essays and pithy thoughts

Nomadism, continued

in glhf, mailbag

A much appreciated positive review, along with a detailed unpacking of the ridiculously steep slope every team faces in today’s scene, was penned by the manager of Quantic Gaming; a widely known team which, despite exhibiting all the popularly held indicators of success in this industry, recently decided to cease operations.

EDIT: Excuse any typos, I’m having to run out so I was in a rush… TL;DR; Starting, growing, and operating a global team isn’t easy or trivial, it’s bloody hard as hell, even if you are fortunate to have luck and money behind you, and bring demonstrated small business expertise to bear – you have a long hard road ahead, if you make it at all – even those appearing to “do well” right now, are making meager wages at best, hanging on to some hope of future return, to justify the arduous grind that seemingly never ends…

Alright Reddit – I don’t know why this Chris guy’s blog postings don’t seem to do well on Reddit – maybe it’s because he asks more questions than provides answers, or maybe it’s his writing style, or people just don’t know of him, REDDIT HERE THIS! –> This guy actually is asking all the right questions, knows a ton about the dynamics of sports business as they apply to this activity, and in the case of this specific post, couldn’t be more spot on.

Even long ago established teams like Dignitas started with a very local focus, then regionally, then slowing expanding to become a global giant. But the difference is that today’s teams are very much competing in global market, and there is no choice about it, if you want to be a commercially viable alternative capable of delivering both the reach and engagement metrics and behaviors needed to curry both favor and $$$ from much needed sponsors.

People see all these teams failing, and quickly draw conclusions based on the most visible differences between <team that just failed X> and <incumbent well-established market leader Y> and over-simplify that to extrapolate some explanation that makes sense of the madness. But simply put – being like the incumbents, doing everything they do, as well as they do it – takes money – everything takes money, from competitive participation, to player and partner promotion, staff, brand building, everything. Those teams have those relationships, and revenue sources, already well established and working, while newer teams have to build that revenue stream, while also building a brand and roster and media capability, and marketing business, all at the same time – or they don’t stand a chance at ever seeing those dollars.

This creates an environment, where bold and hungry entrepreneurs, like myself, have to go big or go home, making high risk all-in play after play, engaging unreliable private funding sources who lack the same commitment and belief in the business model we do, and learn from making mistakes, some big, some small, innovation without a net – to somehow stand out and command the needed buzz to raise the eyebrows of those with what has become the lions share of operating revenue industry wide – sponsorship – only in eSports it’s different, it’s not sponsorship for goodwill or the easily measured and well reported on metrics while doing well at large competitive events which are highly produced and broadcast to a massive viewership – rather sponsorship for engagement based deliverables, content, appearances, and social campaigns – all activities requiring both earmarked budget, high value personas, and experienced marketing delivery staff and management – oh, and you still have to pay players, outfit them, get them to any number of events all across the world, cultivate their both skill and their brand, and get them to do these things they in most cases clearly don’t enjoy doing – and all this, before you can even ask for money that is coming from a somewhat finite pool for a space that is growing but in which all or most of the endemic money is already spoken for, and a viewership which is fragmented, at war with one another, and moving between titles constantly…

Starting a team today – either takes landing a large lifestyle non-endemic brand sponsors to do safety, or it requires a 3-year timeline, both requirements the incumbent teams have in many cases met long ago – leaving the newer teams at the whim of private money, scratching for both the talent access, sponsor attention, and organization capability needed to make the model work globally, right off the bat -it’s a tall order, one that even with a lot of luck, and a lot of money behind you, isn’t easy to fill. So when team after team isn’t making it, because they invested heavily in SC2, a title which showed a lot of growth in 2011 with no sign of slowing down, only to see comparatively far less growth in 2012, a impending shift in the entire funding model, and a future 2013 filled with massive uncertainty, in a somewhat saturated and largely unregulated marketspace, largely dominated by incumbents who just keep getting bigger and more powerful, controlling even more mindshare and market share daily – as a team owner, you are left asking yourself “where is the growth?” – “does taking more unreliable private funding even make sense?” – “will the revenue ever come to cover my positions taken” – “will I ever be able to get what is needed to satisfy sponsors while I’m struggling monthly to keep operating, while investors, players, and fans are losing confidence?” –

These closures are in part because of the clearly obvious missteps and failures of management, sure, but it’s unfair not to acknowledge the fact the underlying business model, changing market dynamics, and the ever increasing list of expectations and demands required to even have a shot at becoming a sustainable global team, media company, and marketing agency all in one. It’s no wonder team after team are throwing in the towel – saying “maybe this can’t work, or maybe the opportunity costs are just to high to justify continuance without some visible positive change in performance indicators”. It’s not a lack of will, or commitment – It’s just good sound business decision making. In life, poker, and StarCraft – you gotta know when to flod’em, as they say…