either. Why does people go to barcrafts? It's awfully expensive to go to, but people go anyways. Chill been to one too. People attend because it provides an compelling atmosphere, and it's worth their money. The "we are poor" hypothesis does not hold water when you consider how prolific are barcraft or coaching. The money is there. It's not about being clever. We are talking about glaring, systematic problems of our industry. | ||
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QuanticHawk
United States32089 Posts
everything falls back to even the biggest esports (sc2, lol, etc) still being a niche thing, with viewership numbers that are not too appealing to a national or international company trying to brand itself on a large scale. On top of that, the demographic that esports caters to, while growing, is still small and very specific... definitely 25 & below on average, but surely tech savy enough to find ways of pirating streams and blocking many of the ads that are used online. That further limits the companies that would be interested in advertising and sponsoring events. diversification is key for the reasons that the op stated: extra eyes and reduced costs if all the same equipment and sets are used. the number of people tuning into something is what will drive everything ipl, even if it doesnt make money from the league itself, is good for the company as a whole because it increases exposure to everything else they do (and their sponsors) as kondora said. there's a definite benefit for them. I'm not sure why other major companies that dont have that kind of incentive would continue to stick around because it's a double edged sword. you can cut your prize pool to turn the red into green, but you'll have talented players in other jump to other leagues, and the eyes will go with them. | ||
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Bagration
United States18282 Posts
On October 29 2011 02:54 Primadog wrote: all three NA majors are losing money. The difference has always been at what viewer base scale do they plan to break even. Currently, NASL's break-even line is closest to our actual viewer-level; MLG is furthest. Things may change when MLG restructures (note the fact that MLG had to restructure). As-is, the starcraft 2 population is too small, too spread out to sustain even our current level of activity. This is not doom-n-gloom, just that our industry is immature. Additionally, we really haven't find a proper way to produce contents and materia that people will pay for, even for our existing, hardcore viewer base. The hardcore viewership - ones whose entertain are primarily based on eSports - have money, but nobody has properly utilized them. That's why you see these random fundraising that are highly successful. These kind of hijinks are not sustainable and an highly inefficient way to move money around. Interesting point and perspective you make there. What I do fear is a shift towards online-tournaments if these major leagues are not successful, but then it reduces the prestige and size of the scene. In terms of content, I did enjoy the roundtable analysis of HD, Painuser, and Catspajamas during the finals of IPL 2. They took the time after the games to give their analysis, and predicts on the match as it was being broadcasted. Perhaps the tournaments are focusing too much on games? Do we need more SOTG or LO3s? Looking at other mainstream sports, there is a lot of time dedicated to analysis and commentary, and commentator predictions. Should esports use this as well? Already IPL has done a very good job with content, filling up most of the time during IPL 3 with some sort of pre-recorded ad, promo, or interviews, or even the top 10 plays. Any additional thoughts? | ||
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Integra
Sweden5626 Posts
And most of the times things aren't just only "great" or "fucking terrible" most of the times it's somewhere between and the reasons for them shutting down are different. some are actually losing money and in the end lacks the fund to continue while other just fucks up in the leadership side and has to close shops due to things not relating to the actual income of the game itself. Other companies just closed because they didn't make enough money. | ||
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Primadog
United States4411 Posts
Nobody in the industry know what we're doing. I have consistently preached this message to anyone who would listen, that includes some of the big guys we talked about in this thread. Of course, many took offense to that. Having a bit of humiliaty, and willing to keep an ear open for new ideas, are what's most needed from the community leaders among us. Without that, eSports will always fall short of its true potential. its a damn shame | ||
thedeadhaji
39489 Posts
On October 29 2011 00:53 Chill wrote: I agree. The thing is that a company can sustain massive losses for a year or two without really showing it. IPL lost money, I'm sure NASL is losing money. I'm hoping MLG is at least breaking even. Without seeing the balance sheets there's no way to know. And there seems to be this huge "Esports is huge" push going on, but is it really? It seems like everybody but the very top players are just scraping by. Are these teams actually making money? I'm worried it's all smoke and in a year when we need to start seeing profits, everything will be gone. A similar thing happened at the start of BW everyone seems to forget (massive prize pools that were never done again). Exactly the concern I voiced to Neo over the weekend. I sincerely doubt anyone but the toppest of top players (and MAYBE the title sponsors of events, because the ROI might be better than traditional media) are coming out in the black... | ||
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Integra
Sweden5626 Posts
On October 29 2011 06:42 thedeadhaji wrote: Exactly the concern I voiced to Neo over the weekend. I sincerely doubt anyone but the toppest of top players (and MAYBE the title sponsors of events, because the ROI might be better than traditional media) are coming out in the black... At the same time there are other events that are actually making profit right now like Dreamhack. | ||
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icydergosu
528 Posts
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Primadog
United States4411 Posts
Dreamhack is different than IPL/NASL/MLG. It's a mega-LAN, and its foundation is still people bringing their own gears over and lan all-night long. The tournaments, including SC2, are just a sideshow, even if eSports has since become a bigger portion of Dreamhack. The concept is similar to how panels and concerts in ComiCon and AnimExpo are expenditures, but overall the organizations are profitable and expanding. Its per-capita fees are higher: about $70 an entry compared to $20 of MLG. It has a history behind it and earned its growth organically, that's why it's operationally profitable, and the reason why you don't see Dreamhack needing a new round of venture capital ever few years. tl;dr; dreamhack is profitable. Using that as base-line, let's compare it with MLG/NASL/IPL event staffing: MLG ~hundreds, IPL ~hundreds, NASL ~dozens per event cost: MLG ~mid-high six digits, IPL ~high six digits, NASL ~low six digits ticketing: MLG $20, IPL ~varies (largely free), NASL $25 attendance: MLG ~low 5-digits, IPL ~low 4-digits, NASL ~low 4-digits peak concurrent total viewership: MLG ~200k, IPL ~115k, NASL ~85k All public information. You don't need to be an financial analyst to be troubled. | ||
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Bagration
United States18282 Posts
On October 29 2011 06:47 Integra wrote: At the same time there are other events that are actually making profit right now like Dreamhack. GSL should be making profits, but they are being broadcast on TV and enjoy higher prices for ads and a wider viewing audience. As for other tournaments, there is very little information on the matter. Tournaments do not generally disclose such finances, and we must estimate their finances through viewership, prize-pools, sponsorships, etc, but even that is very speculative. As such, statements such as Mr. Ting's admitting that IPL 3 was financially in the red are rare. | ||
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_awake_
196 Posts
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Bagration
United States18282 Posts
Second, are travel costs getting in the way of tournament profitability and the viability of progaming as a career? IPL 3 paid for the travel and lodging costs of 16 players, several of which flew from either Korea or Europe, which alone may cost tens of thousands of dollars. Earlier this year, many Koreans pulled out of NASL due to a dispute over travel expenses and NASL's unwillingness/inability to pay the costs. Any thoughts? | ||
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Primadog
United States4411 Posts
Travel is a significant portion of a teams budget, and for most, the majority of its yearly budget. Traditionally, travel has been the responsibility of teams, not tournaments, but the shift you noted has become much more regular of late. It's possible that travel costs become more consistently shouldered by tournaments in the future. | ||
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