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.

Publishers are dictating what esports will be

In 2013, I wrote about the differences of publisher involvement in esports mainly regarding Riot Games, Valve and Blizzard Entertainment. I wrote the following consideration:

On the one hand, publishers’ want to ensure the longevity of their game through keeping eSports alive, as it is an emblem of new generation values and the long-standing human nature of competition. On the other hand, event organizations have been surviving on their own alongside teams and players for quite some time now. While a publishers’ blessing can help advertising and marketing for these event organizers’, their demands can sometimes be detrimental to overall business interest or severely limiting in terms of actual growth in that specific eSports title. As time moves forward, it would not be a surprise to see companies be more hands-on with their games and the direction of the eSports sector, but will it be for the better?

November 2, 2013 – Michael Cohen (GLHF Magazine)

Back then it was mostly regarding the title StarCraft II (Blizzard), League of Legends (Riot Games) and Dota 2 (Valve) where Riot Games was completely hands-on, Valve was completely hands-off except for The International and Blizzard was in this transitioning phase of involving their own WCS structure but with third-party help.

The current Major model leaves small pockets for third-party tournaments to join in the Dota 2 esports scene, but otherwise – Major and Minor titles are mostly determined at the decision of the publisher.

Though the title of this piece may appear as a sort of impending doom, the years of developer involvement is more of a ‘point-of-no-return’ direction of where esports is going. As predicted, the hands-on involvement of developers in their game-to-esports products has grown larger, sometimes completely cutting out middle-men production companies that have been in esports since its [many] starts. Though that is a threat to the livelihood of these businesses, it also puts into question the definition of esports – either as a marketing attachment and new source of revenue for developers or as a separate division of entertainment and business akin to traditional sports spectating and its assorted diverse revenue streams.

The Consequence of Developer-Controlled Esports Scenes

As more esports titles become largely dictated by their publishers, the fewer opportunities there are for tournament organizers to create events. Tournament organizers not only compete with one another for calendar dates and territorial positioning but they also compete for esports titles. In the past, brands like MLG, ESL and DreamHack announced events for StarCraft II or Dota 2 with near overlapping dates. This is no longer occurring thanks to the involvement of developers ensuring that there is no overcrowdedness. On the other side of the spectrum, for games like League of Legends or Overwatch, as tournament organizers were readily involved with the scene, to have that entire license lost meant that multi-game title events were no longer as easy as possible.

Traditionally in February, IEM Katwoice has been a staple of major tournament production for the major esports titles: League of Legends, Counter-Strike, StarCraft II and Dota 2. Over time, the IEM brand and its associated games have been reduced to just Counter-Strike and StarCraft II.

Developer involvement means that tournament organizations are aiming more and more to be production services for publishers that cannot afford (or do not think it is a worthy investment) to host their own esports leagues and tournaments. With less tier 1 games being available for tournament organizations to host multiple or multi-title events, tournaments orgs are now stepping over each other to reach those contractual jobs such as with Gears of War, Supercell Titles (Brawl Stars) and PUBG Mobile.

Speaking of stepping over each other, let’s also consider the number of Western tournament organizations involved in Counter-Strike, which has a much more open calendar (and appeal to Western audiences) than Dota 2 (who has more popularity in the East and a very tight schedule of Majors and Minors). As more esports titles become closed-off, current businesses get squeezed and new businesses are less likely to prop up since there’s less opportunity to do so.

Including Majors and Minors, there has been over 35 tournaments and leagues for the 2019 calendar in Counter-Strike. For Dota 2, including Minors and smaller tournaments: approximately 24.

For teams and players, they are caught between the expected investment that publishers can comfortably afford to get involved on the newest and latest titles. To invest in Overwatch or Call of Duty for a team means that there is heavy trust in the publisher to lead and follow-through on reaching a shared profitability in the long-term, which is difficult to guarantee. Ultimately, teams are start-up investments but start-ups investing 20 to 30% of their value into one game removes that start-up agility that a lot of growing orgs and business sectors rely on to ensure long-term viability.

The Duality of Esports

The duality of esports references the contrasting, but sometimes overlapping, perspective of how to treat esports according to the actions of the publisher. As previously noted, developers are taking a very strong approach in how the shape of their esports scenes are developed and more importantly, who has the rights to be involved with its growth and success.

We separate the identity of esports into two camps: An Ecosystem or Marketing Outlet but to say that if one developer is in one camp does not necessarily mean they not of the other, it’s that their intent or focus is on either side. The main differences between each side is how involved and what do brands get in return for their involvement. For an ecosystem identity: the goal is long-term value and cooperation for an enriched profitability in exchange for immediate investment/input. For esports as a marketing outlet: esports is an extension to push product and immediate sales, pushing players to the game title as well as also converting esports fans into routine paying in-game consumers.

An Ecosystem

Esports as an ecosystem is the perception that esports will become a separate avenue of revenue on top of its immediate marketing framing. It’s the idea that if invested and developed properly, it can generate strong return of investment in the long-term.

Over 20 teams were formed to create the Overwatch League. Starting in February 2019, these teams will compete in over 70 matches across 4 stages of the year.

With franchising from Riot Games and Blizzard Entertainment, both brands have invested heavily into their infrastructure and esports development to ensure it is at its maximum quality in terms of production for immediate sponsorship and viewership. For Blizzard specifically, by tying their company’s own involvement into the brand, they signaled to other investors at conventions such as MIT Sloan Sports Analytics Conference to also invest in what they believe to be the future and in imitation to what most sports teams investors know (traditional sports spectating). Another clear sign of tying themselves to the scene is through their shared revenue model, where franchised brands, like in Riot Games’ League of Legends, share a % of earnings to a collective pot and is distributed proportionately to all parties involved. The exclusivity Overwatch deal from Twitch to Blizzard will likely go to all parties involved.

The challenge right now is to follow and adapt their year-to-year plan as they expand to both physical inner-country audiences and events as well as to ramp up sponsorship, viewership and appeal. What we may see in the coming years is Overwatch, as a brand, expand to future spin-offs and titles and franchised teams being utilized as marketing assets or already inducted brands should there also be a tournament circuit there. Likewise for Call of Duty, it would be no surprise to see that the release of a new game does not affect franchised teams’ involvement in the League.

PS: It’s important to note that these publishers companies may have considered going in-house due to the businesses, productions and services that third-party esports companies offer may not be sufficiently up to the level of expectation that the developer expects and thus have chosen to invest internally for current and future esports or broadcast-related works. Both Riot Games and Blizzard have previously or currently (Blizzard) work with third-party brands such as ESL, DreamHack and/or StarLadder.

A Marketing Outlet

Image result for rainbow six league team skins
Akin to the stickers in Counter-Strike or the Battlepass in Dota 2, Rainbow Six: Siege adds in digital monetization to convert esports viewers and fans into purchasers, tying in a split monetization value for both the teams involved as well as the developers. PUBG originally had announced plans to do similar, but ultimately backed out of the idea.

The assumption that if a developer is not handling an esports scene as an ‘ecosystem’ then they must not be seeking long-term viability is simply untrue (but understandable). It’s more of an emphasis on making esports fans also purchasing consumers and allowing the scene to develop and manage on its own.

Another facet of treating it as a marketing outlet is being relatively ‘hands-off’ in its process and esports development. However, companies like Valve, Ubisoft, Capcom and some mobile game companies are not entirely hands-off but rather dictate how the scene will be and permit other brands to create licensed broadcasts and events around their product. Companies like PUBG Corp. delegate specific regions of their esports leagues to esports veteran companies like StarLadder and OGN.

By treating it like a marketing outlet, developers can focus more on how to integrate esports fans into consumers and purchasers and worry less on how to monetize the esports scene as a whole, with all of its costs, inexperience and brands coming in (and out). For CS:GO, Valve’s involvement is relatively small, only dictating which tournaments organizations are granted a Major title (and ensuring that no other events are scheduled at the same time) as well as disputing any misinterpretations regarding broadcast rights or legal concerns (is betting sponsors permitted?). For Dota 2, Valve is a little more hands-on and dictates not only which companies are granted rights to broadcast a Major or Minor event but also produced their annual The International tournament alongside PGL.


Regardless of how esports transforms, publishers will survive. The key point to realize is that as esports, as a business sector, gets pulled to either identity definition, mainstream game developers and publishers will survive and move on to the next marketing trend. That cannot be said for some esports businesses that have sought investment to keep up with the latest franchising model in esports or tournament companies who looked under every rock and multiplayer title for contractual work and esports development.

Corrections on article: “Dota 2 Majors are not guaranteed profitable events”

In my previous article: “Dota 2 Majors are not guaranteed profitable”, I highlighted the costs and challenges that Dota 2 majors face when seeking profitability for their event. The article was intended to be an information source for those interested in the business behind your favourite esports events as well as those looking to be more involved.

That said, during my recent travels to Major events, I had a wonderful time talking and receiving feedback from Major tournament organizers. We agreed on many aspects that I had previously explained but they also clarified some areas that were not true for all organizers (naturally as a lot of costs are dependent on the region and agreements between two parties).

This article hopes to display my humility in being open on what I’ve learned but also to correct the record for the sake of clarity. For the most part, the article remains accurate and reflective of how the majority, if not all, tournament organizers feel when considering the value of hosting a Dota Major.

Corrections and Clarifications

  • Uncertainty of Major Status: in my piece, I wrote about how Major status is not approved up to 3 to 6 months before the event-date. During my discussion with colleagues, they had indicated to me that, in reality, this is not as big of a challenge for tournament organizers as I may have (unintentionally implied). My intention was to highlight all potential challenges that tournament organizer’s face but did not do a decent job in prioritizing which were of major concern (beyond costs and diminishing returns year-over-year).
    • Additionally, it was not evident to me but it appears that every first DPC Major are run by PGL. This could be due to the close relationship between PGL & Valve. If the first major is communicated to PGL ahead of time and guaranteed, then the next major would be in January, plenty of time from the application date (May 1, 2019).
    • Additionally, reserving a venue does not have much or any (depending on the relationship) standing problems for a recurring tournament organizer.
    • Lastly, the concern was more towards incoming new brands to apply for Majors when they do not know if they will be considered. This is something that has been confessed to me by Western tournament organizers in the past year. That said, E-League has applied, was granted and dropped out of the DPC season, so this concern can be relatively small (for this year, they were replaced by the DreamLeague Season 11 Finals).
The upcoming dates for the DPC Season of 2019-2020 display an open slot in November then January. Last year, the PGL Major in Kuala Lumpur was the first Major. The year before was the PGL Bucharest Major.
  • MDL Major Example: In my article, I noted that Flights, Housing & Accommodations can take up to 27% of a tournament’s costs. I cited an example with the MDL Major in Paris, Disneyland. That said and despite my parenthesis that costs can vary depending on the organizer (and before group discounts and negotiations). I was not being faithful in that the MDL Major cost was much higher than traditional Dota Major events:
    • For starters, the MDL Major has an attached cost of about 4 to 4.5 million dollars (including prize-pool) – more or less double than other Majors.
    • Secondly, in partnership with Disneyland, a portion costs were covered which helps off-sets some cost concerns.
      • Majority of costs, including hotels and accommodations, were covered by MDL with no discount.
    • Thirdly, the breakdown of costs is still accurate in how they’re split. The costs, as noted for a third time, is dependent on the location and the organizer. An event in Russia or Ukraine is much, much cheaper than in Western-Europe or North American countries.
    • Lastly, Mars Media took a significant risk to deliver their event to Paris as opposed to their traditional country of China. That risk was not mitigated by Disney’s minority involvement.
Disney covering a portion or most of the costs for the MDL Major is something we touched upon by other organizations.


Reception of this article overall was very positive. While many friends and colleagues who run DPC events or are involved with Dota 2 have come forward to discuss further about this subject and changes they’d like to see or do for next year. The public has been mixed where people misunderstand healthy skepticism with cynicism and a personal vendetta. When it comes to writing these kinds of pieces, I should have done a better job highlighting my credentials, work in esports and in Dota 2 (my LinkedIn is publicly available). I was naive to assume that this would be received well by all parties but am relieved to see that the people who I respect in esports, have welcomed my article for its openness and interest in bringing the discussion to the public light.

Though under-reported in Western media, the article has been picked up by large media CIS hubs such as Dota.ru & cyber.sports.ru. I thank them for their coverage.

Though it was impossible to display everyone who spoke to me privately, publicly or simply acknowledged the article. It gave me great validation to see friends I regularly speak with openly (admittedly, on LinkedIn, which means a varying amount depending on who you are) enjoy my work. Thank you.


This will be my last public commentary regarding the current subject of Dota 2 Majors. The discussion regarding value of an event, risks to start a new team or considerations in a commentary career are always spoken in circles, from advocates and so-called consultants without any actual numbers behind it. This is either due to the fact that they do not know them, unsure if they can openly talk about it or if they feel secure about where their information is coming from.

In the future, I am hoping that more publicly-recognized members of this industry will speak up about how much money is truly being invested in esports and the short and long-term values that can be comfortably projected.