This sport has millions of viewers, but remains virtually unknown in mainstream Australia. It is also a sport with prize pools equal to major televised events, but has not been a professional sport until recently.
And when BusinessDay asked Australia’s television networks about plans to broadcast this weekend’s world championships, which has an expected audience of more than 36 million, the response was furled brows.
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Company behind the incredibly popular League of Legends started 10 years ago with two competitive gaming fans wanting to make a new kind of video game.
A senior executive – who has been involved in billions of dollars of live sports deals – replied “What is League of Legends?”
Well, League of Legends (LoL) is an online Multiplayer Online Battle Arena where players control a “champion” to fight other players in real time with the goal of destroying their opponent’s base. It makes as much sense as three dozen men chasing a small red ball.
The Oceania Pro League has a 26-week season with three official sponsors, Red Bull, Hoyts and Logitech.
Until this year esports (electronic sports) have been fairly informal in Australia. But earlier this month Australia got its first ever pro esports team when Guinevere Capital bought a controlling stake in a team called Dire Wolves. And in August St George Bank announced it will sponsor ESL Australia, which publishes games Counter-Strike and Dota 2, along with equipment partners ViewSonic and Plantronics.
“The sponsorship reflects St George’s investment in innovation, given the immense growth of online gaming in Australia in recent years and the large and growing number of customers who embrace online games every month,” the bank said at the time.
But banks, insurers and telcos are missing out on a highly engaged young male audience, according to managing director of Guinevere Capital, David Harris.
The stake in Dire Wolves cost “well into six figures but short of seven figures”, Harris says. He wants to sell memberships to Dire Wolves fans, get sponsorship, and sell merchandise.
Investing in an esports team is like venture capital – it could flop or it could be a gold mine. Dire Wolves wants to be the next Hawthorn Football Club, but there is a long way to go.
“There is a real opportunity to engage with the player base and try and get them attached to a team at the league level, and that’s what we are hoping to do,” Harris says. “At the moment revenue is being reinvested, but down the track we hope there is an opportunity to draw a dividend.”
Guinevere will provide a house for the team and cover Dire Wolves’ living expenses.
The team keeps playing fees, worth up to $10,000 a year, and prize money. While gamers have a slovenly reputation, Harris – a former sports physiotherapist – says pro players are usually fit, have stamina and have good mental preparation.
Harris spent two decades in professional sports, including stints with the Sri Lankan cricket team, Premier League teams in Britain, and the National Rugby League in Australia. He and fellow director Rodney Cocks are using their own money for the Dire Wolves investment.
Asked what an esports injury looks like, Harris says: “We don’t get guys blowing out their thumbs in the middle of a game. It’s more postural [problems].”
Dire Wolves founder and CEO Nathan Mott. Photo: Daniel Pockett
Dire Wolves founder and chief executive Nathan Mott is a 20-year-old university drop-out who will soon be moving into the team’s new share house in Sydney.
“My parents were pretty against me playing video games all night. They were very suspicious and thought it should be more of a thing on the side,” Mott says. He is now managing a professional sports team.
He wants to build the Dire Wolves team into a big brand “like the AFL teams Collingwood and Hawthorn”.
“The physical side isn’t so much of a worry, but the mental control is huge. Sport psychology is huge in this space. We are also getting nutritionists involved,” Mott says.
Australia is catching up on the popularity of esports, but is years behind other countries.
Owning an esports team is common in the US, with many basketballers or footballers owning stakes in a team. Even Amazon owns teams through its Twitch subsidiary. One team, Evil Geniuses, have won more than $14 million in prize money.
South Korea has an esports association managed by the Ministry of Culture Sports and Tourism and affiliated with the South Korean Olympic Committee.
But our geographical isolation creates problems.
“We can’t play against the US or Europe because the ping is too high it creates milliseconds of lag that we need,” Mott explains.
Ping is the time it takes for signals to travel through internet cables. Even with a super fast connection it still takes some fraction of time for signals to travel. This means Australians are limited to the small pool of Oceania players.
But on the other hand, it is a quick journey to the top of the league compared to regions with millions of players. Australia is in the Oceania Pro League, which sends a winner directly to the International Wildcard Qualifier. From here the winner goes straight to the international quarter finals.
Or as Harris puts it, they are “three wins away from winning the world champs. If we win that, the sponsorship and all the other revenue coming around it would be incredible.”
Pay to play
This year’s LoL championship is between Samsung Galaxy and SK Telecom T1. Yes, both teams are named after South Korean companies. Tickets cost just $55 and anyone can stream the game live for free. It’s the opposite of mainstream sports, which make money from selling exclusive rights.
“We don’t sell broadcast rights. We are more interested in expanding our reach than trying to monetise broadcasting,” head of esports at Riot Games in Sydney, Daniel Ringland, says.
Riot Games created LoL and manages the tournaments. It is a privately owned American company and claims 67 million people play LoL every month. Riot reported it made more than $US1.6 billion last year from in-game micropayments. So the owners don’t care how many people watch, they care how many play. It’s like the Federation Internationale de Football Association (FIFA) getting 1¢ every time a kid kicks a soccerball.
It is impossible to know how many Australians play LoL or watch the matches because Riot refuses to reveal country breakdowns. The local championships attracted 11,000 fans to Luna Park in 2015 with a further 2000 people watching live streams to cinemas. FoxSports also streamed this year’s Oceania finals. But this is far short of the 6.5 million Australians who watched the AFL grand final on television.
First place takes home $2.1 million and second place $810,000. Not bad for computer games.