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Hello my name is Bagration, and welcome to my blog. In this blog, we shall be discussing ways in which we can grow the competitive SC2 scene, and Esports in general. With that said and done, let's begin:
Recently, I was watching the IPL stream where Mr. Ting had been taking questions on IPL 4. A statement that I found particularly concerning was the fact that IPL 3 had spent roughly $1 million dollars, yet had ended up losing hundreds of thousands of dollars.
From a business prospective, this is horrible news. If premier tournaments such as IPL cannot be profitable if they hold LAN events, companies are less willing to provide sponsorships and partnerships, and a vicious cycle begins, and eventually will lead to the collapse of the tournament.
In IPL's advantage is the fact that they do have a significant financial overhead in IGN. IGN acts as the umbrella entity over IPL, and IGN can dillute the financial losses from IPL from its other sources of revenue, and thus continue to sustain IPL longer than had IPL been a singular entity. But nevertheless, no company is willing to hold on to a division that consistently loses money.
Another advantage is that this tournament was IPL's LAN debut, and the overall response to the event was overwhelmingly positive. This is good news since it suggests that IPL is still attracting viewers, and thus sponsors will become more interested in IPL due to its growing viewship.
How do we solve such a structural financial problem? I do not work with IPL, and thus my ideas are merely suggestions from a lone individual. One way IPL can increase profitability is by cutting costs, as Mr. Ting notes that IPL 3 had spared no expense. Obviously, this is not something that many fans nor players would want to see: IPL 3 stood out from the pack because no expense was spared, and this perfectionist attitude will bring in more viewers and sponsorships. Still, while we can agree that this is probably an unwise business decision, it will almost certainly remain as an option for the IPL executives.
Another possibility is to diversify the product. League of Legends is often looked down upon by SC2 players, and one of the critiques that many made for IPL 3 was the LOL finals broadcast which delayed the SC2 finals. I too feel that this was a poor move on IPL's part, but their idea to diversify their product was a good idea. Whatever the community may feel about LOL, LOL is immensely popular, and in NA and EU, arguably more popular than SC2 (gasp). If LOL can match similar viewership numbers, this allows IPL to make additional revenue, but at a marginal increase in costs, since many large costs such as facility, production, staff, etc would been already largely paid for, and could increase total viewership numbers, which would also encourage sponsors.
TL;DR Financial viability is very important to the success for SC2 tournaments, and how we can improve this.
Thank you for taking the time to read my lengthy presentation. Of course, I now open the floor to the community. Any thoughts, comments or ideas? Thank you.
  
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Calgary25969 Posts
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).
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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.
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konadora
Singapore66117 Posts
in a BW-related show a couple of months back, called "After Talk", one of the BW commentators mentioned how e-sports is mainly a loss-based investment, but the only reason investors continue to pump money in is because of the increase in face value of the companies. by investing into something youths and the masses enjoy, even though they make financial loses, they increase reputation and improve their image. but yeah, as you pointed out, other than IPL, it's rather hard for companies to continue pumping money to be faced with losses which you really can't afford.
the idea of diversifying is not a bad idea. with the resources for streaming/broadcasting already at hand, all it needs will be just some adjustments and they're ready for another game.
chill has a good point though, something that i've been worried about ever since the launch of SC2. i felt that way too many companies are throwing ridiculous amount of sums of money into SC2, in the name of ESPORTS, without waiting to see it develop in the first place. it's like forcing steroids into a newborn and the whole process, to me, felt rather unnatural. there's no prejudice or anything of that sort when i say that the whole SC2 and ESPORTS bandwagon was fueled, at least initially, because there was tons of money involved. even one of the GSL winners (was it MVP?) said so that he played because of the money. (ok i think i went off tangent too much lol)
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they will continue to operate so long as the have a good prospective in the long run. like chill said, they can cover their losses relatively easily for the first little while, and SO LONG as they expect to see some sort of profit in the future it is worth it to keep going. the question is how long are they willing to wait before seeing a return?
people are definitely putting a lot of faith into the scene and its expected growth, hopefully that pays off for everyones sake.
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Great blog. I always wondered what the business expectations are for events like IPL / NASL / MLG.
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IPL audience on stream looked super tiny, the crowd shots when they the panel were stunning. It was like 5% full, i wonder why? I'd love to see stephano, select, mc, and incontrol talk o_o. I do think they made quite a mistake holding it in a 21+ venue rather than not. On the most basic level, the amount of people who wouldn't go to a tournament unless there was gambling and drinking involved (lol?) should be (i think) greatly surpassed by the number of people under 21 would have liked to go to the event.
Touching on the cutting costs thing a bit, I've always wondered if e-sports in it's current state is growing too fast. When they go on talk shows, people like Incontrol and others are always comparing "the best tournament". They're always talking about how great it was, how it could be better next time, what needs to happen, and while some of it is necessary, others may benefit from being pushed back a bit. To hold a bigger tournament means to put more money into it, and the only way to get your name into the scene is to throw a great tournament. Trying to directly compete with an MLG at this stage of the game may be fighting not to have a larger revenue share, but to survive. My main concern is that the prestige and cost associated with maintaining a premier tournament is growing faster than people are hearing about it. Secondly, the fan base. I think it's safe to say that the majority of new people who go to tournaments aren't new to starcraft, but rather already play and have decided to attend their first tournament. The increasing base is coming from a set population, not people as a whole.
Of course, it takes money to make money. If something is poorly set up and run, it's more unlikely for people to come back. Lan events also have really large sunk costs associated with computer and other tech equipment, which will take many tournaments to average out.
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I think people are seeing the viewer numbers and assuming there must be a business model that works. Part of the problem is that advertising dollars don't actually get spent rationally. Ads on websites pay a lot less than ads in newspapers/magazines, even when they have the same number of viewers, and I would assume the same is true for streams vs. tv. I think that's actually a big part of why the idea of putting SC2 on tv makes more sense than some people realize. My guess is that at some point advertisers will wake up to this and and the pressure to find cheap ad opportunities will push online advertising up to reasonable prices. But that's a huge industry change that we can't do anything about. We just have to hope it happens soon enough (or that we make the jump to tv).
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Katowice25012 Posts
On October 29 2011 01:41 phiinix wrote:
IPL audience on stream looked super tiny, the crowd shots when they the panel were stunning. It was like 5% full, i wonder why? I'd love to see stephano, select, mc, and incontrol talk o_o. I do think they made quite a mistake holding it in a 21+ venue rather than not. On the most basic level, the amount of people who wouldn't go to a tournament unless there was gambling and drinking involved (lol?) should be (i think) greatly surpassed by the number of people under 21 would have liked to go to the event.
For the finals the theater was nearly full, but in the days prior yeah it was pretty empty. I question IPL's strategy of hosting these at 21+ events but David Ting tweeted about having the next one in Vegas so I guess thats their thing. At this point I don't think a LAN can even start up and try to hang with 'the majors' without incurring a huge loss in their first few ventures, so we'll have to see if that causes problems in the next year.
We're in kind of a weird place right now because these kinds of things are making the ears of sponsors perk up, but a lot of them are a little uneasy because they have been burned in the past with the millions of failed LAN ventures. We'll have to see if people can monetize things appropriately to a point that is sustainable. I'm pretty interested in seeing how everything pans out over the next year, these events can't just run at a profit so it comes down to being able to find backers who think the investment is worth it to put their name out there.
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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.
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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).
Can you elaborate on these prize pools? I don't know the really early live tournament history of BW but am interested (pre 2002 that is) in learning more from the financial side of it.
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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.
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.
Yeah monetizing it is difficult, especially when the most obvious way is pay-to-view but your main fans are going to be people who will be tech-savvy enough to find a way to get a pirated stream or something.
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Monetization has always been difficult for esports because we never really attract business-minded people in the industry, and the business-minded people that we attracts tend to be flight-by-night carpetbaggers that jump in and out and leave a trail of destruction in its wake.
To be sure, it's not impossible. BarCraft is a very obvious new concept that has been generating economic activity in esports. I just hope it can be properly harnessed to contribute back to the industry in some way. Before barcraft, there's also streaming and coaching - business concepts that fueled our economic engine for quite some time. Another bright spot is the Collegiate StarLeague. While it takes more long term to become a financial center, it can provide big dividends for the industry as it grow and prosper, and we're very close to that point.
We need more of these ideas.
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New, successful business concepts rarely happen in eSports. This is because when some business-major will come up with a business plan, we tend to kicked them right out of the community for "coming in to eSports to make money (fairly and unfairly)." We all seen it happens. ProVPro is an obvious example.
This is related to the dual business-community nature of eSports. To be successful in this space and not get rejected, you gotta be both a brilliant business-mind and understand what makes our community tick. How many people fulfill that criteria? Sundance is often cite, but many people forgot that he's not some miracle, instead he's a business guy with an team of media strategists behind him. He understand community relations is closer to politics than business, and treats it as such.
Starting a new business is hard enough already, but consider how much harder it is in eSports. Not only do you have to put together a viable business plan on paper, you have to communicate its feasibility to the community; not only you have to find and join the communities, you're also expected to provide all the details about your plans; It cannot be too financially successful, or else the community will say you're in it for the money; you have to locate community veterans to back your venture or else you're a scammer; etc;
Anyone who started a business before can see how much more hostile esports can be compared to more traditional ones.
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On October 29 2011 03:11 Primadog wrote:
Monetization has always been difficult for esports because we never really attract business-minded people in the industry, and the business-minded people that we attracts tend to be flight-by-night carpetbaggers that jump in and out and leave a trail of destruction in its wake.
To be sure, it's not impossible. BarCraft is a very obvious new concept that has been generating economic activity in esports. I just hope it can be properly harnessed to contribute back to the industry in some way. Before barcraft, there's also streaming and coaching - business concepts that fueled our economic engine for quite some time. Another bright spot is the Collegiate StarLeague. While it takes more long term to become a financial center, it can provide big dividends for the industry as it grow and prosper, and we're very close to that point.
We need more of these ideas.
Are you implying that the standard things established sports do can't work? The obvious idea seems to be the ones most people are trying - advertisements during tournaments, paying to watch the tournaments, endorsements, and tickets to events. Obviously there are details that are still unclear (sponsor teams or individuals? ban streaming to boost major event viewers?) Those things have clearly worked for other sports. Is there any reason they won't work here, other than just that the viewer numbers are lower? It seems to me that the real barrier isn't coming up with some clever way to monetize, but rather just in getting big enough numbers. (Part of the issue is maybe a lack of centralization. The NBA having a monopoly over basketball has a lot of downsides, but they make sure players don't play where you can see them without buying tickets to NBA games and so forth.)
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Cite "standard" implies there is anything that we (as an industry) haven't already attempted to copy wholesale from mainstream sports, besides getting on television. Copying mainstream sports (big and small) have got us so far, but it has not grown our sport to a sustained level. This is why many veterans has begun to reject calls like "let's get on tv" or "let's have KESPA."
Endorsements, advertisements, ticket-sales are already part of the industry revenue source, but their numbers pale in comparison (even in per-capita basis) to what any other sports rake in (mainstream or not). That's exactly why this blog was warranted.
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Calgary25969 Posts
On October 29 2011 03:04 cz wrote:Show nested quote +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). Can you elaborate on these prize pools? I don't know the really early live tournament history of BW but am interested (pre 2002 that is) in learning more from the financial side of it.
I may be mistaken, but I seem to remember there was a specific tournament in BW that TheBusDriver (or similar name...) won 10k with a 6 pool. My memory is hazy and it's hard to find information online about them  I hope someone who remembers can find in the blanks and correct me if I'm wrong.
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On October 29 2011 03:39 Primadog wrote:
Cite "standard" implies there is anything that we (as an industry) haven't already attempted to copy wholesale from mainstream sports, besides getting on television. Copying mainstream sports (big and small) have got us so far, but it has not grown our sport to a sustained level. This is why many veterans has begun to reject calls like "let's get on tv" or "let's have KESPA."
Endorsements, advertisements, ticket-sales are already part of the industry revenue source, but their numbers pale in comparison (in per capita basis) to what mainstream sports rake in. That's exactly why this blog was warranted.
Right, but I'm saying why? Is it just that the number of viewers is smaller? Or is there something about the community/sport/etc. that makes those models fundamentally work less well? It doesn't seem to me like starcraft viewers are somehow more bothered by commercials on streams than soccer or baseball viewers are. They seem to care *more* about companies that sponsor their favorite teams/players (or just anything in the industry, for that matter). My bet is that a higher percentage pay money in order to watch the game than do so for other sports (which are mostly available for free on tv/internet). So maybe I'm missing something, but it seems to me like it's just a lack of viewer numbers that keeps us from doing the same things that tennis does.
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On October 29 2011 03:40 Chill wrote:Show nested quote +On October 29 2011 03:04 cz wrote: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). Can you elaborate on these prize pools? I don't know the really early live tournament history of BW but am interested (pre 2002 that is) in learning more from the financial side of it. I may be mistaken, but I seem to remember there was a specific tournament in BW that TheBusDriver (or similar name...) won 10k with a 6 pool. My memory is hazy and it's hard to find information online about them I hope someone who remembers can find in the blanks and correct me if I'm wrong.
You might have been thinking of this tournament. http://pc.ign.com/articles/066/066321p1.html
I remember thinking it was too good to be true when it was announced.
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On October 29 2011 03:11 Primadog wrote:
Monetization has always been difficult for esports because we never really attract business-minded people in the industry, and the business-minded people that we attracts tend to be flight-by-night carpetbaggers that jump in and out and leave a trail of destruction in its wake.
To be sure, it's not impossible. BarCraft is a very obvious new concept that has been generating economic activity in esports. I just hope it can be properly harnessed to contribute back to the industry in some way. Before barcraft, there's also streaming and coaching - business concepts that fueled our economic engine for quite some time. Another bright spot is the Collegiate StarLeague. While it takes more long term to become a financial center, it can provide big dividends for the industry as it grow and prosper, and we're very close to that point.
We need more of these ideas.
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)?
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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?
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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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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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On October 29 2011 03:44 cz wrote:Show nested quote +On October 29 2011 03:11 Primadog wrote:
Monetization has always been difficult for esports because we never really attract business-minded people in the industry, and the business-minded people that we attracts tend to be flight-by-night carpetbaggers that jump in and out and leave a trail of destruction in its wake.
To be sure, it's not impossible. BarCraft is a very obvious new concept that has been generating economic activity in esports. I just hope it can be properly harnessed to contribute back to the industry in some way. Before barcraft, there's also streaming and coaching - business concepts that fueled our economic engine for quite some time. Another bright spot is the Collegiate StarLeague. While it takes more long term to become a financial center, it can provide big dividends for the industry as it grow and prosper, and we're very close to that point.
We need more of these ideas. 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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The op brought up a ton of good points, and there were many more in the thread
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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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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and to add too Primadog's excellent post:
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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To be sure, I really don't know what steps we need to take, but that's the key here.
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
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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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On October 29 2011 06:42 thedeadhaji wrote:Show nested quote +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...
At the same time there are other events that are actually making profit right now like Dreamhack.
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Is there any proof that Dreamhack, and i mean the SC2 Tournament side of it, is making a profit?
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None of the balance sheets are public, but there're plenty of ways to estimate revenue and expenses even if you're not privy to nonpublic information.
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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On October 29 2011 06:47 Integra wrote:Show nested quote +On October 29 2011 06:42 thedeadhaji wrote: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... 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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Just out of curiousity, is there any data on membership purchases for GSL, MLG, NASL, IPL, etc? These can be a very large portion of any tournament's revenue, and strong sales of these memberships could mean a difference of thousands of dollars for tournaments.
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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membership purchases are private and there's nothing I can release. The only thing that ever approach public information is when Sundance in a moment of weakness tweeted that he needs 100k subscriptions to MLG Pro (instead of 10k).
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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EPT
