Because esports is inexorably tied to the gaming space, paying attention to the mergers and acquisition of smaller gaming companies by bigger gaming companies is a must. An understanding of each company’s operating history can give investors and those interested in the space some idea as to how operations going forward will look. A small sample size certainly, but we’ve already seen this take place with Activision Blizzard — after the announcement of the acquisition process by Microsoft — and its Call of Duty and Overwatch Leagues, as now both will be run through third-party operators, which is typically how Microsoft has run its esports events.
— Kevin Hitt
Activision Blizzard has confirmed that Overwatch League is already taking bids by third party operators to produce and facilitate league operations, news first reported by SBJ’s Kevin Hitt last week. Both the Call of Duty League and the Overwatch League will have its productions and operations assisted by third parties.
As it stands, there has yet to be any announcement as to which outlet has been selected to help produce the Overwatch League, but sources are saying that the deal is already done and there will be an announcement upcoming this month. And while there have been rumors that Adam Apicella and Esports Engine have already been selected to join OWL productions, sources tell SBJ that isn’t the case. Esports Engine already has the Call of Duty League and Halo and taking on OWL might be too much at this time.
The change to third parties for production and assisting in facilitating league operations is a 180-degree pivot from the previous model used by Activision Blizzard, who took over Studio 1 where «The Tonight Show Starring Johnny Carson» was filmed. Matches were played there until 2020 when team facilities were set to be used for league play before the pandemic.
The third-party operator space (i.e. running esports tournaments for a game publisher) saw a seismic shift recently when Savvy Gaming Group, backed by the Saudi Arabian Public Investment Fund, paid a combined $1.5 billion for operators ESL and Faceit. What does it all mean for esports? SBJ’s Trent Murray caught up with Vindex CEO Mike Sepso, who co-founded Major League Gaming in 2002 (it was sold to Activision in 2016), to get his thoughts on the deal.
On what’s next for Savvy: “Their private equity team was looking around at a lot of different assets in the esports space. I would not be surprised if this was their first transaction, not their last. … There are very few at-scale esports solutions providers or businesses or customer aggregators in the market.”
On why ESL fetched $1 billion on its own: “The infrastructure that’s there, the expertise, the management team — it’s worth a lot and it’s scarce in this space. … The number sounds huge. You know, ESL is also a 21- or 22-year-old business. They’ve been around building that for a long time. From that perspective, it’s not that big of a number, it’s just reflective of what a at scale business in the esports or gaming ecosystem space is really worth.”
On the future for third-party operators: “You have to somehow acquire rights to somebody else’s game. That’s the weak part of the model. That game can always be taken away from you. And I think what ESL has done incredibly well is build a big brand and fan base in that community. … Where the industry is headed is towards publishers being significantly more in control of what they’re doing with regard to professional esports.”
Check out Murray’s full video chat with Sepso at SBJ’s YouTube channel.
Swift Media Entertainment, parent company of esports team TSM, has announced a slate of new executive hires led by new CFO Woo Kim. Kim joins Swift following seven years as CFO of native advertising platform Nativo and previously worked as VP/Corporate Development for Vonage.
«First off was this global opportunity and specifically as it related to Asia and China,» Kim told SBJ’s Trent Murray of his move to Swift. «If you look at the core games that are supported by Swift and their legacy … if you look at what Blitz is trying to do, the opportunity there is enormous. There are more League (of Legends) players in China than in the rest of the world combined.”
Blitz is a coaching and training product that helps gamers improve their skills at a variety of competitive video games including LoL, Valorant, and Fortnite. The app was acquired by Swift in 2019. Kim noted that Blitz and the focus on developing technology is a key differentiator between Swift and other companies that operate esports teams. “There are esports teams out there that have very similar businesses to TSM, but when you look at Swift overall, I think we’re unique in that investment in R&D and in technology,” he said.
Swift’s commitment to Blitz is echoed in its new lineup of hires, three of which are leadership positions specifically for the app. Nelson Lai, formerly of Riot Games, will join as CEO of Blitz China to aid in the company’s Asian market expansion efforts.
Swift has also hired John Sinclair as Senior VP/Product and Ted Li, also a previous Riot Games employee as a data scientist, as Head of Data Science (both for Blitz). Sinclair will leverage his experience working for Apple and Google as he develops strategic relationships and oversees the company’s growth strategy while Li will help further the development of Blitz’s AI-driven coaching experience.
While Blitz is a key component of Swift’s long-term strategy, Kim noted that TSM as well as talent agency Icon are critical businesses. “It’s greater than the sum of its parts,” Kim said of Swift. While all three companies operate in distinct areas of the gaming and esports industry, there are opportunities for collaboration between them. Kim noted that the audience that supports TSM as a competitive esports team are largely the same demographic that the Blitz app seeks to service. “There is a little bit easier path to market being able to tap into that audience,” he said.
The final new hire in Swift’s announcement was Michelle Suzuki, who will become VP/People Operations. With more than two decades of experience in human resources, Suzuki will oversee processes for all people operations including diversity and inclusion as well as talent acquisition and management. Earlier this month, TSM also hired former Gen.G Head of U.S. Operations Dominic Kallas as its new VP/Esports. Kallas has said his first order of business will be establishing operational procedures for TSM’s competitive teams.
According to Kim, operations will be a key focus for Swift. TSM was one of the first esports teams to experience explosive growth in the modern esports era and has continued to focus primarily on growth. Kim: «You reach an inflection point where you say ‘if we don’t build a foundation from an operational standpoint, things are going to start to unravel as we grow.’ I think (Swift CEO) Andy (Dihn) and the team had started to realize that and they took the necessary measures to invest in the additions to the team to really build that operational foundation.»
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