The esports category is becoming big business: it is expected to grow from $748.8 million globally in 2015 to over $1.9 billion by 2018. It's a still a pretty young space, though, and one whose future is not exactly easy to see.
One area that will be interesting to watch will be the blending of esports with real sports, something that took a giant leap forward on Monday as the Philadelphia 76ers became the first North American sports franchise to purchase its own esports team.
The company acquired controlling stakes in two esports teams: Team Dignitas from owner Michael O’Dell, and Team Apex from David Slan. The team acquired the eSports franchises in partnership with NextEquity Partners, a growth equity and venture capital investment firm. No financial terms of the deal were disclosed.
The two teams will be combined under the Team Dignitas banner, and it will compete across five games including “League of Legends,” “Counter-Strike: Global Offensive” and “Overwatch.” The team will consist of 30 players, along with coaches, general managers, and support staff, among others.
O’Dell will lead the newly merged Team Dignitas’ team operations as President, while Slan has been named Vice President and General Manager.
Greg Richardson will serve as Chairman of the new Team Dignitas. Richardson has spent many years in the video game industry, having founded game developer and publisher Rumble Entertainment. Before that he was a partner at Elevation Partners and served in a variety of senior executive roles within leading game companies including BioWare/Pandemic, Electronic Arts, Eidos Interactive and the 3DO Company.
The origins for the 76ers wanting to get into the esports market came around a year ago, Richardson told me in an interview, at an NBC team owners meeting, where commissioner Adam Silver showed a presentation about the space.
"Josh Harris and David Blitzer were watching the presentation from Adam Silver on esports, and they saw the profound numbers, reach, popularity and passion of that fanbase. That catalyzed them to want to explore it," Richardson told me.
"They embarked on a learning process which led them to Michael O'Dell, the founder and entrepreneur behind Team Dignitas for the last 13 years. They hit it off. OD has a reputation for high integrity and being very successful at leading his team, so they figured out they wanted to work together."
It was O'Dell who introduced Harris and Blitzer to the team at Apex, and the three entities realized they had “a shared vision for esports.”
The 76ers organization says that its intends to manage the day-to-day operations of Team Dignitas, "sharing best practices in sponsorship, sales, branding, digital marketing, merchandising, publicity and more." As to what that means, exactly, Richardson outlined three goals that the team has going forward, and how the 76ers can help.
First, to reinforce the view that Team Dignitas is "the most fan-centric and fan friendly team in all of esports." In that respect, the 76ers can be valuable in helping Team Dignitas to create content that will help it have a closer connection to its fans.
Second, it can help Team Dignitas field the most competitive team. The investor group led by Harris and Blitzer also includes the New Jersey Devils of the National Hockey League, Crystal Palace of the Premier League.
"We think there’s some strong appeal created by bringing the universe of the NBA, NHL and soccer," said Richardson. "We also want to keep our athletes in peak performance. The 76ers have world class training facilities, sports psychologists, and we can leverage that to have the best performing, and happiest, athletes on our team."
Finally, the 76ers can help Team Dignitas build its business infrastructure through merchandizing.
"Brands are excited about the demo, but they're not comfortable yet with how to reach it. The 76er can play vital role in helping them do that, and secure those world class relationships," Richardson said.
Ultimately, whats exciting about this from the point of view of the 76ers is that it gets to be on the ground floor of an emerging market, one it can now help shape.
"Part of the motivation for this investment is that they get to play an active role collaborating with game publishers, team owners, and fans. They can be sitting down and collectively painting what this looks like in five years. I don't know exactly what that will be, but bringing everybody to the table, and leveraging what the Sixers have been able to do, we'll find ourselves in a healthier and larger ecosystem than today," Richardson said.
The 76ers have been on the forefront of technological innovations. For example, In February StubHub began selling tickets directly from venues on its platform. It also announced its first partner, the Philadelphia 76ers, meaning that people who want to buy tickets to home games for the 2016-2017 season would have to go to StubHub to get them.
In May, it also became the first team to sell advertisements on its jerseys. The first partner was StubHub.
The 76ers are also the only professional sports team in North America to own and wholly manage an innovation lab, the Sixers Innovation Lab Crafted by Kimball.
(Image source: news.sportslogos.net)