It's not all trials and tribulation in the world of esports

At first glance, there's a course correction with the esports biz.

Late last week, Overactive Media announced the departure of co-founder and CEO Chris Overholt, who, as announced yesterday, is returning to his traditional sports roots as the new senior VP, global partnerships for MSG Sports. We reached out to some esports industry insiders this week and were quickly told there’s no need to start writing the biz’s obituary. And yesterday, Enthusiast Gaming announced its own leadership change at the top with Nick Brien being named the company’s new CEO, replacing Adrian Montgomery, who will now chair the board of directors as part of a transition plan that was made public earlier.

Kroenke Sports & Entertainment, owners of the Colorado Avalanche, LA Rams and Arsenal FC, laying off all of the employees of The Guard esports organization at an all-hands meeting last week.  Beyond the Summit, another North American esports business, letting go its full-time staff at the beginning of the week. Last month, FaZe Clan trimmed its staff by a reported 20 per cent, and in January, LA-based 100 Thieves said goodbye to 30 employees, including its chief revenue officer. And, the city of Chicago is pulling the plug on a couple of ventures with ties to esports. (A tap of the PlayStation console, by the way, to James Fudge of The Esports Advocate, not only for his reporting over the past couple of weeks but also for posting this highly accessible spreadsheet of former Beyond the Summit employees with their contact information for potential employers.)

Speaking of Fudge, he broke the news on Thursday that analytics company Newzoo is walking away from breaking down esports industry data.

“It’s not just esports (experiencing layoffs),” Rivalry CEO Steven Salz, sipping tea to help combat a cold, told Gaming News Canada during a Zoom call Tuesday morning. 

The stuffed-up Salz directed us to Layoffs.fyi, which reports 428 tech companies laying off more than 120,000 employees already in 2023 (160,000 workers were let go in all of 2022). 

“The Amazons, Apples, small startups,” he continued, referring to the wave of lost jobs in the aftermath of the COVID-19 pandemic. “Esports is such a media-driven, social media-heavy industry, so (the layoffs) seem abnormally high.”

In the case of esports, the economic squeeze isn’t affecting tech but teams and the media companies who banked on esports as a revenue opportunity for an industry having its own trials and tribulations. (Also, the money that was available for investing in shiny new objects pre-COVID has disappeared, and there’s now a day of reckoning for companies with their investors.)

“The esports industry, like many other areas of economic and social life, were of course affected greatly by the massive outlier event we all went through the past two years, COVID,” Christopher Bohlmann, the senior director of finance for Bayes Esports - the Berlin-based betting, gaming and data business which entered the Ontario market last fall as a partner of Bet365 - told us in an email. “As almost all traditional sporting events came to a halt, esports events still took place online and we started seeing a significant increase in viewership numbers, as well as other adjacent areas, like betting volumes. And with that attention it was inevitable that more companies got attracted to this industry, mainly to offset missing business elsewhere. Hence, esports was one of the beneficiaries of the global pandemic, which in turn resulted in strong growth numbers.

“Now, however, we see that more than a few of these companies never fully understood the dynamics of the industry or its audience, and that the kind of growth we saw in 2020 and 2021 is not sustainable, at least not until some corrections are done. Therefore, I consider what we are currently experiencing a healthy transformation that will set the industry on a sustainable long-term path. The year 2023 needs to be, and I believe will be, a year of refocus for everybody involved, and as a result the esports foundation will be a much more solid one.”

It was pointed out to us by Salz and another person who knows the esports scene very well, paying salaries to players, coaches and other support staff isn’t inexpensive. Unlike professional sports leagues and teams, there is little to no revenue from traditional broadcast networks, which means a reliance on tickets, sponsorships and apparel sales to pay the bills.

Salz said Rivalry, the esports/sports betting and media company which calls Toronto home, is off to “a blistering start” in 2023 after a landmark 2022 that saw it enter regulated markets in Ontario and Australia, and experiencing record revenue numbers. The International Olympic Committee is hopping on the esports train with the launch of a series this year with participation from the International Tennis Federation and other global sports bodies.

“Betting activity continues to grow at a significant pace for us, and esports viewership is as strong as ever,” he said. “The latest version of Counterstrike is 10 years old. The last week or so, the game hit peak concurrent players which is insane. The number of people playing games continues to grow.” (Rivalry’s corporate development exec Billy Levy provided his own bon mots on what lies ahead for the industry as part of a Q and A thing with iGamingFuture.com.

A group of panellists Wednesday at the Casino Esport Conference agreed there’s lots to be excited about around the potential of esports betting. Bohlmann is also bullish on the industry moving forward, including here in the Great White North.

“The right levers are being put in place to strategically position Canada as an attractive esports destination,” he said. “In addition, the similarity to the U.S. market, both from its dynamics and its proximity within the esports world, will definitely prove to be beneficial going forward. Many major leagues and regional tournaments include the entire North American region and make no distinction between U.S. and Canada in their requirements (e.g. player nationality in the LCS, the North American League of Legends Championship Series), so a surging U.S. market is essentially a direct driver for the Canadian market. And with the U.S. states now opening up at a rapid pace, we believe the growth connected to that will also facilitate the Canadian market opening up further.

“We are certain that other provinces will follow Ontario’s example in the near future, and once that happens, Bayes is well positioned to offer live esports data to sportsbooks all across Canada. Our goal is to not only benefit ourselves from that evolution, but also help the Canadian market become one of the most attractive ones globally.”

We also asked Bohlmann about Bayes’s internal evolution as a company.

“We have made important changes in recent years, most notably in the past 12 months, both operationally and employee wise,” he wrote us. “The most recent change is the addition of our new COO York Scheunemann, who joined us at the beginning of 2023 from Google, where he held leading positions for about twelve years.

“Bayes’s management team has therefore completed a major overhaul, and now consists of two ex-Googlers, two tech leaders from the German startup scene, a people and culture specialist from Red Bull, an automotive expert from Audi, and a university professor for communication management, plus myself as an ex-investment banker and manager.”

And, as we read, hear and watch on a daily basis, the development and use of data is moving at a frenetic pace.

“I think the most obvious and notable is that we have only scratched the surface of what is possible with official live match data,” Bohlmann said. “As you know Bayes is a strong advocate for the use of officially licensed data, both from the perspective of rightholder protection, but also for taking a stance for the integrity of the esports industry. As we are steadily pursuing this we feel that we are finally being heard and that there is increased support not only from rightholders, but also from legislators, who advocate the use of official data within their regulatory requirements.

“And the further we drive this education of the market, the more Bayes will benefit from it, being the leading source for official esports live data, some even exclusively. There are many growth use cases for officially licensed data points in esports, including but not limited to betting operators, media outlets, teams, and players.”

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