Mentioned in this article Games: Hearthstone

Arnd Benninghoff is the deputy CEO and CEO xVentures at MTGx, the digital accelerator of international media company Modern Times Group. MTG became notable within esports earlier this year, when they bought 74 percent of the shares in Turtle Entertainment, the company that runs ESL.

Benninghoff has a lengthy career in technology and media ventures, and has founded and held senior roles in numerous companies across the German tech industry, such as ProSieben, Seven Ventures, and Holtzbrinck.

We reached out to Benninghoff to ask him about MTG’s intentions in esports and what lies in store for the industry’s future.

This year, MTG purchasing a majority stake of ESL, which drew huge attention from the esports industry. What were the reasons behind this move and what steps lie ahead?

Media companies all over the place are losing the younger demographic, because the so-called “millennials” are not interested in traditional TV. Modern Times Group is therefore naturally looking for new opportunities to attract this audience. Now that watching esports is one of their favorite activities, it is obviously highly valuable for us to get involved in that field. Plus, if we look at sports broadcasting, MTG is already the most important player in Scandinavia and beyond, so it is natural for us to expand into electronic sports.

Esports is becoming more and more relevant. It is already scratching the surface of mainstream attention, and it won’t take long before it fully penetrates the market. We all know the numbers that are circulating. And even if they may not be as accurate as economic data in other industries—because of the strong fragmentation the esports sector still witnesses—they point in the right direction to justify serious investments.

What lies ahead? We don’t know yet. There is no example of best practice for us. We will trial-by-error, experiment with formats, shows and events, and we will provide access to our knowledge and infrastructure to let the industry grow further.

Can we expect any structural changes to ESL or Turtle Entertainment?

No, we will stay out of ESL’s daily business to the largest possible extent. We have complete confidence in the staff of Turtle Entertainment.

The value distribution among its employees is actually pretty unique and impressive. Not only the management, but every staff member I’ve met is highly ambitious and passionate about the job, which is saying something! This is the entrepreneurial spirit we at MTG are looking for, and there is no reason to interfere in their day-to-day operations. Never change a running system!

What we will do instead, is to make sure that our expertise and infrastructure is accessible to support the success of Turtle Entertainment and the ESL. We don’t want to assimilate but rather facilitate its esports business. Consider us as a sparring partner, who points towards strengths and weaknesses.

MTG is not a foreigner to Esports. What kind of projects have you done in the past and how did you get into the esports industry initially?

Our venture started with Viagame. Back then, the gaming industry were not aware that genuine first-class content is the main driver for success in this industry. Today, however, partnered closely with DreamHack, Viagame has become a global streaming service for premium esports as well as casual gaming content. An exclusive airing of the world’s largest Hearthstone tournament, broadcasted on Viagame live from DreamHack, marked the launch last year. It was our esports initiation.

According to rumors, MTG is considering purchasing a large stake of DreamHack—which would be a somewhat natural consideration, as a complementary acquisition to ESL. Also it is reported that MTG purchased ESEA. Can you tell us more?

I won’t comment on rumors. What I can say is this: MTG and DreamHack talk to each other frequently, a somewhat usual procedure in an ongoing business partnership. But, we also talk to a lot of other stakeholders in the industry on a regular basis as well. This is nothing extraordinary. Our involvement to date simply proves us being serious about this business, and you can expect to hear more on our part in the future.

Other mainstream media companies have entered esports lately. To drop some names: ESPN, BBC, TBS, etc. Why did we see this development, and why now?

First and foremost, esports has reached the critical mass to be relevant. TV channels are losing the younger audience to new media outlets. They feel the pressure to innovate, but as a long-established company, this is no small task. It is almost impossible to find solutions from within, and that is mainly why these companies are searching beyond their own borders.

But there is no best-case scenario yet, no formula for success. The hardest part is to try to suit everybody. There is the established audience for these mainstream media networks, who have yet to be introduced to esports. But there is also the new audience, the ones with an esports background, who easily get offended if their passion is represented in simplified terms. It is a fine line we are walking on. But TV succeeded to introduce sports like Snooker and Darts to a broader audience, so I think it can succeed with esports too.

What can the esports industry learn from traditional media companies and vice versa?

Let’s start with esports learning from TV companies. First of all, we know everything about production, of course. Even though, a few esports events and leagues have decent broadcasts. Also, in terms of licenses, assignment of permissions, and legal issues in general, we have way more experience, along with a running network of partners and institutions. Marketing methods, advertisements, and overall budgets are better as well within the TV industry. TV also excels in the art of storytelling, though I admit that some esports organizers definitely know how to hype up a crowd. All in all, TV can help to professionalize esports to a large extent.

Vice versa, TV companies are really behind when it comes to community management. I’m referring to what we call “talk of the town,“ being the topics of choice within a certain target audience. With all its interactive communication channels and distinctive culture of fan-created content, esports has real potential to be the next mass media phenomena. This is also true because of its international approach. There are no borders in esports. Where TV often is more focused on local or regional level, esports is always global. Another unique and possibly interesting matter in esports is its budget management, which is highly shaped by collaboration and cooperation. But again, the biggest takeaway for me is: when it comes to the audience community, there is nothing like esports.

Besides MTG’s involvement in esports mentioned earlier, the company itself is non-endemic. How is the purchase of ESL perceived from within the company?

Honestly, I’ve never witnessed so much interest for a venture before. MTGx, as the digital accelerator for Modern Times Group, gets a lot of attention and support from its parent company. They realize that we can be part of a growing trend and do our bit for an even better esports experience. Regardless of impressive stats circulating in the press, esports is relevant for MTG because we believe it is fit for the future, and fits into our portfolio as well as a long-term strategy. There are a lot of sections within the company that want to get involved. This much is certain: anybody that is still hesitating just needs to experience a major event like ESL One Cologne or IEM Katowice to become an enthusiast.

From your perspective: what are the most urgent problems that have to be tackled in the esports industry? How will esports mature and grow in a sustainable way?

What this sport needs is more professionalism and reliability on all levels. A regular event calendar would be beneficial to fans and players alike. Also, well-ordered league grinding is needed, including structures other mass sports have in place, like the UEFA Champions League with national qualifiers leading to international finals. Marketing is another topic which is still in its infancy. And something, which will become more and more important: political and institutional recognition to tackle visa issues, for example. What is still lacking too are specialized institutions representing the different interest groups. But in a fast-paced industry like esports, things change rapidly. Yet again, the esports landscape of 2016 will most likely be a totally different one, an exciting time to be part of it for sure!