Conference Presentation, Panel
So You Want to Be an eSports Owner
Milken InstituteStephanie Snowden, Andy Miller, Shawn Sanford, Ari Segal, Barney Waters, Noah Whinston
- Industry leaders plan to expand portfolios with multiple teams across various titles, anticipating that the Overwatch League franchise model has recently eased fundraising and will likely be adopted by Fortnite, though distinct models may be required for games like Clash Royale and PUBG to avoid recency bias.
- The sector is described as undergoing a generational shift driven by audiences under 30, who view gaming as a lifestyle component, aspire to become CEOs rather than athletes, and are expected to continue shifting their "eyeballs" and "share of wallet" toward esports, potentially making it larger than traditional sports within 40 years.
- Traditional sports owners are expected to view esports as a long-term hedge against the decline of the linear cable model, which is predicted to cease existing over the next 30 years, while esports organizations are projected to become synergistic with traditional entities like AEG to leverage shared infrastructure and audiences.
- Monetization strategies are predicted to evolve through direct-to-consumer OTT platforms, premium digital subscriptions, and the integration of gambling and daily fantasy sports driven by youth familiarity with titles like Counter-Strike, though successful models must create repeatable live events and avoid forcing a single franchise structure on all games.
- Investors face risks regarding operational maturity and unrealistic valuation expectations, as "type one" investors seeking 20x returns in five years may lack the necessary operations for 10-figure valuations, and brands risk appearing inauthentic if they do not drive value to existing stakeholders rather than simply placing logos.
- The industry outlook includes plans to professionalize player management by emphasizing health, sports psychology, and efficiency, alongside a "gold rush" for athlete endorsements and a transition where celebrity involvement and media spending increase as leagues become more structured and transparent for external investment.
- Operational execution is critical for future success, with a recognition that the gaming and esports industries have fundamentally different demands, and while the sector is nascent with challenges regarding access and viewer optimization for games like Fortnite, it offers an opportunity to surpass legacy sports by addressing issues immediately rather than waiting for generations to pass.