Thursday, October 15, 2015
Clinton Foy: Why We Bought Our Own E-Sports Team, the Immortals
Story by Benjamin F. Kuo
What is the appeal of e-sports; and how is it that investors are now buying their own e-sports teams, just like investors might buy and sell their own, traditional sports teams in soccer, basketball, and football? To get some insight into the growing world and business of e-sports, we caught up with Clinton Foy, a local venture capital investor at Crosscut Ventures in Los Angeles. Foy—along with a number of partners, including, Brian Lee of Honost Co.; Peter Levin of Lionsgate Interactive Ventures; Allen DeBevoise of Machinima; Steve Kaplan of Oaktree Capital; Gregory Milken of March Capital Partners; Paul Rappoport of XPRIZE; Akinobu Yorihiro of Yoshimoto Kogyo; and Machine Shop Ventures, the investment arm of the band Linkin Park--made a personal investment in buying their own, e-sports team, which they have christened as the Immortals.
First, for our readers who are not familiar with the whole e-sports area, talk about what the big deal is with e-sports today?
Clinton Foy: E-sports is, fundamentally, one of the biggest trends and one of the hottest areas in video games and the interactive space right now. It's something that has been increasing year of year for the last ten years or so. It's super interesting, in particular, for Southern California, where Blizzard and Riot Games have been really helping to lead that charge, both locally and internationally. Blizzard has been one of the founders of e-sports, an created many of the early e-sports games, and Riot Games is well known for League of Legends. Southern California companies are fundamentally part of e-sports, and both of those companies have become multi-billion dollar companies. The really big e-sports that people have their eye on include League of Legends from Riot Games, Valve has DotA, Defense of the Ancients; Blizzard has Hearthstone, Heroes of the Storm, and Overwatch, which could be a first person shooter for e-sports. E-Sports has 100 million fans around the world, and an international fan base, which is super-engaged and passionate. For League of Legends, for example, the world championship is running right now in Europe, and for the finals that are about to happen on October 31st in Germany, there are somewhere around 35 million spectators and viewers around the world, across broadcasting and live streaming channels. That's bigger than the NBA finals.
Why did you buy your own team?
Clinton Foy: (laughs) That's a great question. Part of it, emotionally, is it is something I really care about. I've been very passionate about e-sports, and very passionate about the interactive industry. E-sports is something that is fundamentally a very interesting area. You have a core fan base which really cares about e-sports, cares about League of Legends, cares about Counterstrike, as much as other fans care about the NBA, or NFL, or golf, or hockey. They are fans for life. That's how I feel about e-sports, and that's how I though other fans feel about e-sports as well. We've recognized that fans around e-sports are as engaged, and even more crazy than fanatical sports fans. I think, when Donald Sterling bought the Clippers back in 1981, I think he was paying a lot for the team. He only paid $12.1 million, and sold last year for $2 billion. I don't think he ever thought the team would be worth $2 billion dollars. I think where we are in e-sports, is similar to the early days of the NBA, and the early days of the NFL. We're helping to build a new league that is forming around these professional teams, and working with publishers like Riot Games, Blizzard, Activision, and Valve to lock in broadcast stations, the ESPNs, the Twitches, and Foxes, and Turners to help create an ecosystem around this. This is a way to be a player in that space, and work with everybody—the other team owners, the leagues and publishers, the IP holders, and the e-sports community—to create that. That's what's exciting about this.
What will it take, do you think, for e-sports to attract as big an audience as traditional sports?
Clinton Foy: That depends on your definition of big. E-sports are really bigger than a lot of professional sports already, in terms of audiences. It's bigger than the NHL, and it's almost as big as the NBA. It's not quite as big as the NFL. In terms of spectators and engaged community, it's as big as traditional sports already. It's also growing twenty to thirty percent per year. If traditional sports has essentially flatlined in terms of sports viewership, which it has, I think e-sports will, very quickly in the next few years surpass a lot of those traditional sports in terms of viewers and fans.
In terms of money, and in terms of brands, I think you're starting to see a lot of endemic brands sponsoring e-sports tournaments and individual teams. You can see that with Intel and AMD. AMD is one of our launch sponsors. You're also seeing of course, the PC makers, people like Alienware, Dell, and Nvidia, supporting these. There are some big, multi-million dollar brands in this. What would be interesting, is when the non-endemic sponsors and brands start to get into advertising and positioning in e-sports, such as the Toyotas, the Hyundais, the Allstates and State Farms, the McDonalds. When they start to realize that this is a very valuable demographic, that this is a fan base, and there are the spectators and audience they want to get in front of, that's only a short while away. I think it's going to happen in the next few years.
How would you compare this investment, versus the more traditional investments you have been doing at Crosscut?
Clinton Foy: That's a good question. Just to be clear, this is a personal investment, and something that my partners at Crosscut support. At Crosscut, we tend to invest in platforms. Some of our game related investments have been Super Evil Mega Corp., which is the leading e-sports, mobile platform, and with their title Vainglory, has become the top mobile e-sports company in the world. We've also invested in Vulcan, which is involved in gaming and fantasy sports, and that is a top, daily fantasy sports platform for e-sports. We've also invested in some other companies we haven't announced yet, but we're very active already in the e-sports area. Mobcrush is another we've announced, which is focused essentially on mobile streaming, and they are here in Santa Monica. They're essentially a Twitch for mobile.
So, what is the most exciting thing you see coming up in e-sports?
Clinton Foy: The most exciting thing in the short term, is I am super excited for the World Championship in Europe. If you saw the League of Legends Championship in 2013 at the Staples Center, there were 20,000 people who fliled the Staples Center, and it sold out in under and hour. I had just seen a Beyonce concert in the same place, and that was probably the best concert in the world, but it couldn't compare with the energy and excitement in the Staples Center when those two League of Legends teams, one Korean, the other Chinese, battled it out for the championship. I'm super excited to see this year's World Championship, which is truly now an international sport on the world stage, with tens of millions of fans. Medium and long term, I am excited to see how this involves into a true sport, bigger on every scale and metric than the NBA or NFL. That's what really excites me.