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On February 09 2012 23:40 Doodsmack wrote:Show nested quote +On February 09 2012 22:50 RenSC2 wrote:
As I was saying in my last post, the problem isn't the model, e-sports actually monetizes more than traditional sports, the problem is the viewer numbers. ...which is why a PPV model might be necessary. If there aren't enough viewers, then the ad model won't be sufficient. Professional sports on national TV have amazing viewer numbers and that's why they're able to offer everything for "free."
This exactly.
There is a pool of around 100K people who tune in to MLG / GOMTV / IPL right now. The ad revenue for that kind of base is not nearly as robust as you might think. Where this becomes problematic is that there are major economy of scale problems we run into for these organizations. There are certain fixed costs, and cost thresholds that exist for any production, regardless of size. Just because 1/30th (not a real number) of the people are watching an MLG then are watching, say, an NBA game, there is not necessarily 1/30th the cost. They both need a certain amount of support staff, for example, to provide a professional production. But you can't just pay the MLG producer 1/30th of what you pay an NBA producer, there is a certain minimum amount needed. (If you want a professional at least, and from what I have read here that is the quality that people are asking for.)
The point is, that while the cost is certainly lower to run a smaller event vs. a larger one, the reduction in cost based on size is not 1:1. That is why when you are on the smaller end of the continuum, as Starcraft is, there needs to be a slightly higher "revenue per viewer" rate to get to a sustainable level.
For example, I worry about IPL the most. I think that is the organization that gets the least amount of recognition relative to the amount they are investing into prodividing SC2 content. They have 4 casters on staff right now, they are running Team Arena's, and their live events (at least IPL3) attempt to really achieve a high level of quality / prize pool. When are they going to start making money? I guarantee you the 60K people watching IPL3 finals does not nearly cover the prize pool, much less the other fixed costs associated with it. As far as I am concerned, they are running an SC2 charity over there.
And lets take GOMTV ,the flagship. How much money, exactly, do you think a product like Hot6ix is shelling out to sponsor that organization? Enough to cover the Code S & A prize pools, studio rent, broadcast infrastruture, and paying the casters? As has been pointed out before, even with sponsorships and subscription rates, I would be shocked if GOMTV has anything more then a razer thin profit. My guess is they are banking on future revenue growth to make up for any thin (and possibly negative) margin they have now.
Right now, most of these organizations are running "loss leader" models, where they are not making money now, on the hope that they will make money in the future. It isn't a question of growing esports, it is a question of if the things we enjoy can even stick around.
I think Mr. Bitter's post hit the nail on the head. PPV is an idea, and I would support it... but it is possible that the community will just not go for it. But that means that as a community we need to be aware that there is a chance that we can't keep having the level of content that we have today. It isn't a question of "growing" esports, its a question of keeping what we have today.
tl dr: I think MLG / IPL / GOMTV are awesome products, and I love that they are out there providing me things I enjoy watching. I hope we can find a way to make them financially viable on a long term basis.
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When GOMtv got hacked last year their numbers were release they had earned something like $1.4million in subscriptions that year or something
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One of the reasons why most sports are "free" on TV is because the channel that shows the sport pays the sport for the rights to broadcast it. In the UK the FA (football association) doesn't have to pay for any of the equipment used to broadcast the games, its all paid for by Sky/BBC/ITV or whomever is showing the game. The cameras, cameramen, commentators, pundits, production staff, everything is paid for by the companies who have bought the rights to broadcast.
One exception to this model I would guess is UFC/WWE whom run production themselves (I know for sure WWE do, UFC probably hire a company) and that is why their big events are PPV. In the UK about half the WWE PPV's aren't actually PPV, they are on Sky, whom pay a butt ton of money to have them for free.
If I could pay £5-10 per month and that got me every single SC2 tourney, save for big big events, like I can with Sky Sports then I would jump at it. however if I have to start paying £5-10 for each individual tourney then I will have to choose which ones I want to watch. We aren't at a point where tourneys can go PPV only yet, there isn't a big enough market. HD should be paid only, for all tourneys, but up to 480p should be free, defo up to 360p.
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Well I'm not on team esports, If they want to charge for content I'd probably restrict my viewing to a few events/leagues but that's alright i feel there's too much stuff going on in sc2 as it is anyway i can't wait for a few leagues to go away so i can keep track of all the important games 
On February 10 2012 00:28 1sz2sz3sz wrote:
When GOMtv got hacked last year their numbers were release they had earned something like $1.4million in subscriptions that year or something
source?
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On February 10 2012 00:30 nttea wrote:Well I'm not on team esports, If they want to charge for content I'd probably restrict my viewing to a few events/leagues but that's alright i feel there's too much stuff going on in sc2 as it is anyway i can't wait for a few leagues to go away so i can keep track of all the important games Show nested quote +On February 10 2012 00:28 1sz2sz3sz wrote:
When GOMtv got hacked last year their numbers were release they had earned something like $1.4million in subscriptions that year or something source?
Cant be bothered digging but there were pictures released which had numbers as well as account logins
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On February 10 2012 00:30 emythrel wrote:
One of the reasons why most sports are "free" on TV is because the channel that shows the sport pays the sport for the rights to broadcast it. In the UK the FA (football association) doesn't have to pay for any of the equipment used to broadcast the games, its all paid for by Sky/BBC/ITV or whomever is showing the game. The cameras, cameramen, commentators, pundits, production staff, everything is paid for by the companies who have bought the rights to broadcast.
One exception to this model I would guess is UFC/WWE whom run production themselves (I know for sure WWE do, UFC probably hire a company) and that is why their big events are PPV. In the UK about half the WWE PPV's aren't actually PPV, they are on Sky, whom pay a butt ton of money to have them for free.
If I could pay £5-10 per month and that got me every single SC2 tourney, save for big big events, like I can with Sky Sports then I would jump at it. however if I have to start paying £5-10 for each individual tourney then I will have to choose which ones I want to watch. We aren't at a point where tourneys can go PPV only yet, there isn't a big enough market. HD should be paid only, for all tourneys, but up to 480p should be free, defo up to 360p.
I would love it if the big companies would team up and create an international 24h non stop StarCraft stream. I would pay 25$ per month to subscribe to that StarCraft Channel. Move all the big shows there (all major tournaments, Day9 daily, SOTG etc).
And for a league to enter that channel they need to fit a certain standard.
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On February 09 2012 22:55 hashaki wrote:Why hasn't any tournament tried doing a "pay what you want"-model yet? Or maybe someone has, but I can't recall it happened. Show nested quote +Speed Demos Archive, the home to video game speed runs, is proud to present a special speed running marathon: Awesome Games Done Quick, a 6-day online event played to raise money for cancer prevention and streamed live for you to watch!
The marathon has finished, and over $149,000 was successfully raised for the Prevent Cancer Foundation, our partner for this event. We deeply appreciate everyone who donated, watched, or helped out in any way! Ok, so that was for a charity event which might have been an extra incentive for people to donate, but that was simply from donations watching gamers do speedruns of games, some of them very odd and unheard of. But there are other methods to be explored for making money than jumping straight to "ok, now you gotta pay to watch our tournament". This being the internet and all (where so much content is free and has been for a long time) a PPV model or any forced payment for streams should be a last resort imo.
I watched almost all of the AGDQ, an event I had never heard of until a day or two before it happened, and I even donated $15(though I'm a very broke college student). I enjoyed the event so much that $15 was worth it to me. I was only going to do 10, but Flicky convinced me cause I wanted a rant, so I manned up and put up 5 more dollars x.x
Pay as you please can totally work, but I don't think it's a very sustainable business model. At all. The major problem with events outside of Korea is that, because of the logistics, it is hard to make a league or a model like a major sport. UFC and other PPV events are occasional because of this (and many have argued that UFC has saturated the market by having too many cards and that they're not all worth the $45 asking price). The only league I currently pay for atm is GSL. Great production value, lots of content that comes out at the perfect pace, and the best players and casters. I don't want to pay for an MLG because I honestly can't watch Sc2 for 3 days straight. Same with Dreamhack and IEM and the rest. NASL had very poor production values and their VOD system (at least for season 1) was hosted on Justintv... That's just not acceptable.
I pay the GSL because the cost matches the value. If leagues can't lower their costs to match the value of the event, then their business model is not meant to work and they will fail. I'm not saying I want them too, but the onus is on them to make it worthwhile to their audience.
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Imagine that almost all problems could be solved with 2 millions(random big number) of chinese/asian fans tuning to watch some IEM. I think thats where problem lies, in our western life its pretty hard to captivate a normal young person during their daily life, but asian countries seems like a place to grow esports, or to sustain it (BW story).
And this is why i called blizzard in earlier post, post-mortem fixes like organizing a shiny tournament in china will not help much to grow a base of players, the game is pretty hard to reach for standard Chinese person. Production values will go as far as it can go, and the downside of overblown production values compared to product will be that certain ammount of people will watch only "best" tournaments, with best values because of those values not product. You will never reach to average people with it, there is no other way than to make the game more accesible. Hope that changes in Hots, the UI is just a tip of an iceberg.
I know this thread is about monetazing esport, but its sad that tournaments/sponsors has to pay their toll for low casual player base / no asia.
Production values should be decent, but overblown production values are inefficient attraction long-term. And we shouldnt pay double money for it.
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On February 10 2012 00:41 Witten wrote:Show nested quote +On February 09 2012 22:55 hashaki wrote:Why hasn't any tournament tried doing a "pay what you want"-model yet? Or maybe someone has, but I can't recall it happened. Speed Demos Archive, the home to video game speed runs, is proud to present a special speed running marathon: Awesome Games Done Quick, a 6-day online event played to raise money for cancer prevention and streamed live for you to watch!
The marathon has finished, and over $149,000 was successfully raised for the Prevent Cancer Foundation, our partner for this event. We deeply appreciate everyone who donated, watched, or helped out in any way! Ok, so that was for a charity event which might have been an extra incentive for people to donate, but that was simply from donations watching gamers do speedruns of games, some of them very odd and unheard of. But there are other methods to be explored for making money than jumping straight to "ok, now you gotta pay to watch our tournament". This being the internet and all (where so much content is free and has been for a long time) a PPV model or any forced payment for streams should be a last resort imo. I watched almost all of the AGDQ, an event I had never heard of until a day or two before it happened, and I even donated $15(though I'm a very broke college student). I enjoyed the event so much that $15 was worth it to me. I was only going to do 10, but Flicky convinced me cause I wanted a rant, so I manned up and put up 5 more dollars x.x Pay as you please can totally work, but I don't think it's a very sustainable business model. At all. The major problem with events outside of Korea is that, because of the logistics, it is hard to make a league or a model like a major sport. UFC and other PPV events are occasional because of this (and many have argued that UFC has saturated the market by having too many cards and that they're not all worth the $45 asking price). The only league I currently pay for atm is GSL. Great production value, lots of content that comes out at the perfect pace, and the best players and casters. I don't want to pay for an MLG because I honestly can't watch Sc2 for 3 days straight. Same with Dreamhack and IEM and the rest. NASL had very poor production values and their VOD system (at least for season 1) was hosted on Justintv... That's just not acceptable. I pay the GSL because the cost matches the value. If leagues can't lower their costs to match the value of the event, then their business model is not meant to work and they will fail. I'm not saying I want them too, but the onus is on them to make it worthwhile to their audience.
This post describes something called capitalism. Let the market set the price based on an item's value.If any business sets their price too high (Netflix) their will be backlash. If you add a cost make sure the consumers can see the value of the added cost. If you have to add a cost to something that is free make sure you calculate that it is worth the backlash to lose fans/viewers its just a fact of business. Basically if a tournament wants to make you pay to watch the previously free stuff their better be an increased value.
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On February 09 2012 23:36 Equity213 wrote:
I have no problem wiht 'monetizing esports'. I just think that the business model Jerith proposes is ancient and dead. Other posters have put up facebook and google as examples of the new way, and I think its great.
vVv gaming can do whatever they want with their business, I just dont see that course of action being profitable for them.
Are you kidding? Microtransactions have been the way of the future for years now, expect it to come. There will be a day in the next 20 years when the concept of "buying a DVD movie" or whatever equivalent media is around will be foreign and strange. Why would you buy a movie? You just pay for it once to be streamed to your "device X".
Free and ad-funded models only work for things like google and facebook that get more views per day than there are people on the planet.
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Although I would have a bigger hole in my wallet I do agree that E-Sports needs to find a way to do more in monetizing itself. Quite frankly things just look so uncertain for the future of E-Sports with the way things are going. I want there to be a time where players are given salaries, viewers are willing to shelve out good money to watch tournaments, and Foreign teams to really prosper. Hell even the Korean teams don't make a whole lot of money unless you're 1 of 2 or 3 certain people.
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On February 10 2012 00:28 1sz2sz3sz wrote:
When GOMtv got hacked last year their numbers were release they had earned something like $1.4million in subscriptions that year or something
Even if they made $1.4 million, that doesn't mean $1.4 million PROFIT
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I think Chill is right when he says that people have grown to used to this charity model where theres so much content for free.
This thread seems to be a lot of people that demand free content, demand growth of the community and tournaments, want higher prize pools and want to see premium players with high quality production, and are throwing numbers and stats around with little true knowledge of whats going on behind the scenes, assuming that ads will just pay for it...
I really hate to be "that guy" and start bashing people, but a lot of the SC2 community has been way too spoiled with what they get. It seems that a lot of people think that all these production companies are basking in wealth and trying to scalp every customer they can for every dollar possible, but the truth of the matter is, businesses can only lose money or break even for so long before they call it quits and pack it in.
A lot of people hear the word Monetizing and immediately scream betrayal and backstab, that's fine, keep believing that but just don't be surprised when slowly over the years, content becomes less and less, and esports becomes a fad that a small group of people think back and reminisce about. This business model we have right now just doesn't last forever.
Anyone that argues that NBA or NFL is free, well... Do you pay for cable or satellite? Then you pay for channels, and channels pay for broadcasting rights.
The idea that anything is free is absurd, but so many people in this community want to have their cake and eat it too. Pony up and support the products you enjoy, and growth will occur. Bottom line is, if you don't want or care about growth of esports and just want to enjoy it as is, keep doing what you're doing, it won't last forever.
(Just as a side note, im not accusing everyone of never paying a dime for anything ever, and this problem isn't exclusive to the SC2 community either)
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1- I went to Brood War because I could watch in on youtube for free. I discovered Boxer, Nada and Oov through Nevake, Jon747 and Violetak channels. If that hadn't been for free, I wouldn't have paid anything, and I wouldn't have known BW pro-scene. The same way I watch tennis from time to time. If I had to pay fucking 20 dollars a month to watch tennis, I wouldn't watch tennis. Even Roland-Garros.
2- I have never watch a single code A, S or GSL game, and therefore I never became interested in pro SC2. Because there is no fucking way I will pay to watch people play a video game. If it had been for free, I would maybe have become interested in the pro-scene and therefore in the game. I haven't. One less client for esport and pro-SC2.
Asking people to pay for GSL is already a terrible idea. They make money from commercials and sponsors anyway. It works now, but it won't work long. BW would have died after few years if watching OSL / MSL / Proleague had costed anything.
Asking people for "quality stream" that are not at least as big as GSL is a joke. Seriously.
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Calgary25986 Posts
On February 09 2012 23:54 SACtheXchng wrote:Show nested quote +On February 09 2012 23:47 Chill wrote:On February 09 2012 23:42 SACtheXchng wrote:On February 09 2012 22:24 Klonere wrote:
So what people are asking for is:
- Have 1080+ free stream (a la IPL)
- Nearly TV broadcast production levels
- Constant flow of high quality content (many people commenting on MLG only being on a few times a year)
- Perfectly run event (no delays, tech problems etc)
- The best casters (despite that being an enormously subjective thing)
- The very best players
And then they would maybe consider dropping $5/10 on the event? Just trying to do some market research here. You sound like you think that's too much to ask. Chill wrote something about "Charity Model" earlier in this thread. On February 09 2012 15:09 Chill wrote:
I think people have gotten used to this charity model where the majority is given away for free. I, as a consumer of free esports content, feel offended by that term. It has happened more than once that I turned off one of these "Charity Broadcasts" just because I simply couldn't bear anymore the sometimes cringe-worthy, amateurish casting/production. Right now events that charge for streams are asking the viewers for "Charity Money" despite their sub par production. Well I'm certainly not going to give "Charity Money" to companies that have: - Bad quality streams - Bad broadcast production levels - Outrageous waiting times - Casters who drop hundreds of "Uhs" per broadcast - Sub par players That's fine, but there's a gap between what things cost and what people are willing to pay for them. If people will pay $100,000 for a production that costs $1,000,000, then we have a problem. So in a way you are agreeing with me that the industry is essentially asking the community for charity money? Be it for the greater good of ESPORTS or whatever, but asking people to pay $20 for something that's worth $10 is just that; asking for charity.
I think the following happened:
- A few companies started up first and got incredible attention.
- Slowly, more events and companies started up and the scene got oversaturated.
- Call it lost leader or bad business, the competition got so fierce that events started undercutting each other.
- Now every event and company offers more value than money they can generate.
The result is that companies are giving away a lot of content. People are used to paying a small amount for this content, and are actually demanding more content for their money.
I don't think the industry is pointing to a charity model, I think everything got fucked up and people have this vision that GOM and MLG and IPL are making good money. Therefore, they feel justified in demanding $50 worth of content for a $10 payment. And because of bad business, if one company doesn't give it to them, 2 others will come along and give it to them. That means they look like heroes for a week, until everyone forgets and that becomes the new standard and now everyone is losing even more money. Hooray!
I don't have a solution.
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On February 09 2012 15:09 Chill wrote:
I think people have gotten used to this charity model where the majority is given away for free. I think there's this perception that companies are making money, but I doubt they are.
It's a tough spot. Monetize and people revolt and you die. Don't monetize and you slowly drown. I don't know how it's going to work. Maybe you have to completely level up the broadcast to a completely different place where people expect to pay for that quality? No idea.
Edit: No one seems to treat this as a business. There's a feeling things should be free because they want it to grow. Until we get past that and make it a business, it'll never be more than a niche market, which is fine, but it is what it is.
western starcraft will never become a business if the primary viewerbase consists of people watching from home, which i strongly suspect is the case. people will say, oh, mlg orlando or whatever has a huge audience...well, huge is relative, and a tiny proportion of the market would actually travel all the way to orlando to watch the event live. it's hard to charge "live" fees that way.
the korean model is very different and very effective as a business. seoul/pusan is very densely populated, traveling to live events is usually feasible, and the big events themselves are concert-like. therefore they draw huge crowds who support their favourite player (cough bisu) - ever wonder why there are so many girls?
my honest feeling is that the western starcraft scene should remain mostly as a charity as it is. number 1, the skill level is quite abysmal in comparison (either that, or the korean guy is gonna win), and number 2, the scene is oversaturated atm. Even the GSL has become quite passe/flavour of the month right now, while we had to wait several months for the next starleague finals.
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I don't think someone with this kind of attitude and anger management skills should be given too much attention, especially because I think he misses two big points. First as he clearly stated himself the audience of sc2 is made up mostly by kids and college students who do not have the means to spend an extra amount of money each month for stuff they do not really need. Second this kind of audience seems to be the main target for advertising companies because they are young. So why produce content that is free for consumers but can be sold as a business model to all kinds of firms who want to advertise to this young crowd?
So I think that is exactly what is happening right now and it has gotten esports a long way the last few years.Why would you want to change that unless there is huge gain for yourself.
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Calgary25986 Posts
To add to the complication, while I think people need to pay more for content, I can tell you surely that if IPL or MLG went to a PPV model I would not pay. So I personally fit into exactly what I'm describing as the problem.
Also, when GSL was the only show in town I paid for every season and watched it religiously. Now that there are so many big ticket events, I pay for a few GOM events (far fewer than before) and typically watch Ro4 only.
I really think we would do well to have one western event elevated above the rest, and the rest be viewed as more of a minor ciruit. The problem is that everyone is trying to be the NBA right now and no one is willing to be the NCAA because we have 10,000 high school leagues all trying to do that too.
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On February 10 2012 01:03 Chill wrote:Show nested quote +On February 09 2012 23:54 SACtheXchng wrote:On February 09 2012 23:47 Chill wrote:On February 09 2012 23:42 SACtheXchng wrote:On February 09 2012 22:24 Klonere wrote:
So what people are asking for is:
- Have 1080+ free stream (a la IPL)
- Nearly TV broadcast production levels
- Constant flow of high quality content (many people commenting on MLG only being on a few times a year)
- Perfectly run event (no delays, tech problems etc)
- The best casters (despite that being an enormously subjective thing)
- The very best players
And then they would maybe consider dropping $5/10 on the event? Just trying to do some market research here. You sound like you think that's too much to ask. Chill wrote something about "Charity Model" earlier in this thread. On February 09 2012 15:09 Chill wrote:
I think people have gotten used to this charity model where the majority is given away for free. I, as a consumer of free esports content, feel offended by that term. It has happened more than once that I turned off one of these "Charity Broadcasts" just because I simply couldn't bear anymore the sometimes cringe-worthy, amateurish casting/production. Right now events that charge for streams are asking the viewers for "Charity Money" despite their sub par production. Well I'm certainly not going to give "Charity Money" to companies that have: - Bad quality streams - Bad broadcast production levels - Outrageous waiting times - Casters who drop hundreds of "Uhs" per broadcast - Sub par players That's fine, but there's a gap between what things cost and what people are willing to pay for them. If people will pay $100,000 for a production that costs $1,000,000, then we have a problem. So in a way you are agreeing with me that the industry is essentially asking the community for charity money? Be it for the greater good of ESPORTS or whatever, but asking people to pay $20 for something that's worth $10 is just that; asking for charity. I think the following happened: - A few companies started up first and got incredible attention. - Slowly, more events and companies started up and the scene got oversaturated. - Call it lost leader or bad business, the competition got so fierce that events started undercutting each other. - Now every event and company offers more value than money they can generate. The result is that companies are giving away a lot of content. People are used to paying a small amount for this content, and are actually demanding more content for their money. I don't think the industry is pointing to a charity model, I think everything got fucked up and people have this vision that GOM and MLG and IPL are making good money. Therefore, they feel justified in demanding $50 worth of content for a $10 payment. And because of bad business, if one company doesn't give it to them, 2 others will come along and give it to them. That means they look like heroes for a week, until everyone forgets and that becomes the new standard and now everyone is losing even more money. Hooray! I don't have a solution.
I agree with this. Bad business is still the norm in e-sports, not in an ethics way but in a spending way. Spending way too much on things they have no business supporting. If MLG and IPL expected to go to a PPV model when they made their business model that was a horrid decision with 0 proof that this model actually could be successful over the long term And running a business on an unsound model and will lead to another downfall or necesary consolidation in the industry.
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[Right now, most of these organizations are running "loss leader" models, where they are not making money now, on the hope that they will make money in the future. It isn't a question of growing esports, it is a question of if the things we enjoy can even stick around.
I think Mr. Bitter's post hit the nail on the head. PPV is an idea, and I would support it... but it is possible that the community will just not go for it. But that means that as a community we need to be aware that there is a chance that we can't keep having the level of content that we have today. It isn't a question of "growing" esports, its a question of keeping what we have today.
tl dr: I think MLG / IPL / GOMTV are awesome products, and I love that they are out there providing me things I enjoy watching. I hope we can find a way to make them financially viable on a long term basis.
I am glad that this rant spurred so much discussion. I also agree with Mr. Bitter's post, a realistic view of the situation.
eSports is too small for ad revenue alone to sustain it. First, we must figure out what people will pay for it, then we need to see if we can make it/market it/sell it profitably. If MLG (for example) can't maintain margin with what their customers will spend (i.e., eSports fans), then they need to stop.
As Peter Drucker said, "Wherever you see a successful business, someone once made a courageous decision." I think it's time for someone to make courageous decisions.
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