Last week, the Philadelphia 76ers announced a deal to buy majority stakes in two e-sports franchises — Team Dignitas, a longtime fixture on the professional gaming scene, and Apex, a relative newcomer. The teams will be merged under the Dignitas banner. This came shortly after the news that a group including Golden State Warriors co-owner Peter Guber, Washington Wizards majority owner Ted Leonsis, and Magic Johnson bought the e-sports franchise Team Liquid. E-sports just leveled up.
People have been predicting pro gaming as the wave of the future for 20 years or so. Back in the 1990s and early 2000s the idea was that audiences would one day watch Doom or Unreal Tournament competitions on television. Streaming video changed the equation; it allowed e-sports to develop organically, and deliver content directly to their fans. The mountain has come to Muhammad.
E-sports is a catchall term, blunt and unwieldy. It covers any video game that people compete in for the entertainment of others. First-person shooters like Halo and Counter-Strike: Global Offensive, virtual card games like Hearthstone, and multiplayer online battle arena games (MOBAs) like the wildly popular League of Legends and Dota all fall under the banner of e-sports.
I’ve been playing video games for my entire life. Lately, my semiregular fix of digital escapism has taken the form of rising e-sports game Overwatch. (Dear Blizzard: Please make solo-cueing in competitive less shitty.) I watch Overwatch pros on Twitch with semiregularity, and I watched European squad Misfits defeat U.S.-based Envyus in the Overwatch Open grand finals on TBS last weekend. I’m not a hard-core e-sports fan, but I dip in for what I’m interested in. Even so, writing about e-sports partnerships fills my gamer brain with static clouds of cognitive dissonance.
Traditional “ball and stick” sports are easily separated, conceptually, from the vast and deeply rooted economic partnerships that help fund them. You can watch the Los Angeles Rams be awful on a Sunday afternoon without having to think too deeply about the NFL’s brand partnership with the Microsoft Surface.
Not so with e-sports. It is impossible to talk about e-sports without sounding like you’re sexting with Darren Rovell. What began in the 1980s and ’90s as a handful of independent tournaments for gaming aficionados exists now as naked — and necessary! — advertising. E-sports are an essential strategy for building an audience and maintaining interest in a particular video game. This, perhaps, is why e-sports appear impenetrable to old-school sports fans and the uninitiated.
If you think it’s hard keeping up with television, try video games. More than 30 titles will be released this October, and that number doesn’t include indie games and mobile offerings. Finding a game amid the haystacks of titles on the marketplace Steam, for example, is essentially a nonstarter without the guidance of one of the platform’s curated lists. Games compete for your attention share with other games, social media apps, web content, streaming video, television, and movies, as well as live sporting events.
All of this is to say, the reason that various figures from the traditional sports and entertainment spheres are investing heavily in e-sports is [extremely Rovell voice]: That’s where the millennials are. As many as 112 million people will watch an e-sports event this year. More people watched League of Legends than the 2016 NBA Finals. Seventy-five percent of the e-sports audience is between the ages of 18 and 34, tech savvy, and deeply engaged with the sport, according to Deloitte Global. Revenues, though, are still small relative to the massive audiences. Market research firm Newzoo estimates that e-sports will pull in just under $500 million in 2016; in 2015, the NHL had revenues of $4 billion. No wonder that investors are so hot on e-sports; there’s gold in them thar hills.
A “Big Four” sports franchise taking over an e-sports team is a first, but it’s not exactly an unprecedented development. Former NBA player Rick Fox was early to the game, pun unintended. He bought Gravity Gaming — now known as Echo Fox — in 2015. In March 2016, Shaquille O’Neal, Alex Rodriguez, and Jimmy Rollins became investors in NRG eSports, a team owned by Sacramento Kings minority owners Andy Miller and Mark Mastrov. In September, Jonas Jerebko bought the rights to the Renegades. And, while not an owner or investor, Jeremy Lin is the brand ambassador and face of Team VGJ.
One way to think of the Sixers’ deal for Team Dignitas and Apex, then, is as one business co-opting a competitor before it matures into a real threat. This is to the mutual benefit of both parties, of course. I spoke with former Bioware CEO and Electronic Arts VP Greg Richardson, whom the Sixers have hired to manage their new acquisition, and he essentially agreed with that analysis.
As for Philadelphia’s goals for Team Dignitas, Richardson said: “We want to be the world’s best team. And to do that, we have to attract the world’s best players. We’re going to bring the Sixers training facilities, all the sports sciences, the nutrition, the sleep, to get these players playing at a peak level, and to keep them as happy human beings. It’s gonna be more than just, Hey, here’s an opportunity to play with other great players and win championships. It’s also, We’re going to take care of you, we’re going to build your personal brand.” Which sounds like the e-sports version of Suge Knight at the Source Awards.
I also spoke with Leonsis, and he talked about the value he adds to Team Liquid, as someone with several NBA and NHL lockouts in his rearview mirror.
“How do you deal with players and one day a union that emerges to represent the players? I’ve been on the executive committee of the NHL, I’ve worked on the CBA negotiations, and that I think will become important one day,” Leonsis said.
Both Richardson and Leonsis stressed the integrity, and long histories, of their respective acquisitions. Team Dignitas was founded in 2003; Team Liquid in 2000. On the scale of e-sports, these are epochs. “Mike O’Dell — ODEE — as we call him,” Richardson said. “He’s been running Dignitas for 13 years now. Which when you think about it in ES life, it makes them the Boston Red Sox, the Chicago Cubs of e-sports, one of these venerable, passionate fan bases, with great tradition.”
They may have its storied institutions, but e-sports are still the Wild West. This is gaming, after all, along with all the toxic behavior that comes with it. Just last May, during the Twitch livestream for the DreamHack tournament, professional Hearthstone player Terrence Miller — who plays as TerrenceM for the e-sports team Gale Force, and is black — was the subject of an avalanche of racist posts in the livestream chat panel. Miller was surprised; not that it happened, but how bad it was. “I was getting texts from my parents saying ‘Oh, we saw you on your interview, really good job,’” Miller told Polygon. “I was just hoping they saw it in full screen and didn’t see the chat.”
In addition to the all-too-common racism and misogyny, e-sports have been gripped by numerous cheating scandals, match-fixing allegations, and issues stemming from the quasilegal gambling using weapon skins as currency. Right now it’s up to the individual teams to police their members, but when it comes to bad behavior on the part of fans, it’s difficult to do anything about it. Taming e-sports without dampening the tremendous energy of the community will be a challenge. And it’s not clear that e-sports, without outside investment from traditional media and entertainment entities, would be up to it.
“It’s endemic,” Leonsis said of the toxicity. “Anonymity drives a lot of people’s courage. And in the gaming industry, that community needs to do a better job of policing itself without coming off like it’s establishment.”
Richardson agrees. “There’s a quarter billion people who will watch an e-sport match this year,” he told me. “But in terms of creating the kind of marketplace that fans can rely on, where they know there’s not cheating or illegal gambling going on, the roster moves and the interactions between teams are all above board, and creating the kind of entertainment value and rule set that can stand the test of time … all of those things are things we feel we can be helpful to. Our aspiration is to make it even more mainstream than it is today and to go deeper in terms of engaging those quarter billion people that are interested in e-sports.”
In some respects, the e-sports gold rush resembles the online-poker and daily-fantasy booms, and the growth of MMA. The tech-based growing pains of DFS, in particular, mirror the challenges that e-sports face in stamping out cheating and match fixing. E-sports, though, are something different. While traditional entertainment powers are searching for an answer to the fractured status quo of the peak content era, and cable behemoths are wetting size-big-boy pants over millennials canceling their subscriptions, investors increasingly see e-sports as something like a landing strip hacked into the jungle.
“The biggest risk is taking no risk,” Peter Guber said recently to ESPN. “The bottom line is these are not the cord cutters we are dealing with. They are the cord neverers. And the opportunity this presents for us in the enterprise business and the sports entertainment business is to use this space to interact with these people. So maybe there’s some anxiety about the Wild-West nature of it, but then there’s some comfort in knowing you have experience in owning venues and teams in various leagues, that we have the knowledge of best practices and that language still works in this world.”
The Sixers are the first North American major sports team to buy into e-sports, but there will surely be others. The mix of energy, demographics, and baked-in product placement is intoxicating for people who make a business out of making businesses. E-sports are nowhere near done leveling up.