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The transition plan

in glhf
Recommended reading: Mark Conrad - The Business of Sports: A primer for journalists The problem with prize circuits - Part 1, Part 2, Part 3

The following is based on the basic assumption that, while there is much in the arena of professional team gaming that hasn’t been seen before, we must still operate within the bounds of proven principles in the operation of professional team sports, if our goal is to create sustainable revenue streams and reliable jobs from it. It’s also based on the fact that the structure of professional team gaming doesn’t look at all like the structure of professional team sports today. What we do is not some sort of fundamentally new and unique endeavor from the world of physical sports. If we want to share in the sort of success that the largest sports enjoy today, we must operate along the same paradigm. (If you’re not with me there, I’d suggest you read my previous series of posts, in the hopes of bringing you on board, entitled ‘The problem with prize circuits’ – linked above.)

There’s nothing magical in what I’m about to discuss here; there’s very little in the way of drama, intrigue, or sex appeal in the raw business mechanics of sport. It’s all very much observable in the real world, tested and documented. I realize that, to most people that these concepts have a direct impact on, this crap is horribly boring. I get it. However, you and I both know that ‘professional gaming’ is a useless platitude when the vast majority of ‘pros’ in team games are emptying their bank accounts on a regular basis just to keep their status up; those that argue otherwise are just lying to themselves. This is something that is just a reality when it comes to solo sports and other endeavors like poker, but has no corresponding example in professional team sports. How team gaming operates simply isn’t sustainable for players, and that creates all sorts of underlying problems that impact gamers on a weekly basis.

Yes, a few leagues have managed to find a path to profitability and stability. A few teams have managed to find a similar path. However, it’s a precarious balance that is directly tied to a constant flow of new teams bringing new money into the system, the leagues and teams that have found it are few and far between, and no game has found a means to sustain the growth that we saw around 2005. Such leagues, generically referred to in the rest of this post as the ‘major gaming leagues’ (and I’m thinking of ESL, ESEA, and MLG specifically), provide some great services to the games they support, services we’d sorely miss if they didn’t operate. Yet, the fact still stands that most participants who would consider themselves ‘pro’ put more money in than they get back out, and the leagues themselves rely just as much on the various fees that come in from players than they do on sponsorship dollars they’re able to collect. These constructs look less like professional sports and more like recreational bowling leagues.

These leagues are definitely deserving of some applause for the stabilizing effect they’ve had on the scenes they support. What I plan to argue in this piece, however, is that these league’s models essentially set themselves up in a position which puts a ceiling on how far a game can grow. It’s a case study in trickle-down economics and league parity. Since leagues exist to profit and to make their ends meet first, the bulk of teams end up needlessly subsidizing these profits. At the same time, the top teams enjoy a system where each success sets the stage for greater success at the next step, destroying parity within the system and ultimately erodes at the very foundation of what keeps the scene running.

Even so, I plan to explain that these leagues are best equipped to usher in the next step in the evolution of professional gaming without forfeiting their ability to make money; and not only that, it’s actually their only way of guaranteeing further robust growth. To condense my point: the plan I’m describing here is not only the best thing for team gaming and the teams that comprise it, but would also allow the existing league constructs to evolve their role in a way that doesn’t require them to forfeit profits, and open the door to even larger profits than they would realize otherwise. (For the analytically challenged, this is known as a win-win.)

In order to have the greatest possible impact on gaming, these leagues need to move from their fixed position as a wedge between teams and profits, to a fluid position as an establisher of new independent leagues, and as a pathway for new teams and aspiring gamers to enter a tier of professional gaming that doesn’t exist today. They must become the means, not the end. Otherwise, gaming teams will not be able to move from consumer to producer, and gaming will not become a profession worth aspiring towards in the western world.

Shifting from monolithic growth to build-and-spin-off

At the core of professional gaming’s would-be transition into adulthood is a change in the mission of the major leagues. Instead of attempting to build a monolithic structure that acts as the single sanctioning body for all of gaming, which necessitates the prize circuit model that is holding back team gaming, major leagues should instead adopt an approach where they nurture a game to a high-level status and then grant its independence as a proper team sport league, while keeping a minority ownership in the newly spawned league along with the collective of teams that comprise it. As a game grows further, they can continue to spin off lesser ‘minor’ leagues as demand exists, and create promotion/relegation mechanisms similar to association football, or major-minor league relationships as in baseball. In this way, a major gaming league acts as the launchpad of new franchise-based sports leagues, instead of trying to restrictively house every facet of every league for every game and leaving the scene in a constant state of volatility.

I think this cuts to the core of the primary dilemma that team games have. The major leagues are absolutely necessary in providing a platform to get a game off the ground. Still, there becomes a point where this becomes less of a blessing and the circuit model becomes a terrific burden; where the league, well meaning or otherwise, actively undermines a game’s success by putting it in a state of arrested development. There’s a point in a game’s growth where the paternal role that a major gaming league has on a team game shifts from positive to inhibitive.

I can’t help but picture an unfortunately cocky kid that’s outgrown the need for training wheels but is still seen riding around the neighborhood with them on, who still thinks he’s hot shit in the face of reality. It’s been years since other kids took theirs off, but overprotective parents refuse to remove his. Regardless, he proudly rounds corners at reduced speed, dead upright, bragging about how fast he’s going. Counter-strike is that kid. The major leagues are those parents.

Whereas the potential of Starcraft was fully realized in Korea, so too could Counter-strike have been a true pioneer here in the States. Instead, league operators, who ignored fundamental principles of sports economics, placed the extension their own profits ahead of the well being of the sport and those who played it, and created a status quo in gaming that proved to be wholly unsustainable, yet continues unchecked. There comes a point where the endless inflation of prize pools ceases to have any meaning, where yet another tournament circuit does little to advance the sport and just accelerates the draining of the limited resources teams have. There comes a point where teams don’t need yet another nationally-based stop on a tournament circuit for which they have to scrape together more cash to attend and compete, but a place to call home, and a means of generating revenue for themselves that has nothing to do with prizes. Teams need a structure in which they’re able to function more as a business, and less as a habitual lottery player.

A large multi-gaming league, in its current form, is incapable of providing such a structure – one where teams are allowed to realize their potential as viable businesses and become part of the fabric of a town, acting as their game’s ambassador to a region, able to enjoy reliable revenues from a proven business model based on ticket sales and local sponsorships, no longer forced to keep their sole identity as unprofitable international nomads.

It really doesn’t matter how benevolent the management of a given league is; if they force team games to operate under the paradigm of solo games via the prize circuit, teams cannot achieve growth that’s sustainable. The prize circuit is the only type of model that makes sense for a major gaming league to operate under, yet it’s the exact opposite of the model that allows team sports to function properly and flourish. The only logical conclusion to be drawn is that, at some point in the development of a team game, it must be transitioned out from the circuit model and exist as an independent entity that can provide the structure it needs to further mature.

The tipping point is in the parity

The first step is getting the game to an appropriate critical mass. The existing prize circuit structure has proven quite good at getting games to this point, and growing along with them; we’ve seen a lot of leagues get to this point with a few team games. During this phase, the focus is on attracting more teams to participate in a broad competitive structure that links ongoing online competitions with significant offline events, creating an ecosystem in which meaningful and attainable rewards exist for teams able to climb to the top of the heap. Before a game can be elevated to a higher professional level, it must first reach the point where it has outgrown the prize circuit.

The point at which you know it’s time to transition a game to the next phase of it’s life is pretty easy to spot: the level of parity in competitions will start to fall off.

Early in a game’s competitive life, parity between teams is relatively high because the game is new and teams are still figuring the game out, and and influx of new players and teams ensures that talent stays generally widespread amongst teams for a little while, and a large group of teams have a legitimate chance at prize money. As time goes on, and the normal amount of attrition starts to happen to players and teams, the better players start to gravitate towards each other and concentrate within an increasingly smaller number of teams. The level of parity is almost never as high as it is at the instant a game starts its competitive scene. Instead of a large group of teams all having a relatively equal shot at making ends meet, that number starts to come down, typically to the tune of two or three teams that have reasonable shots at going home from any given tournament in the black.

The effect this has on a scene is to accelerate the attrition every scene experiences, until it surpasses the flow of new players and teams, resulting in the beginning of an unstoppable net loss of teams and interest in a game. You simply need to look to Counter-strike in the States to see the endgame of this pattern: You have one team (Evil Geniuses) with a legitimate shot at the winning the few major tournament still left here, you have Complexity who is really a shell of their former self, and then everyone else. There’s little to no interest in this scene because there’s nothing to be interested in. Woo, EG won again, fantastic. (Yes, EG on the international stage is a bit of a different matter, but that doesn’t help things here in the States as much as a thriving national scene would.)

Once such a situation exists, it’s hard to return things to a level of higher parity. The teams at the top get all the cash, so they have all the resources to sign and retain the best players. New teams don’t have a chance to get in on this without entering with more money already on hand than the teams at the top, and that just doesn’t happen often. Thus the game stagnates and eventually everyone’s left wondering why, with such powerhouse teams at the top of the scene, can there be so little depth in the rest of it.

Point is, there’s an identifiable moment in the life of a game where it reaches its peak operating on prize circuits alone. When parity starts to drop and the top end of the scene starts rolling away like the train in ‘Unstoppable,’ it’s time to head this situation off before it poisons the game’s growth.

Spin it off.

Here’s the bit that’s likely a bit radical and wholly untested, but I think is the key to making the leap from prize tournaments to a stable professional league structure for a team esport. In this step, the league is looking to act as broker between potential new investors in gaming, and the top teams in the game. The goal is to spin off a new league body, in which the major league is a part owner along with a new ownership group, each with license to run a franchise within the new league.

Instead of operating under the prize model, this league to be spun off should look like traditional sports leagues, complete with home cities and teams deriving their business model from that key portion of their identity. This spinoff can take many different forms, all of which are far beyond the scope of this post in particular, and will likely spin off into a few posts of their own. In any case, the realities of this step is up to the individual league to construct it in a way that works for them and the new owners stepping up to take part. The key is the creation of a new competitive system that exists separately from the developmental system that the major league has operated to this point; in order to restore a greater level of parity to that developmental system, the top teams must be weaned from the steady diet of prize money and set on a path to viability that looks more like a real sports team. They need a real sports league to do that.

The initial spinoff for a game can exist as eight or even six teams to start, and could be confined to a specific region of the country if necessary; going nationwide from the start will likely be a stretch for most upstarts. What’s important is that the region in which it starts is one that would be receptive to a progressive new sport. The focus goes from attracting more and more new teams and new players, to a focus on spreading the game within their home operating areas, reaching out to the communities they find themselves in, and earning money by generating attendance for their matches.

The major league continues to operate as normal, but now act as that crucial developmental layer between the professional league and the hopefuls that want to get there, and share in the success of the league they spun off as part owners without having to manage every last operational detail. As further growth is spurred, the major league can act again as an agent to bring new expansion teams up into the league they created, or spawn additional leagues that exist in lower competitive divisions. The options become literally wide open in shaping the future growth of a game.

Feedback.

I need your thoughts. I need a dialog on this, otherwise I’m just some crackpot with a blog. Please email me your thoughts and I’ll include them in a very special edition of the mailbag on Monday. This week I was dropped a most unexpected email, from someone who came across my blog after giving into the compulsion she gets every once in a while to google a certain public figure within gaming…