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Keekernomics #1: War is Peace

By Chris 'keekerdc' Schetter
Jan 17, 2011 18:42


ImageSustainable business models in team sports don't look much like the business models in team esports. keekerdc examines this difference and how it might be holding team esports back in his first column for SK Gaming.

The relationship between teams in professional team sports, particularly in the United States, is more reminiscent of the diplomacy between superstates in Orwell's 1984 than it is between typical business partners.  Professional sports leagues are the manifestation of a complex mix of competition and cooperation, a mix that is the engine behind revenues for teams and provides the basis for a team's equity.  Just as the most cooperative relations between two superstates was in fact a declaration of war, the primary mode of cooperation between sports teams is the formation of a league for the purpose of going to war on the field of play.  A single team, considered in a vacuum, is practically worthless; by organizing together with other teams for the purpose of setting up matches, and producing a matchplay product for fans, they're able to find a business model that's both profitable and highly sustainable over time.

When you see a big match on television, particularly between an intense rivalry, the animosity begins with the fans and ends on the pitch.  I assure you, for the management staff and owners of teams in such a rivalry, the feelings are pretty warm and fuzzy, for they're each other's most prized business partners - there's no better days for their business than match day against their fans' most hated opponent.

Cooperation and sustainability
"Team esports find themselves in a state of arrested development because they too are operating under an identical model as solo sports (often under the exact same league entities), and the raw economics of it simply doesn't add up."

The world of professional sports realizes that this symbiotic relationship between groups of teams, not just between rivals but between all teams that they compete with, is an integral part of their profitability.  Unfortunately for us, this lesson has yet to make the jump into our world of electronic sports.

I think it's fair to say that, by and large, the biggest problem plaguing teams today is a difficulty in finding and building sustainable models of revenue.  Solo esports like Starcraft and Street Fighter, on the other hand, are enjoying quite a bit of success lately since they operate in models that actually make the most sense for them - the prize tournament circuits.  Team esports find themselves in a state of arrested development because they too are operating under an identical model as solo sports (often under the exact same league entities), and the raw economics of it simply doesn't add up.

A fundamental difference between team and solo

The path to sustainability looks entirely different between team and solo sports.  At the most fundamental level, our collective thinking along this axis hasn't changed much since the very early days of organized gaming, and comparisons to South Park's underwear gnomes are hard to avoid.  Build a large multi-gaming team, play tournaments to win prizes, gain sponsors to try and cover the costs of attending tournaments, ???????, profit.
"There is no path to widespread success in team esports, when its core structure leaves teams literally fighting amongst themselves over a limited group of sponsors and prize pots."

I'll admit, this model works for a few teams, including the team whose website you're reading this column on.  That it can only work for a few teams at the maximum is the issue, leaving everyone else in a position where they're subsidizing the entire system so those few teams can continue to make ends meet.  The result of this is a scene that features a handful of permanent fixtures at the top, teams that have managed to break through and have the resources to maintain their position there.  Meanwhile, the rest of the scene is in a state of constant flux; new teams try to make that climb into a sustainable model, but often wipe out, running out of cash and willpower before they can make it.

Continuing to go about our business in this manner will only result in perpetuating this crippled state.  There is no path to widespread success in team esports, when its core structure leaves teams literally fighting amongst themselves over a limited group of sponsors and prize pots.

Inflate the scene, inflate the problem

Operating in a full-fledged adversarial mode against all other teams in existence across all areas of your team's business, as part of a system where only a small fraction of teams can find sustainability and everyone else sinks, is ultimately counterproductive.  The economics of team sports simply don't allow for robust growth to exist for a substantial percentage of teams when the primary mode of revenue is winning prize tournaments, and the biggest example of cooperation is signing up to the same league's website.
"Praying that we can simply take an air pump to the current broken model, hoping that the solution is simply to reach an undetermined critical mass of teams and attention, is folly."

Praying that we can simply take an air pump to the current broken model, hoping that the solution is simply to reach an undetermined critical mass of teams and attention, is folly.  Our current model requires the existence of completely unprofitable teams in order to allow a few to make money; this proportional relationship doesn't magically reverse itself based on sheer volume of participants!  If anything, the larger the scene grows under the status quo, the more pronounced the division will be between the top teams and everyone else.  If we want stability and continued growth in team gaming, it requires a rethinking of team esport's core business model at the most fundamental level.

This can begin with the simple realization that third-party leagues, while providing a much needed point of central focus for team games, cannot be relied upon to provide a platform for games such as Counter-strike or DotA to bloom into proper professional sports. A scene hyper-focused on unprofitable international competitions needs to look closer to home to find cooperative league models that build parity amongst teams, build local fan bases, and create shared revenue streams, leading to the long-term viability that we all want for professional gaming.

Please join the discussion.

This is the primary concern of this column: how do we make professional gaming sustainable for more people?  How do we grow larger without making gamers as a whole foot the bill in perpetuity?  How do we get the direction of cashflow to point in the right direction?  I sincerely hope you'll join me in discussing these important issues; I'll be maintaining this column every other Monday, and your comments, questions, and thoughts on overall direction are very much appreciated.


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