GosuGamers Weekly Business Review, Jan 7-14

Although the story has gone a bit cold these last few days, there can be no doubt that the Professional eSports Association (PEA), their formation and plans and the subsequent fallout is one of the most important stories in recent memory. This clash between two powerful groups is all about money, and comes at a time where experts are predicting the industry is set to generate $1bn over the next 12 months.

As Richard Lewis detailed in a recent video, the PEA plan and attempt to gain exclusive control of Counter-Strike (CS) was a reaction to an ESL plan to try and lock top teams into an exclusive league. Even though that plan failed, and has caused a backlash, it was confirmed in the same video that ESL have told any team wishing to compete in their events from Jan 1, 2018 onwards that they will need to be ESL-exclusive by that stage, causing some considerable consternation.

The PEA attempt to essentially impose the same conditions on their teams obviously didn’t work out, with news breaking that the group has shelved plans for their CS league indefinitely, but the question won’t go away. The influx of outside money into the scene has created a situation where top team owners that used to be able to flex their financial muscles are aware they are now potentially becoming small fish, if the sharks decide to make it so, and there is a degree of that fear behind the PEA’s decision to bite back.

With brands like Movistar in Spain, Turner in the US and GINX in the UK now looking to focus more heavily on eSports and broadcasting it to a wider audience, it is only logical that control of the biggest names would be valuable as it would allow those with power to sell the rights to the highest bidder. A mock up posted by Michael Decker on twitter recently showing those brands alongside major sports teams in a fantasy ‘ESL One Cologne 2018’ group draw, and it’s nice to think that eSports orgs could compete alongside Read Madrid, Bayern or other major club.

If we’re honest though, the PEA won’t protect the biggest eSports teams if groups like Paris Saint Germain or Manchester City decide to take eSports seriously. If FC Copenhagen is able to shake things up and make an offer one of the biggest brands in the scene cannot match (and pay CS pros more than the average pro footballer in Denmark in the process), City and PSG could redefine the landscape overnight without breaking a financial sweat.

While that might seem attractive, those long enough in the tooth to remember previous venture capital investments and the like know the importance of endemic knowledge to the scene, and are alongside those owners who (in fairness) are probably more concerned about their personal wealth at this immediate point in time. Potential solutions do exist down the road, but at this point in time the regulation isn’t there to implement them, and the threat of multi-million dollar outsiders will continue to prompt attempts to hold what they have from the organic overlords.

The prize in these cases is obviously the broadcasting rights, along with the ability to sell access to the players to various companies, and whoever gains control of that in Counter-Strike, Dota or any other eSports will most likely become very wealthy in the coming years. Twitch seem perfectly placed to remain the platform of choice, but pesky competitor Azubu won’t go away, making another deal this week to try and catch the purple giant.

Azubu 'buys' Hitbox

The acquisition of Hitbox was apparently confirmed in an LA Times article this week, and gives Azubu a possible edge, albeit a small one in the battle with Twitch. Games and mods that have been deemed not suitable for Twitch for one reason or another, like popular Smash Bros mod Project M for example, are currently broadcast on Hitbox instead, to varying degrees of success. With the company deciding to cut costs in 2016, including dropping League of Legends streaming after a reported price increase, this move is not yet confirmed but would signal an upswing for Azubu if it comes to pass.

Whether it will be enough is another matter, as Twitch are already dominant and YouTube is rumoured to have gained the exclusive rights to the upcoming ESL Pro League, due to a partnership between the company and the World Esports Association (WESA). The move was not confirmed at the time of writing, but would represent a real coup for WESA in a time of obvious conflict for competitive Counter-Strike.

Investment in eSports orgs continues

Speaking of outside money, this week saw two more large firms investing in eSports, the first of which is a fairly standard (at this point) sports team story. The Miami Heat has announced a partnership with Misfits, the team that rose from the ashes of the banned Renegades franchise, and the announcement came with a flurry of PR language and meaningless fluff, including this gem: “For us, it made perfect sense to partner with Misfits, a young and ambitious franchise in a sport that is blazing a trail in terms of 21st century recreational competition amongst Millennials.”

Millenials aside, that move and the announcement that American entertainment and media company Lionsgate were investing in The Immortals, the team run by Noah Whinston came in the same week. These outside investments by firms with extremely deep pockets are the sort of moves many expected when eSports began to infiltrate the mainstream, and put power and money in the hands of a group that contains genuine eSports knowledge, and while Whinston has obviously been fairly busy of late signing and writing letters it’s nice to see him back doing what he does best.

How do you rate an eSport?

Elsewhere, a very informative article published on The Esports Observer shows a breakdown of how increasingly influential eSports investor Jens Hilgers rates games according to relevance. The former ESL owner and current TEO investor laid out a tier system used to rate titles based on active users, annual prize pools and hours watched, and it is a fascinating insight into the mind of one of the fastest moving endemic investors eSports has at this stage.

Roundup

The return of legends - Jaedong and Flash meet again while thousands of Starcraft fans relive their youth

Heroes Global Circuit takes shape - Blizzard reveal details of their revolutionary new Global Heroes event

IEM Katowice announced - $250k on the line for major CSGO event

Cloud9 returns to Dota2 - the organisation has signed the former Imperials roster

CLG picks up former Na'Vi Hearthstone roster - one of the world's top HS teams signs with the American org

Matches of the Weekend

Newbee.Boss v LGD.Fovever Young - Top tier Chinese Dota featuring the first mixed team in competitive Chinese Dota

Misfits v Dignitas - Blizzard's Heroes Global Championship serves up a juicy opener

WE.White v Celestial - Overwatch Team Story chapter one comes to a conclusion, the winner facing SHRC in Grand Finals

Orange v Talion - Hearthstone Grand Finals from WESG for your viewing pleasure

Events to catch

The World ESports Games (WESG) is taking place in China, with Gosu reporters on site and millions of dollars to be won in Dota, Counter-Strike, Hearthstone and more

DreamHack Leipzig is also running Counter-Strike, with $100k in prize money on the line

The first Open Division Cup for the HGC, run by none other than GosuGamers, is starting soon

ESports Careers

GINX are looking for an eSports editor to manage their editorial output in London

Splyce are looking for a head of content, working in LA or Berlin

Fnatic need a teams operations manager