Waxangel Profile Blog Joined September 2002 United States 29168 Posts Last Edited: 2017-01-05 15:42:11 #1 Michal "Carmac" Blicharz's official title at ESL is VP of Pro Gaming. However, most esports fans know him better as "that guy who runs Intel Extreme Masters."



In the part two of my interview with Carmac at IEM Gyeonggi, we talked about IEM's evolution, concerns over Blizzard's Overwatch League and team localization, the ideal tournament format for esports, and the effect of traditional sports investment in esports.



*This interview has been edited and condensed for clarity.





Photo: Patrick Strack/IEM



Read part one for Carmac's thoughts on StarCraft II, Counter-Strike 1.6, and the value of legacy in esports





Wax: Let’s change track to questions about IEM in general. IEM, in the past, was something that was very much tied to trade shows and conventions. And now, it’s changed track a lot, partnering with local governments, holding arena shows.



How was that transition? Did you fall into that because the opportunities just came by, or was it something you were pushing actively for, getting away from trade shows?



Carmac: There was always value in trade shows, because it built a sustainable model for esports to grow bigger without…



When it was poor.



...When it was poor. And we always knew we would end up doing esports in their own locations. But if I’m completely frank with you, I never thought we would have a stadium event in 2013. We would have started doing it eventually, but the reason we started doing stadium events originally in 2013 was I gave an interview to Forbes.com about IEM, and a member of the Katowice city council read that interview and thought it would be a good idea to see if we could get IEM to Katowice and messaged me on Facebook. Turns out, we have one or two friends in common. Poland’s not such a big country as it seems, even with 40 million people.



So it happened to be that the timing we went into major arena events was, let’s say, to some degree haphazard, but the intention of making it bigger and taking esports out of the trade show was always there. I have to admit we were actually fairly apprehensive and kind of scared of the first Katowice event, which is why we came up with that free to enter model. Kind of a freemium model where anyone could enter for free, but if you paid for a ticket you get in one hour early, you had priority to come in and out.



It was one of the best moments of my life, at least one of the best moments of my professional life, when one hour before the opening of the show, I went out on stage just to have a look. I go through the backstage and kind of sneak out onto the staircase that leads down to the floor of the stage, and I look up, and it’s all the way up to the nosebleeds—it’s completely full. One full hour before the show began, and it was… I don’t think anybody in the world expected that to happen. And it was during the winter, the kind from Home Alone with Macaulay Culkin, that type of winter back in Katowice, and there were still two or three thousand people outside waiting to get in, just to see it. That had a tremendous impact on me, and it gave me a lot of satisfaction as well.



When it comes to transitioning over to stadium events, I think esports is now popular enough in most countries, at the right time, under the right circumstances, to fill at least an auditorium of two to three thousand people, if not an arena of fifteen.



Is that the natural progression of esports?



Yes I do, I think it’s a natural progression. There’s also, the value in trade shows for Intel was obviously in that there was natural traffic. Let’s say a hundred thousand people at Comic-Con have a chance to pass through the Intel booth. But the majority of those people are more interested in Batman than technology. What we’ve noticed at a business level, which might be boring, is that when we had San Jose with nine or ten thousand people a day, going in and out, it’s not as many as you would have at Comic-Con, but they’re all esports nerds. They all have an opinion about a gaming laptop. They all have an opinion about a gaming monitor. They all have an opinion about a gaming mouse. Having a crowd that is so narrowly filtered to that specific group is of tremendous value to companies.



We got feedback from Acer who was exhibiting at San Jose. They said that the conversations and feedback they had in San Jose was the best they’ve ever had, between expos, trade shows, etc.



You deal in short events, and now you’re moving to short stadium events. Do you think that this is the ideal form for esports? What are your thoughts on always being the guy who’s running alongside the longer leagues?



I think there’s value to both, and honestly as much as I like to think that I’m right every time I talk about esports, no one in the world, including me, has the golden formula that solves all the esports problems. I just think that overall, esports is primarily a broadcast product. Even if it’s a stadium with 10,000 people, it’s still a broadcast product, as opposed to…



To give an example, the NFL, the NBA, Premier League in England, they all do round robin, with a very extended number games. But if you look at, say the Chicago Bulls vs. Dallas Mavericks in the middle of the NBA season, is that game unmissable? It’s absolutely not unmissable. It’s actually a very average TV product, if you think about it from that point of view. The playoffs are much more unmissable than a random game two-thirds into the regular season.



Manchester United vs. Chelsea in the Premier League, in the middle of October, is it unmissable? It’s absolutely not unmissable. At the end of the day, nobody dies. It gets interesting toward the end of the season. Why does it make sense? It’s because every time they open up the stadium, they make one to three million dollars in revenue, from tickets, hot dogs, beers, jerseys, and things like that. The traditional sports leagues were built around monetizing them through a stadium.



They may have been built around that, but now the balance has changed, though. The broadcast revenue for some of these leagues, accounts for sixty, seventy percent [note: on review, this isn't quite accurate]



I’d have to check to be sure, but there’s a good article by The Guardian about how it breaks down in the Premier League. Gate revenue and commercial revenue that’s local to the game, for some clubs is very often the same size as the broadcast revenue. But even if the broadcast revenue is large, a million dollars every time you hold a game is not insignificant. What I mean to say is, if you don’t have the ability to monetize a venue on a regular basis, on a weekly basis…



LCS, the biggest show in esports, has what, 300, 400 people every week? And I don't think they could have 2000 people every week at this stage. Even if they had 2000 people every week, I don’t think that it allows them to break even with local revenue.



But the “burden” of being tied to that local stadium revenue or whatever, it's not there in esports. So you can structure your esports program to be the most exciting broadcast product possible. And I stress the "most exciting" part. I feel that an extended online league, it fills that consistent need—if you want to watch CS on a Wednesday, you can watch CS on a Wednesday. But it’s not the most exciting form of esports that it could be.



And I feel like those short weekend events, I’m very much a fan of the tennis model. You have your grand slams and your events, I feel that scales very well. Because if you’re not very committed, you’re just going to watch the grand slam like the majors in Counter-Strike. If you’re medium committed, you’re going to watch those Grand Slams and the events a little bit below them. And if you’re extremely committed, you’re going to watch everything; it scales very well.



Whereas a league system doesn’t scale very well to the same degree. I honestly believe single short events, make for the best, most exciting products in esports.



To that point, it’s interesting to see Riot actually selling their broadcasting rights for quite a large sum. I mean, they believe that esports is a broadcast product, too. They don't care as much about selling tickets in their little studio.



To me, I don’t have a full understanding of how their esports program correlates to their venue. There might be a fantastic reason they have a weekly broadcast as opposed to a more exciting format. And it’s not a knock on Riot, it’s a knock on the general mode of the round robin regular season. It’s not the most exciting mode to run an esports competition or a sports competition in any way, shape or form. But the regularity, the fact that it’s a recurring thing, might actually be good for Riot’s bottom line because it generates engagement, it generates skin sales, etc.



And it may be the best way to package your product to advertisers.



It could be. The one gigantic benefit of both localization and round robin with playoffs is that the fifty-year-old's at ESPN that spend the big dollars, they can easily relate to that, whereas everything else is very abstract and you need to be quite smart to quickly grasp it. But if you go, “we’re on the same model as the NFL” they go “oh I understand that.” So one of the kind of hidden benefits of doing it that way is that this is what the executives with the big money understand.



Let’s talk about Overwatch League, then. Because even though Blizzard and Riot both want to get this traditional sports money to buy out existing teams, Blizzard is going one giant step further by declaring they want localized franchises. We know you’re a big supporter of Liverpool, so you understand the value of supporting a localized team with a long history. What do you think about this move?



I think, it’s certainly not going to hurt. But I don’t think it’s going to help either. If you really think about modern sports today—MMA, UFC got sold for 4 billion dollars. Clearly, they’re doing something right. If you think about this, everything before 1950 is very local, everything 1950 is actually very globalized.



The UFC doesn’t care where the guy comes from at all. They care about if they can turn him into a global superstar, that’s all they care about. Tennis doesn’t care about that either, they care about global superstars. Roger Federer isn’t popular only in Switzerland, he’s popular globally, and people get behind him. Rafael Nadal has fans all over the world. Of course he’s going to have a fan base, a nucleus in Spain, but that’s not even tied to his city—it’s tied to his country.



And that’s very similar to how it works in esports. Fnatic’s Counter-Strike team is Swedish, is popular globally, but especially in Sweden. But it’s not necessarily in Gothenburg or Stockholm or wherever, but just in overall Sweden. Why would they limit themselves to a city? Structurally, I do believe that the value in esports, in terms of how you derive income from your esports program, is if you make it as global as possible. To open the door to as many fans as possible.



How did NBA become popular? Michael Jordan. New York, LA, Chicago, Dallas, had nothing to do NBA becoming a global product. It was Michael Jordan, Karl Malone, Shaquille O’Neal, Scotty Pippen, that were global superstars. And to a guy in China, that might not even be able to point within a 200 mile radius where Chicago is, does localization mean anything to a global product? I don’t think so.



I agree with you from a tournament perspective or a fan perspective, but from a team perspective don’t you think that if you can truly realize localization—and I don’t mean a money dump, I mean a successfully localized franchise—don’t you think that will give the teams and players the kind of security that we don’t have right now?



I honestly think that structurally, say you take Liverpool, Fnatic and Roger Federer. Fnatic is closer structurally in how it functions in the ecosystem, to Roger Federer than it is to Liverpool. Fnatic doesn’t have a home stadium they can monetize, it isn’t feasible. They don’t have a stadium to host matches, and nobody cares where they’re from. They don’t need to train in the same place. It’s kind of like telling a bird that “you can fly, we know that, but now you can only walk.” Why do they necessarily need to be grounded to a physical place? I don’t understand that, it doesn’t seem natural to me.



Well we talked before about how Premier league teams have this local base, and they can rely on this income they have, it’s a form of security they have. I’m not saying that level of success will ever be attained by an esports team in Overwatch, but if it CAN be attained, isn’t that something that’s worth aspiring to, at least?



I think on some level, trying to localize teams is a message to Fnatic, Cloud9, SK Gaming, and the biggest teams in the world, that they’ve been missing out on a very obvious opportunity all these years.



It’s suggesting to the most successful people who have built some of most successful brands in esports that they’ve been doing something wrong all along. I would side with the people who have successfully maintained an esports business for years and made it profitable, over somebody that came form the outside and said “you know what Fnatic, for the last ten years you’ve been doing it wrong.”



I think, it’s a little bit… I’m not saying that I’m necessarily right, maybe localization will have a tremendous effect on esports. But if the world’s biggest team brands are not doing localization consciously, it must be for a reason. And I know they don’t want to, I know for a fact they don’t want to; I spoke with many of them. Because it alienates their fanbase, they have a global fan base. If you're suddenly “Oh, I’m in Dallas!” but half of your Facebook followers are not in Dallas, not even in the US. Why would I suddenly be tied to Dallas? I just think it doesn’t allow as many people as otherwise to get behind those teams, tying those teams to London, to Paris, to wherever.



I think it’s pretty much understood that localization can only be achieved with the influx of massive capital from investors, probably from large traditional sports groups. What do you think about these companies entering esports, and them being courted to continue their expansion into esports?



Any influx of new money is dangerous, because it creates a bubble. And what I’m somewhat afraid of is, those big sports owners, some of them will be humble and listen to the people who got esports teams to where they are today, some of them might go, “oh actually this is how we do business in traditional sports, and that’s how esports should do business too.” I only hope that the people with the new money in esports, there’s tremendous lessons that we can learn from those people in how to build a brand, how to monetize a brand, how to… to quote Liverpool’s owners, “turn fans into customers.” A bit callous, but that’s how this business works.



I only hope that they tread carefully, and don’t do anything stupid because, overall, it’s a big benefit to have their skillset come in and help turn esports into a viable business.



Viable business. Where are we right now, in terms of that? Are we still in the investment phase?



I think we’re in the new investment phase. I think up until recently, up until you know, maybe the formation of the new major esports leagues, esports was kind of at a point where it was self-sustained. And now, everybody sees esports as the big exploding thing, and they’re coming in and investing money that doesn’t necessarily have an immediate return, and that always generates a bubble.



If you see how much prize money goes up across events, how much players are demanding right now in terms of wages and things like that, I think the cost of running esports events has accelerated out of proportion from its cost of sustaining esports overall, with players, teams, and everything has accelerated a bit ahead of the natural revenue of esports.



But that’s okay, that’s the natural progression. It’s a bubble that grows, it pops, it shrinks, it shrinks to still a bigger level than it started to begin with. Then it grows again, it pops, it shrinks, and it’s still bigger than the last time it shrunk. That’s kind of how esports will go on until it stabilizes and matures enough for those crazy people with free money to spend, that stabilizes.



Alright, let’s wrap up. Anything you want to tease for Season XII?



I think the one thing to say about Season XII is that we’re slowly transitioning from a model where there was a string of events that ended with one big event, to be a little bit more like tennis. Because if you run an event in a stadium, let’s say in San Jose or Oakland, that just can’t be a qualifier anymore. It needs its own prestige, it needs to build out its own legacy and history, and its own value as an event. That’s the only kind of, let’s say, significant and noticeable change of direction in Intel Extreme Masters. We do have plans that we will announce soon, in January, February, about things that will be different and hopefully better for our slice of esports.



Anything you want to say to end? Please cheer for me and...



Please cheer for me and I hope I show good games for the fans. And I hope to show good games, and I’ve tried so hard, and your support is very important to me.



Thank you. You are the person in the best position to actually say “I will show you good games.”





Click to read part one of the interview, including Carmac's thoughts on StarCraft II, Counter-Strike 1.6, and the value of legacy in esports



You can follow Carmac, Intel Extreme Masters, and Wax on Twitter. Intel Extreme Masters Season XI will conclude in March of 2017 at the World Championship in Katowice, Poland.

Carmac: There was always value in trade shows, because it built a sustainable model for esports to grow bigger without…...When it was poor. And we always knew we would end up doing esports in their own locations. But if I’m completely frank with you, I never thought we would have a stadium event in 2013. We would have started doing it eventually, but the reason we started doing stadium events originally in 2013 was I gave an interview to Forbes.com about IEM, and a member of the Katowice city council read that interview and thought it would be a good idea to see if we could get IEM to Katowice and messaged me on Facebook. Turns out, we have one or two friends in common. Poland’s not such a big country as it seems, even with 40 million people.So it happened to be that the timing we went into major arena events was, let’s say, to some degree haphazard, but the intention of making it bigger and taking esports out of the trade show was always there. I have to admit we were actually fairly apprehensive and kind of scared of the first Katowice event, which is why we came up with that free to enter model. Kind of a freemium model where anyone could enter for free, but if you paid for a ticket you get in one hour early, you had priority to come in and out.It was one of the best moments of my life, at least one of the best moments of my professional life, when one hour before the opening of the show, I went out on stage just to have a look. I go through the backstage and kind of sneak out onto the staircase that leads down to the floor of the stage, and I look up, and it’s all the way up to the nosebleeds—it’s completely full. One full hour before the show began, and it was… I don’t think anybody in the world expected that to happen. And it was during the winter, the kind from Home Alone with Macaulay Culkin, that type of winter back in Katowice, and there were still two or three thousand people outside waiting to get in, just to see it. That had a tremendous impact on me, and it gave me a lot of satisfaction as well.When it comes to transitioning over to stadium events, I think esports is now popular enough in most countries, at the right time, under the right circumstances, to fill at least an auditorium of two to three thousand people, if not an arena of fifteen.Yes I do, I think it’s a natural progression. There’s also, the value in trade shows for Intel was obviously in that there was natural traffic. Let’s say a hundred thousand people at Comic-Con have a chance to pass through the Intel booth. But the majority of those people are more interested in Batman than technology. What we’ve noticed at a business level, which might be boring, is that when we had San Jose with nine or ten thousand people a day, going in and out, it’s not as many as you would have at Comic-Con, but they’re all esports nerds. They all have an opinion about a gaming laptop. They all have an opinion about a gaming monitor. They all have an opinion about a gaming mouse. Having a crowd that is so narrowly filtered to that specific group is of tremendous value to companies.We got feedback from Acer who was exhibiting at San Jose. They said that the conversations and feedback they had in San Jose was the best they’ve ever had, between expos, trade shows, etc.I think there’s value to both, and honestly as much as I like to think that I’m right every time I talk about esports, no one in the world, including me, has the golden formula that solves all the esports problems. I just think that overall, esports is primarily a broadcast product. Even if it’s a stadium with 10,000 people, it’s still a broadcast product, as opposed to…To give an example, the NFL, the NBA, Premier League in England, they all do round robin, with a very extended number games. But if you look at, say the Chicago Bulls vs. Dallas Mavericks in the middle of the NBA season, is that game unmissable? It’s absolutely not unmissable. It’s actually a very average TV product, if you think about it from that point of view. The playoffs are much more unmissable than a random game two-thirds into the regular season.Manchester United vs. Chelsea in the Premier League, in the middle of October, is it unmissable? It’s absolutely not unmissable. At the end of the day, nobody dies. It gets interesting toward the end of the season. Why does it make sense? It’s because every time they open up the stadium, they make one to three million dollars in revenue, from tickets, hot dogs, beers, jerseys, and things like that. The traditional sports leagues were built around monetizing them through a stadium.I’d have to check to be sure, but there’s a good article by The Guardian about how it breaks down in the Premier League. Gate revenue and commercial revenue that’s local to the game, for some clubs is very often the same size as the broadcast revenue. But even if the broadcast revenue is large, a million dollars every time you hold a game is not insignificant. What I mean to say is, if you don’t have the ability to monetize a venue on a regular basis, on a weekly basis…LCS, the biggest show in esports, has what, 300, 400 people every week? And I don't think they could have 2000 people every week at this stage. Even if they had 2000 people every week, I don’t think that it allows them to break even with local revenue.But the “burden” of being tied to that local stadium revenue or whatever, it's not there in esports. So you can structure your esports program to be the most exciting broadcast product possible. And I stress the "most exciting" part. I feel that an extended online league, it fills that consistent need—if you want to watch CS on a Wednesday, you can watch CS on a Wednesday. But it’s not the most exciting form of esports that it could be.And I feel like those short weekend events, I’m very much a fan of the tennis model. You have your grand slams and your events, I feel that scales very well. Because if you’re not very committed, you’re just going to watch the grand slam like the majors in Counter-Strike. If you’re medium committed, you’re going to watch those Grand Slams and the events a little bit below them. And if you’re extremely committed, you’re going to watch everything; it scales very well.Whereas a league system doesn’t scale very well to the same degree. I honestly believe single short events, make for the best, most exciting products in esports.To me, I don’t have a full understanding of how their esports program correlates to their venue. There might be a fantastic reason they have a weekly broadcast as opposed to a more exciting format. And it’s not a knock on Riot, it’s a knock on the general mode of the round robin regular season. It’s not the most exciting mode to run an esports competition or a sports competition in any way, shape or form. But the regularity, the fact that it’s a recurring thing, might actually be good for Riot’s bottom line because it generates engagement, it generates skin sales, etc.It could be. The one gigantic benefit of both localization and round robin with playoffs is that the fifty-year-old's at ESPN that spend the big dollars, they can easily relate to that, whereas everything else is very abstract and you need to be quite smart to quickly grasp it. But if you go, “we’re on the same model as the NFL” they go “oh I understand that.” So one of the kind of hidden benefits of doing it that way is that this is what the executives with the big money understand.I think, it’s certainly not going to hurt. But I don’t think it’s going to help either. If you really think about modern sports today—MMA, UFC got sold for 4 billion dollars. Clearly, they’re doing something right. If you think about this, everything before 1950 is very local, everything 1950 is actually very globalized.The UFC doesn’t care where the guy comes from at all. They care about if they can turn him into a global superstar, that’s all they care about. Tennis doesn’t care about that either, they care about global superstars. Roger Federer isn’t popular only in Switzerland, he’s popular globally, and people get behind him. Rafael Nadal has fans all over the world. Of course he’s going to have a fan base, a nucleus in Spain, but that’s not even tied to his city—it’s tied to his country.And that’s very similar to how it works in esports. Fnatic’s Counter-Strike team is Swedish, is popular globally, but especially in Sweden. But it’s not necessarily in Gothenburg or Stockholm or wherever, but just in overall Sweden. Why would they limit themselves to a city? Structurally, I do believe that the value in esports, in terms of how you derive income from your esports program, is if you make it as global as possible. To open the door to as many fans as possible.How did NBA become popular? Michael Jordan. New York, LA, Chicago, Dallas, had nothing to do NBA becoming a global product. It was Michael Jordan, Karl Malone, Shaquille O’Neal, Scotty Pippen, that were global superstars. And to a guy in China, that might not even be able to point within a 200 mile radius where Chicago is, does localization mean anything to a global product? I don’t think so.I honestly think that structurally, say you take Liverpool, Fnatic and Roger Federer. Fnatic is closer structurally in how it functions in the ecosystem, to Roger Federer than it is to Liverpool. Fnatic doesn’t have a home stadium they can monetize, it isn’t feasible. They don’t have a stadium to host matches, and nobody cares where they’re from. They don’t need to train in the same place. It’s kind of like telling a bird that “you can fly, we know that, but now you can only walk.” Why do they necessarily need to be grounded to a physical place? I don’t understand that, it doesn’t seem natural to me.I think on some level, trying to localize teams is a message to Fnatic, Cloud9, SK Gaming, and the biggest teams in the world, that they’ve been missing out on a very obvious opportunity all these years.It’s suggesting to the most successful people who have built some of most successful brands in esports that they’ve been doing something wrong all along. I would side with the people who have successfully maintained an esports business for years and made it profitable, over somebody that came form the outside and said “you know what Fnatic, for the last ten years you’ve been doing it wrong.”I think, it’s a little bit… I’m not saying that I’m necessarily right, maybe localization will have a tremendous effect on esports. But if the world’s biggest team brands are not doing localization consciously, it must be for a reason. And I know they don’t want to, I know for a fact they don’t want to; I spoke with many of them. Because it alienates their fanbase, they have a global fan base. If you're suddenly “Oh, I’m in Dallas!” but half of your Facebook followers are not in Dallas, not even in the US. Why would I suddenly be tied to Dallas? I just think it doesn’t allow as many people as otherwise to get behind those teams, tying those teams to London, to Paris, to wherever.Any influx of new money is dangerous, because it creates a bubble. And what I’m somewhat afraid of is, those big sports owners, some of them will be humble and listen to the people who got esports teams to where they are today, some of them might go, “oh actually this is how we do business in traditional sports, and that’s how esports should do business too.” I only hope that the people with the new money in esports, there’s tremendous lessons that we can learn from those people in how to build a brand, how to monetize a brand, how to… to quote Liverpool’s owners, “turn fans into customers.” A bit callous, but that’s how this business works.I only hope that they tread carefully, and don’t do anything stupid because, overall, it’s a big benefit to have their skillset come in and help turn esports into a viable business.I think we’re in the new investment phase. I think up until recently, up until you know, maybe the formation of the new major esports leagues, esports was kind of at a point where it was self-sustained. And now, everybody sees esports as the big exploding thing, and they’re coming in and investing money that doesn’t necessarily have an immediate return, and that always generates a bubble.If you see how much prize money goes up across events, how much players are demanding right now in terms of wages and things like that, I think the cost of running esports events has accelerated out of proportion from its cost of sustaining esports overall, with players, teams, and everything has accelerated a bit ahead of the natural revenue of esports.But that’s okay, that’s the natural progression. It’s a bubble that grows, it pops, it shrinks, it shrinks to still a bigger level than it started to begin with. Then it grows again, it pops, it shrinks, and it’s still bigger than the last time it shrunk. That’s kind of how esports will go on until it stabilizes and matures enough for those crazy people with free money to spend, that stabilizes.I think the one thing to say about Season XII is that we’re slowly transitioning from a model where there was a string of events that ended with one big event, to be a little bit more like tennis. Because if you run an event in a stadium, let’s say in San Jose or Oakland, that just can’t be a qualifier anymore. It needs its own prestige, it needs to build out its own legacy and history, and its own value as an event. That’s the only kind of, let’s say, significant and noticeable change of direction in Intel Extreme Masters. We do have plans that we will announce soon, in January, February, about things that will be different and hopefully better for our slice of esports.Please cheer for me and I hope I show good games for the fans. And I hope to show good games, and I’ve tried so hard, and your support is very important to me. Administrator Hey HP can you redo everything youve ever done because i have a small complaint?