A Sociocultural Analysis of Gaming and eSports
What Mark Cuban got right/wrong about esports
What Mark Cuban got right/wrong about esports

What Mark Cuban got right/wrong about esports

In a recent piece from Fair Game, Mark Cuban not only talked about how 5G will change how people will watch sports but also delved into the topic of esports, especially as an investor in North America. Regardless if someone thinks Mark is right or wrong, his opinion is not only highly-regarded among investors but also mirrors some skeptical thoughts of investors who are currently involved.


Summary of Mark Cuban’s Comments

Mark had a lot of key points to make regarding Twitch, esports and more. I recommend watching the video but for the sake of this think-piece, I will narrow down some choice quotes:

  • Owning a team in the US is an awful business
    • Consolidation is coming for many esports team brands as investors seek to sell
    • Valuations slowly coming down
  • Would not buy a League of Legends team because of player overload
    • Game meta is constantly changing every 90-120 days, exhausting players mentally and physically
    • A lot of investors who bought into esports teams did not grasp how bad the business is at the moment
      • People who bought in did not recognize the difference between regional viewership value (EU vs US, etc.)
  • Esports is growing overall but not domestically in the United States
  • Being in Asia, there is money specifically for countries like Korea and China

A small footnote, on the other side of tech. investors, we have Ashton Kutcher who believes in esports but mentions old marketing misinformation that mislead a lot of investors into the viability and viewership of esports. While both Mark Cuban and Ashton Kutcher are both invested into Unikrn, they have contrasting perspectives and understanding of esports.

What Mark Cuban got right

In terms of his understanding of esports, it is pretty accurate regarding the challenge of investing and owning a team. Though consolidation has already come for a few organizations including Echo Fox, Optic Gaming and Clutch Gaming, there is an expectation that more will come by next year. Restructuring like with the Splyce brand is also another example of businesses reshaping their brands to transition with the market’s direction.

Owning a team, in general, is a risky business. For any starting team organization, if you do not win any events or tournaments, it doesn’t matter what you do, your brand will not survive or yield much progress. For companies like 100Thieves who’s largest achievement is reaching 1st in the NA LCS 2018 Spring Split, the shift towards merchandising and relying on content-creators (live-streamers) is to off-set the lack of achievement with the branding power and sponsorship agency work in popular streamers.

Deloitte/The Esports Observer (2019)

This factor, stacked with the ‘player overload’ Mark Cuban mentions displays the risky nature of teams. You could be spending millions of a roster (League of Legends rosters can cost up to 3 to 5 million [NA specifically] excluding the additional franchise fee to compete) but if the meta shifts in a direction that doesn’t play to the style of your players or worse, your players cannot adapt or keep up with the latest addition, changes and pace of the newly-revised game, then your brand will suffer and your brand performance will suffer overall.

In terms of the decline in valuations, for most people, it is difficult to discern new investments as reduced valuations or simply a realignment in the true values of these brands. That said, a lot of brands are seeking new investment such as with Evil Geniuses new funding from Peak6 (amount not disclosed) or FaZe discretely starting discussions for new funding with a lot of companies.

Though a correction has been mentioned in a lot of open and closed discussions, it is hard to deny the amount of money invested into esports, especially teams. In another Fair Game clip, Mark Cuban mentions live-streaming and tapping into the attention of younger generations, a challenge traditional sports are facing (especially in Baseball). For some sports teams, investing in esports is looking to be ahead of the (e)sports entertainment transition that media, streaming platforms and better internet data technology (5G) current are and will usher in.

What Mark Cuban got wrong

Is there a lot of money in China? For game developers, sports and esports, yes but not for everyone. In my travels to China, I spoke with a few team brands and leaders and the conclusion resulted in the same: they look to the international audience to broaden their brand. The cost to go international without a guarantee is scary however.

It goes without saying that the viewership in China is much larger but not for all games and not for all brands or tournaments.

In terms of culture, gaming is taken a lot more seriously in Asian countries than in North America. Games like Baduk/Go have had professional players, tournaments and national television broadcasts for decades. Naturally, the development of esports came much faster for Korea and China (e.g: Brood War): non-endemic sponsors, team-houses and trainers, rigid practice schedules and staffing, etc. Being ahead of the curve means they have also identified challenges that the international scene are now facing. Since the early 2010s, Korea, and now China, face two problems:

  1. Reaching the business ceiling of opportunity
  2. Turning an internal ecosystem of brands into an international interest and value.

For point #1, the established brands of esports tournament organizers, team brands and more has been hit since the StarCraft II era (some would argue even before then). Brand consolidation has already occurred as old StarCraft II brands closed down like oGs and SlayerS (pioneered by old Brood War veterans) and game channels like MBC Game departed in 2011. The reality is that there is a lot of money in Korea, as Mark Cuban says, but there is a lot more in North America and China. Unsurprisingly, those NA and CN team organizations have paid more to import Korean talent.

Back in the day, Korean events were considered the best and most entertaining tournaments in the StarCraft scene. Turning an internal ecosystem of brands into an international interest and value (#2) was easy since the rest of the world had not developed in terms of player talent, tournament broadcasting and esport infrastructure. Competing at international tournaments paled in comparison to the few major players who could go to Korea and play among the best in the GSL. This has been true since the Brood War days years ago but StarCraft II really pushed esports development to a new speed.

This segues into point #2 where Korean brands are looking to go internationally (but may be too late in the large scope of things). Some examples are OGN investing 100 million in their North America venue, the joint venture of T1 Entertainment & Sports (a cooperation between Comcast Spectacor and SK Telecom) and Gen.G who are involved with both the South Korean scene and North America. The goal of transitioning these internal brands and expanding Korea’s ecosystem of businesses into a global value properties is dictatory of Korea’s challenges. In discussion with Korean leaders over the years, they have all sought to expand abroad.

Regarding China, it’s similar to North America. Prices for players and to start an esports company is growing more than the promise of matching revenue growth. When I was in Shanghai, my conversations with some team and business leaders were becoming repetitive: how can we reach an international audience with as little risk as possible. There is a ceiling in China but its risky, sometimes bureaucratic, and challenging to get the necessary funding. Team LGD Gaming has tried several times to go international before partnering with Paris Saint-Germain. Though the partnership is rare, the desire is not among Chinese brands. Paris Saint-Germain (PSG) can access the international sponsors that Chinese brands want and LGD can provide the talent, presence and involvement in esports that PSG seeks without the risk and investment they’re not willing to venture into. Before this partnership, PSG had attempted to get into esports through League of Legends and famed played YellowStar. That cooperation did not work out on numerous levels. On the flipside, LGD has tried to go international with a LGD.int team but for similar reasons, it did not pan out and so both organizations are met with a similar challenge at different sides of the earth: how do we reach each other’s markets without the complete risk of a full investment? The partnership between PSG and LGD heavily favours PSG (in terms of numbers) but the alternative for LGD means no involvement whatsoever internationally.

2012-2013. LGD International is born but does not last long. With Valve implementing rules to allow only one team per organization to actively compete in The International, international risk versus value falls quickly. LGD Gaming were not the only ones to try this as Na’Vi also had a US squad competing at the time.

Esports teams and brands look to go international because it broadens their appeal, raises higher sponsorship values (for the international companies that want to sponsor internationally – which are a very select few) and it will establish an early dominance and household name before the esports market is expected to ‘optimistically explode’.

Esports is not only looking for which markets to target but also which upcoming games and trends will yield the most value. Esports continues to be agile and the transition to mobile games will continue to display quick-interest from companies looking to be first-in-the-market.


In many ways, esports is still very immature, both in its understanding of taking advantage of its growing audience and target demographic but also how to convert aggregated viewership into valuable consumers and purchasers or team brand content and merchandise. On the other side, brands are faced with the challenge of having to invest more heavily into their rosters and brand but also to rapidly expand internationally in order to fully maximize all considerations of potential revenue return.

Image result for pubg mobile esports
PUBG Mobile piques interest from various parties. Many tournament organizers want to be involved in mobile, especially games with the publishers involved such as Supercell, Tencent and Drodo Studios.

To say that investing in esports in the US is an ‘awful business’ and then comparing it to the money in China or Korea is a case of “the grass is always greener on the other side”. Though I am not sure how involved Mark Cuban is with esports in Korea or China, discussions with those esports team brands and even esports businesses will tell you straight-away that they are eyeing markets outside China for similar reasons as the US. Esports is valuable but risky and no region has it best, just different.

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