A powerful player on the D.C. sports scene, Monumental Sports Network, is giving a big boost to eSports by investing in coverage of the budding competitions on top of its pro-sports teams, the National Basketball Association’s Washington Wizards and the National Hockey League’s Washington Capitals.
The effort, led by Zach Leonsis, senior vice president and general manager of Washington’s Monumental Sports Network, and Grant Paranjape, MSE’s new director of eSports business and team operations, is hoping to tap into a cord-cutting audience that’s consuming more content over-the-top. They don’t see online offerings replacing regional sports networks soon, but hope to grow the pie with the eyeballs now glued to online gaming platform Twitch.com as they follow seven-figure competitions.
So far, that business includes a stake in champion gamers Team Liquid and a new NBA eSports team coming online next year. Team Liquid is 2017’s leading eSports money winner by far, with more than $12 million in winnings according to website esportsearnings.com.
eSports competitors are hardly couch potatoes mainlining soft drinks, Leonsis and Paranjape argue, saying players have curfews and nutritionists to help maintain those “twitch” reflexes.
The executives spoke with Multichannel News Washington bureau chief John Eggerton about the future of eSports and why they think it will be a force in sports video. Following is an edited transcript of their conversation.
MCN: Zach, on an eSports panel titled “Why the Revolution Will Not Be Televised,” you talked about the next generation cutting the cord. Is eSports an over-the-top hedge play?
Zach Leonsis: I wouldn’t say it’s an OTT hedge play. I would say that eSports is the greatest first example of a live sports-entertainment category whose primary channels live on digital OTT streaming, with cable as the secondary channel. Audiences are used to cable being the primary distribution source and digital being the complementary channel and I think eSports is a sign of more content opportunities to come. I think I also said on that panel that eSports is a great opportunity for us to reach a brand new type of fan that doesn’t always cross over to the ones we have here at Monumental Sports & Entertainment. They have different categories than your core hockey or basketball fan, and we like that. We like diversity of audience.
Grant Paranjape: As someone who has never owned a cable package, I’m an example of that. But I have probably watched many thousands of hours of eSports on different live streams. It is a great way to bridge the gap between fans of traditional sports and fans of eSports.
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MCN: Talk about NBA 2K and when it will be launching.
ZL: The NBA and [video-game manufacturer] 2K have launched a joint venture and announced several months ago that they are launching the NBA 2K league. They went to the teams and later announced that there were 17 franchises that had raised their hands to have the very first franchises in the league [including Monumental’s Wizards]. So, the league will look to launch in late spring 2018 and we’re happy to have installed our director of eSports in Grant. We’re one of the first teams in the NBA to install someone fully dedicated to the eSports team. That gives us a great head start on getting everything ready, from setting up a gaming house, to training facilities, to sharing that new opportunity with our partners. Grant has great experience from a team called Splice that competes across a variety of endemic eSports titles. He brings insights and knowledge to our organization that we previously lacked.
MCN: Will the NBA team be branded as the Wizards?
GP: The NBA hasn’t announced the team names. That is something coming a little later but it will definitely be associated with the brand we’ve built.
MCN: How controllable is this environment from a branding perspective? There has been talk about drug use, for instance, and this is not going to be a training camp with curfews, is it?
GP: I would say in terms of player behavior, it is pretty strictly controlled. It is very similar to what you would see in a traditional sports league. The players sign some pretty strict contracts prohibiting drug use and there is a team manager who will ensure the players have strict curfews and a nutritionist to make sure they have the proper diet. It is a pretty controlled environment that does kind of keep these players at peak performance, the same as any other traditional athlete.
ZL: I would say that a lot of them hold each other accountable as well. In a lot of these titles there’s a lot of money on the line. Our franchise, Team Liquid, won TI7 [the 2017 International Dota 2 Championships] a couple of weekends ago and a first place prize of nearly $1 million. These players are practicing in many cases 10, 12, even 14 hours a day, or more, and so they have to be ready and in good physical condition. These guys are working out and eating well to hone their “twitch” reflexes [reaction time] and so their minds can be focused on the task at hand. There is just too much money on the line for them not to be prepared and totally committed.
MCN: Do you see streaming rights to eSports being a moneymaker?
ZL: Absolutely. [Live game streaming site] Twitch highly values the streaming rights from many teams from the perspective of either using the games to keep highly engaged users more involved or to sell advertising or emotes, and other freemium type business strategies. Twitch sold for a significant valuation to Amazon [almost $1 billion in 2014]. They have really feasted on growing the eSports gaming community. Players sign individual deals that are quite lucrative around streaming rights, so it’s very valuable for teams and players alike.
GP: Especially as more platforms are getting involved and competing for those rights. Facebook, Twitter, YouTube — it’s only going to get more competitive to acquire those top-tier rights.
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MCN: Do you ever see a time when all sports have migrated to over-the-top rather than broadcast or cable, given how video delivery is going?
ZL: We really see a future where linear cable networks and over-the-top direct-to-consumer platforms live in a symbiotic ecosystem and I think that is really how we tried to fashion our local media rights deal with CSN Mid-Atlantic, which is one of the regional sports networks in the NBC Sports family. [CSN Mid-Atlantic will be rebranded as NBC Sports Washington on Oct. 2.] We have a minority equity position in the channel and we’ve committed our Capitals and Wizards live game rights for the long-term onto that channel.
So, the local core RSN business is still strong. Even though cable is starting to decay, or at least plateau, RSNs are seeing some of the slowest decay rates of any channels out there because local really matters and people really care about their local sports teams. We’ve launched this over-the-top direct-to consumer platform called Monumental Sports Network, and NBC Sports and CSN Atlantic are minority equity owners in that network as well, so we have these reciprocal minority stakes in each others’ networks and share board representation, and we program all of our other content and games on the over-the-top platform, so, all of our Washington Mystics (WNBA) games, our minor league hockey games, our two arena football league teams, “shoulder” programming and original programming about all our teams, including the Capitals and the Wizards. We have built out high school basketball, football, hockey and baseball platforms, and now we’ve started to add eSports to the mix. There are some things that digital channels can do that are better than linear ones, and there are inherent advantages that linear channels have over digital ones.
MCN: One of the advantages to linear TV is they have an established ratings system. When is Nielsen starting to rate eSports, and how important is it to have that?
ZL: I think one of the key advantages to an over-the-top or digital channel, or rather a direct-to-consumer platform, is that with digital channels you know exactly who is watching, exactly how many people watched, how long they were on the platform, what else they watched. Typically if you can get them to sign in you have first name and last name and potentially more information. And if they are a paid subscriber, you also have purchasing behavior, credit card and billing info. And that is incredibly powerful. That’s information that disintermediated cable networks don’t have access to. That is another reason why we think that digital is so important to our distribution mix.
MCN: Grant, what do you see as your mission statement and how will you measure your success?
GP: Creating brands that are sustainable and creating an eSports division at MSE [Monumental Sports Entertainment] that is also sustainable and profitable. One of the major concerns around eSports is that, for these players, they have one-, two-, three-year careers and then they tend to transition out of those playing roles to either management or coaching. So, we will look to build an infrastructure that sets our players up for success long-term.
MCN: How long before your eSports business will be profitable?
GP: It depends on the title. It could be a long-term play, five to 10 years. Some endemic teams are still not profitable and they have been in business two or three years and are constantly fundraising through venture capital and other means. It is definitely possible that we are profitable year one. That is something that we are going to work really hard with our corporate partnership teams to do.
MCN: Are you in eSports just in case it hits, or are you confident it is the direction of at least one sector of the sports video business?
ZL: Obviously we are believers. We have made a significant investment in Team Liquid. We led the group with [Golden State Warriors co-owner] Peter Guber and [Tampa Bay Lightning owner] Jeff Vinik, NBA and NHL owners, respectively, and we quickly raised our hand to participate in the NBA 2K league, and what better partner to stand up a new eSports organization than the NBA, a semi-regionalized approach and one that allows us to leverage big team brands and big existing social media and digital followings. We just think that eSports is well positioned to do well. We don’t just want to be here to see what happens. We are quite bullish on the future success of eSports and we want to be part of that growth and development.
MCN: Do you eventually see an NFL 2K league or an NHL 2K league?
ZL: It’s unclear. We don’t want to speak on behalf of other leagues. We think that the NBA is a great first-mover in the space and I wouldn’t be surprised if other leagues consider this.
GP:Madden [EA’s Madden NFL Club Championship] is doing something with the 32 NFL teams.
MCN: Washington is a big sports town. Can it be a big eSports town?
ZL: I think so. There is a great viewership base all along the Northeast Corridor. We have not held an eSports event in Washington yet. We would like to one day. We are opening a brand new facility in conjunction with our sports commission in Washington, called Events D.C., and they would really like to position Washington as the capital of eSports. Events D.C. actually sponsors their own endemic team called NRG. We could imagine hosting eSports events in Washington, D.C., in the not-to-distant future.
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