By Alexander Lee • August 29, 2024 •
Creator-owned teams were once seen as a potential pathway for esports to escape its reliance on sponsorship revenue. But as the business model matures, it’s become clear that creator ownership is just a particularly effective way to get brands’ attention — not a panacea for the industry’s ills.
Although prominent esports teams such as 100 Thieves have been partially owned and led by creators in the past, the last few years have seen the rise of a new type of creator-owned esports organization.
As these creator-owned esports teams have entered the conversation, they’ve sparked speculation that they might be better insulated from the cold of last year’s so-called “esports winter” than their more traditional competitors. The idea was that creator-owned esports orgs would be able to withstand periods of low sponsorship interest without having to lay off staff or cut talent due to being the passion projects of influencers with pre-existing access to millions of dollars in sponsorship and subscription revenue.
So far, this has worked — to a point. The reality is that these teams still suffer from the same core issues as other esports orgs: sponsorship deals are still their lifeblood. Though these teams have successfully helped thaw the ice of esports winter by keeping brands and marketers interested in the space, they do not necessarily represent a solution to the industry’s deeper existential threats.
A different approach
The first example of this variety of creator-owned esports org was Moist Esports, which YouTuber Charles “MoistCr1TiKaL” White founded in 2021. Other prominent gaming YouTubers have since followed in White’s footsteps, including Ludwig Ahgren, who became a co-owner of Moist Esports last year, and Jeremy “Disguised Toast” Wang, who started the esports team Disguised in 2023.
To some extent, the rise of creator-owned and -branded esports orgs is a reflection of the changing nature of the esports industry. The once-dominant business model of publisher-owned and operated esports leagues has subsided in favor of a more open ecosystem, making it easier for creators to afford the operating costs of a team.
“That’s kind of what happened with 100 Thieves. [founder and CEO Matthew “Nadeshot” Haag] was a super-charismatic content creator, but in order for him to be able to stay in the game and pay the fees that Riot [Games] requires to be part of the LCS, you just have to sell so much of your company to investors that don’t really understand,” Wang said. “Now that it’s on the downturn, it’s more feasible, and that’s why people like me and Moist and Ludwig are able to have a bigger presence now — because we’re not competing with billion-dollar orgs.”
In other ways, however, creator-owned esports orgs are still grappling with many of the same challenges as their predecessors. They remain largely reliant on sponsorship money, and although Wang has successfully expanded Disguised into new revenue streams such as merchandise, his esports team has not yet reached a point where it is consistently turning a profit month-over-month.
“At the end of the day, I really want to be able to self-sustain — to be able to make back the money that our 15 employees cost, because that’s the first step to a sustainable future in esports,” Wang said. “We can’t just keep esports going forever as long as we just keep taking money from investors and angels, right?”
Intangible value
Turning a profit is less of a focus for Moist Esports, whose owners have openly stated that they are willing to lose hundreds of thousands of dollars on the venture in exchange for the excitement and content generated by operating an esports team. Instead of looking to turn his esports team into a direct revenue stream, White has used it to generate more intangible value for his brand, thus attracting more fans and potential sponsors to the world of MoistCr1TiKaL.
“Now, Moist Esports is always associated with Charlie. There are fans of Moist Esports who did not watch Charlie; it opens up a whole ‘nother fan base,” said Moist Esports co-founder and longtime MoistCr1TiKaL manager Matt Phillips. “It really creates this ecosystem where all the brands work together and prop each other up. It’s very hard to track on the books and say, ‘oh, that made us X amount of money.’”
Indeed, of all the stakeholders in the esports industry, brands and sponsors might be the ones who are best poised to take advantage of the rise of creator-owned esports teams.
As marketers grow more knowledgeable about the gaming community, they’ve keyed into the predominance of individual influencers within the industry, with some brands explicitly divesting from esports in order to focus on the influencer space. Sponsoring a creator-owned esports org allows brands to double down on this approach while maintaining a connection to competitive gaming.
“We are very keen on working with these creator-led orgs, because they’re more creative, more innovative,” said Jeff Chau, director of global esports for the gaming hardware and lifestyle brand Razer. “We’ve worked with previous orgs and had massive deals with them — I don’t want to mention anyone — but they’re a lot more transactional, and they don’t think about being more creative in terms of activating the content. And that activation, that innovation, is what we love.”
The trend is trending
As brands warm up to creator-owned esports organizations, more digital creators are likely to throw their hats into the ring. In June, the Twitch streamer Kaitlyn “Amouranth” Siragusa became the latest prominent content creator to do so by purchasing a stake in the Texas-based esports team Wildcard Gaming.
Siragusa’s decision to invest in Wildcard Gaming is an endorsement of the esports biz by a content creator who has developed a reputation for shrewd business decisions, including the purchase of multiple gas stations in years past.
“In North America, you’ve got DSG and Moist; clearly there’s a need for more offerings from a creator-led model,” said Wildcard Gaming COO and co-founder Ben Merritt, who told Digiday that his company is currently profitable. “We looked at it like, ‘let’s try and be the first female-led creator organization in North America and really capture that niche.’”
Since the announcement, Wildcard has heavily featured Siragusa in its content and branding, emblazoning its Twitter page with a banner image of the creator.
“”My fans will watch me do anything, but with my connections to the industry, I can bring in people who are my friends, like xQc or even Ludwig or MoistCr1TiKaL,” Siragusa said. “And I know some of them also have esports teams, so it’s fun to stoke the fires a bit and get some friendly match-ups outside of actual tournaments — a little bit of crossover hype.”
https://digiday.com/?p=553789
