With some oligopoly market signs appearing within eSports, we decided to discuss those changes with one of the most prominent eSports personalities, eSports journalist and analyst Duncan ‚Thorin‘ Shields.
Starting up 2016 many significant changes took place on the global eSports scale. During the first days of January it was announced that one of the most prominent eSports competition organisers, Major League Gaming, was acquired by Activision Blizzard for reportedly $46 million. In December it became public that Chinese tech giant Tencent Holdings (who also holds investments in Activision Blizzard) now owns 100 percent of the League of Legends developer Riot Games. Just a month prior to this Swedish-based international media company MTG, who previously purchased ESL and, according to Breitbart, popular American online league ESEA, also acquired DreamHack.
Any avid eSports enthusiast will notice that such deals create powerhouses with a great share of influence on the market. With some oligopolistic signs appearing, we decided to discuss these changes with one of the most prominent eSports personalities, eSports journalist and analyst Duncan „Thorin“ Shields.
readmore.de: To begin with, please comment on the recent range of huge acquisitions in the eSports world. Do you think we can lately observe the shift towards an oligopolistic market?
Duncan ‚Thorin‘ Shields: The industry has two main chapters. First, from around 2000, when many organisers and teams started to come into the picture, until 2010-2011. Then it was mostly a grassroots attempt. At that time people running the organisations were gamers or players. They tried to grow from the ground up and in that sense made an effort, to get sponsored by the technology sector. In their marketing plans, they were just a small part though. In the last few years big companies from outside the scene have realised the potential and investment opportunity. They want to get their foot in the door with a perspective of someday making hundreds of millions of dollars. That is why those outside companies and investment groups are not just investing; they are trying to outright buy things. If you simply buy a team or organisation, you can quickly find yourself in a very good position. If a few things go right, greater sponsors join, the scene continues to grow – what now seems like a big investment, will be worth ten times more in a few years.
Game developers are also getting their hands on the leagues and tournaments right now. Riot Games steers the LCS on its own and Activision Blizzard recently acquired a huge platform by buying MLG. Do you think this endangers objective selection?
Many people thought back in 2012 that Riot Games had done things right, securing constant viewership numbers and founding stable a competitive scene by having the complete control in their hands. Now we see that League of Legends is still one of the biggest games, but its growth has been slowed down. It does not grow at the same rate as before. I am sure that some games outside the eSports scene have the same amount of casual players, but because of the gigantic eSports part League of Legends developers can even it out. However, the money in the CS:GO scene, excluding China and Asia, is currently the same as for League of Legends, due to sponsorships and businesses‘ cooperation. What Riot Games did at the start was, they boosted and propped the casual scene up and an eSports scene was built underneath its scaffolding. If you take scaffolding away, it is now same as in CS:GO or Dota 2. The problem that I see here is, there aren’t many benefits of a developer being a tournament organiser. It would have to be a very benevolent one, to a degree that Valve is. They do not do much aside from organising the majors. There are a lot of negatives. The biggest problem I see is, that they do not come with the corollary, positive effects, which we were sold, when the LCS era started. The reason League of Legends is co-operated, is because it did not advance in other areas. Riot has limited the scene and locked out the people, who would have brought the opportunities and money.
Do you think changes in ownership of eSports structures will somehow affect the fans? Does it bring the best quality for the end-user or less diversity? For example: If the game is not picked up by ESL, it will not be featured at any competitions.
On the smaller scale this always existed. It shouldn’t, but it did. This reminds me of what happened towards the end of Counter Strike 1.6. It was around March – May of 2012. The game was still doing fine in figures of people watching and playing it, there were still enough teams and organisations. What changed, was the fact that ESL had to decide and announce their plans for next year’s IEM series. At the time they had the unofficial status of No. 1 tournament organiser. Many others, who maybe didn’t have as good of a grasp of the scene, would just copy whatever ESL’s lead was. They decided that CS 1.6 has plateaued and the following year just went with the two titles: League of Legends and StarCraft II. There was no team FPS to replace Counter Strike 1.6. Because they dropped CS, everyone else, one by one, gradually dropped it too. So CS 1.6 never died, because of a lack of interest from fans or players, it became no longer viable as an eSport, when all tournaments dropped it. The nature of it was artificially caused by the ESL; they made it die off, but claimed it happened naturally. Due to this scenario, it took enormous efforts later on, to force the ESL to take CS:GO and fully embrace it. The skins, the betting and Valve creating the majors before the ESL had any big events themselves were those overwhelming reasons. So the artificial nature of how tournament organisers can influence the whole scene has always existed to a degree. Only in the past it was a killer, because people thought it had to be that way, whereas now it entirely decides what the eSports scene is about. Essentially, if something like Overwatch does not get picked up quickly without any miraculous betting or similar innovation, I do not see it getting into eSports. In theory, some tournament organiser could start working with it but now they have this group mentality, where they all tend to cover the same games.
Thorin’s Thoughts – ESL up to their Old Exclusivity Tricks Again (CS:GO)
Is there a viable solution, to trigger changes in this group mentality and stop the chain reaction?
Here I’d like to come back to another factor of the CS:GO story. The reason why the ESL did not put CS:GO into their pool instantly, was the fact that at the time the developers of CS:GO themselves had no clue it would become such a big deal and thus did not invest money into the scene. Contrary the eSports part of League of Legends has grown exponentially due to only one thing: Riot Games got League of Legends put into the IEM circuit. In the past the entire IEM circuit was funded by ESL themselves and their sponsors. Riot came and said: „We will pay the whole prize-pool ourselves, here is the money.“ The ESL suddenly had so many options – spend sponsors‘ money on something else, keep it… Initially it started a new era, when games had to have some support from the developers themselves. Can this change? I don’t see how any association would help. Ultimately the solution would be the same as the factor causing the problem: People getting together and deciding what to do. In my opinion it would be the best if there was an organiser, who would try to separate their brand. I never understood everyone following IEM’s suit. No one tried to go for an alternative path and to differentiate themselves by covering the other games. You can only do that by shifting your focus or having a different mentality than IEM and all the others following their path. Everyone thinks this one way: „Just follow whatever is working.“
You often work on the analyst desk for CS:GO tournaments. Tell me, does having fewer big tournaments‘ owners and organisers influence the casters and commentators working in the industry?
On-camera talent is another grey area in the Western region, where you can see the obvious benefits of having a third party tournament circuit over a developer-owned, mandated league. For example, in the CS:GO realm, due to the amount of differently scaled events, we brought up quite a solid base of engaged people. Not all of them work on every event, there is healthy rotation. It might look like the same circle, but it includes 10-15 people with around 6-7 working for a single event, which is a a pretty good amount. Now look at League of Legends, which in theory should be bigger than CS:GO in terms of personnel circuit, because it covers all regions in the world. Their English casting squad is pretty poorly constructed, probably less than 10 notable names in the entire world and we are talking about a 5-year span here. But how do you get to work for Riot? How do you make yourself noticed? There is no PGL (PGL CS:GO Championship Series in Romania) tournament, that is still quite big, but does not have the number one casters. There is no equivalent to that in League of Legends, you cannot prove yourself and get your foot into the door. As a result after five years all the number one people are still the same, you don’t have the same progression and opportunities. In CS:GO I might be the best analyst right now, but in six months I have to work at 4-5 events in order to retain that spot and if I don’t do quite well, because of my high costs and talented colleagues, I will be pushed out a little bit, as it should be according to market forces. I think the open third-party aspect in CS:GO is way better for new talents than the lockdown system at Riot or the ESL.
Valve made $221million off CS:GO in 2015.
We have three majors, each with a $250k prize pool.
What is wrong with this picture?
— Thorin (@Thorin) 26. Januar 2016
Many new titles in 2016 aspire to be added into the eSports scene, like Epic’s Paragon, Unreal Tournament, Battleborn and others. Do they have a future in eSports, especially if they are not created by a company already well-established in the field?
One key factor that you always have to keep in the back of your mind: Any game that was dubbed No. 1 at any point in eSports history, was the game that you would never predict to have this title. It was always either a new path of the same genre or a new genre entirely. From single-person FPS Quake to team FPS, like Counter Strike, then over to StarCraft II, which is real-time strategy 1v1, ending in to 5v5 League of Legends, which already existed in the form of DotA and had no eSports impact in the West. Now we are going to CS:GO, which was proclaimed dead and has resurrected through new innovations and crowdfunding. Whatever comes next must be a paradigm shifter. It is almost impossible to predict and it could be a completely new genre. Almost all titles you’ve mentioned will outright fail, I assume. You can’t create an eSports game, knowing it will succeed. You can make a good game, provide developer support to build relationships with organisers, it will give you better chances, but in the end all eSports games at their core level are cultural phenomena. You can’t create cultural phenomena. Companies try to make things viral, but they can’t always force it. Sometimes you put ingredients together based on established formulas and it just doesn’t work out. With games a snowball effect is needed. You create perfect conditions for the game, but ultimately the reason why it becomes No. 1 is not the amazing marketing. It is because of the guy, who plays it and enjoys it, tells his friend about it and then they tell even more. Companies are at the mercy of this first guy when making the game, they just can’t get in touch with the other two. They have to keep this in mind.
So you believe that casual gamers still have the biggest impact and are the driving force?
Riot can convince themselves that they are masters of their own destiny, but they are rather naïve if they think that way. There was League of Legends, Heroes of Newerth and DotA when they were created. In my opinion Heroes of Newerth was the best one of those three, but they messed up some business decisions and they never had the cultural snowball effect. Riot’s is the most popular, whether it is the best is a completely different question. Somehow the player base embraces and builds games up themselves. The best marketing is, when players spread it from lips to lips. We can see money being put into Heroes of the Storm, but I think it will be a secondary eSports game at best. It will be mainly artificially supported due to the Blizzard aspect behind it. As far as I know, Smite recently had a world championship with millions of dollars on the line, which is similar to the League of Legends prize-pools and did not receive that massive success. Funnily, the artificially pumped prize-pool in League of Legends used to seem huge and now it is a pitiful few millions for the World Championship. And that’s with millions of people playing and millions of revenue, whereas in Dota 2 there are significantly less people playing and ten times bigger prize pools. Therefore, I’d say the prize-pool is not an indicator how big the scene is, it’s just a cool number, which doesn’t make players switch to that game.
One of the breakthrough opportunities for developers might be presenting new games on the enormous Asian market, where, due to the sheer amount of users, almost any game has a chance. Do you think that might be the way to go?
If I was a developer, I would put my main focus on China and Korea. If you understand the market and how things work over there – that is how you create a snowball effect in terms of player base – there is no barrier. In the Western world many of the games have to be bought and all the games succeeding in Asia are basically free-to-play or of the kind you can at least try for free. What they did with League of Legends is, if you go to a Korean internet café, you have all the champions unlocked there, while playing with your account. This is good promotion and aside from League of Legends no Western organisation has this focus. The best example of Valve not knowing how to earn money is this: The game that we know as Counter Strike 1.6 has not been updated for somewhere around 9 years and is still played by many people, despite the missing developer support. At the end of every year there are stats published for Chinese PC cafés and the success of games there, as well as the revenue they have earned. If you looked, you’d find a game there, called Counter Strike Online, which, from 2011 onwards, has made around 100 million dollars yearly for the company that licensed it. This Counter Strike Online is Counter Strike 1.6 tweaked to be free-to-play and with some very slight changes. It looks identical. They tweaked it and added some items you can purchase in game, which brings the revenue in. And this game even has its tiny eSports scene solely in Asia! Valve themselves were so short-sighted, didn’t realise the game succeeded and missed out on themselves having 100 million dollars yearly for a game that came out in 1999. They sold their licensing deal, allowing someone to make lots of money, doing next to nothing. Developers just do not understand the Asian market too well. Korea, more than any county I’ve ever been to, is obsessed with something that is popular. Its snowballs are massively out of control. It is not about having ten big games, it is about having one or two that everyone is obsessed over for a period of time. League of Legends is that game right now. Dota 2 was late to the party.
Many teams and organisations are working on their multi-gaming aspect. Once only in FPS some added MOBAs to their played games and Dota 2 teams jump on the League of Legends train. What does this development say?
Every big eSports organisation used to be multi-gaming, like SK Gaming, Fnatic, mousesports and Evil Geniuses. They were big, because they covered all eSports games and had good or good-ish rosters equivalent to how big the organisation was. Though when League of Legends got big, many organisations did not fully capitalise on that. They thought it was a bubble in terms of the salaries and so they allowed smaller organisations, who were operating only within the League of Legends scene, like Team SoloMid, Counter Logic Gaming or Cloud 9 to become really big. They had put all of their money into League of Legends, paid the highest salaries and as a result it got to the point, where those organisations reached the point of the old ones, which they replaced, as they wanted to branch out and have multiple games. You can now see the same scenario playing out again – TSM just lost their CS:GO team because they didn’t want to invest more money, as the salaries were too high, although it was one of the best CS:GO teams in the world. Now they got themselves a really bad one. They committed the same mistake that once allowed them to defeat the old timers.
What do you expect from 2016, do you think anything ground-breaking might happen in the eSports world?
This year is a great example of how eSports never remains at the level it has been at. 2016 for me seems like the time, when everyone is trying to double down and force things to explode two or three times, even more than it did last year. In CS:GO and League of Legends you see similar situations of more and more people getting teams and trying to buy each other out and compete for big teams. They think that having that spot in two years might be worth ten times more. Everyone is waiting for non-endemic sponsors to come in and that will mean that marketing budgets will grow rapidly. In 2016 everything might explode completely, but might also just show a gradual rise, similarly to 2015. I have no doubt that CS:GO will keep getting bigger, there are exponentially more and more tournaments with big prize-pools over the years. With League of Legends I’m more concerned, as the growth is not so visible anymore, but as long as everything else keeps running smoothly, it should be fine another two or three years. Dota 2 has plateaued a bit, it has huge prizes, but it doesn’t make ordinary people play the game. In terms of other titles, it’s hard to talk, I don’t think StarCraft II is going to be revitalized with Legacy of The Void. I don’t see any game sliding into that spot now. Overwatch has one of the worst worlds and the hype has been underwhelming, there are just not enough players too. League of Legends‘ world is bad too, but it has support from the Asian market. There is no obvious contender for a top eSports spot right now.
This interview was recorded as an audio conversation and then transcribed condensing it for clarity.