343 will not make Kansas City Pioneers an officially partnered HCS team
No rev-share for the #6 ranked HCS team in the world. Community expresses shock and disappointment.
Fans, pro players, and other organizations in the Halo esports ecosystem wondered out loud on social media Wednesday morning why the #6 ranked Halo Championship Series (HCS) team in the world, the Kansas City Pioneers, was denied being named a partnered team by 343 Industries/Microsoft Game Studios (partnered teams get a revenue sharing deal on the sale of in-game skins).
On Tuesday evening KCP Chief Gaming Officer and Co-Founder LJ Browne delivered the bad news to the community via Twitter: “Speechless right now," he wrote. "KCP was just denied partnership for HCS. Apparently we were deep into consideration and just didn’t make it through in the end. I have no words, other than sorry to the fans and our players. So much hard work… Don’t even know how to keep going."
Other KCP people I spoke to on background (because they were not authorized to speak) expressed a high level of disappointment, confusion, frustration, and some anger at the decision, mostly because of how much energy, capital, and sweat equity the organization put into promoting and competing in 343’s esport during the 2021-2022 season. Since signing the team in September of 2020, KCP has spent hundreds of thousands of dollars to compete in Halo esports, one source told me on background. The end goal was always to become a partnered team, as highlighted by KCP Halo squad member KCP DRUK on Twitter Wednesday:
“KCP signed us in September 2020 (a whole year+ before the game even came out), before we even played Halo 5 Pro Series where we got t4 consistently and won one of them. Right before infinite came out we resigned with them and were told by HCS that we were projected to get skins.”
KCP did its part to be in the top 10 of most competitions during the season and even hosted a bootcamp at MLB team the Kansas City Royals’ headquarters prior to the HCS Kanas City Major in late April. All of this effort, it hoped, would lead to being rewarded with partnered status in the next season.
People I have spoken to allege that several well funded organizations–Team Liquid and 100 Thieves, along with one unnamed European organization–will be announced as partnered teams in the not-too-distant future, and this is part of the reason why KCP was pushed out. Other names being thrown around the community include Luminosity, Pittsburgh Knights, and Acend. We could not independently verify the validity of any of these claims.
Team Liquid declined to comment on this story, as did KCP. We also reached out to 100 Thieves, 343 Industries, and Halo Esports and Viewership Lead at Microsoft/343 Industries Tahir "Tashi" Hasandjekic for further comment Wednesday morning, but they have not responded as of this writing.
Halo Esports announced nine partnered teams for the 2021-2022 season: Team Envy, FaZe Clan, Cloud9, Fnatic, Sentinels, Spacestation Gaming, eUnited, G2 Esports, and Navi. Recently it was revealed that three additional partnered teams would be added for the next season. What's unclear is how HCS chooses which teams deserve to be partnered; does it make these choices based on name recognition and popularity (and the potential to sell lots of in-game skins), or on engagement with the community and performance? It’s clear that well-funded organizations may have a leg up on scrappy up-and-comers like KCP who have put in the work within the community.
100 Thieves would be an interesting choice–if the rumors are true–because it doesn’t currently have a team competing in Halo. Team Liquid competed in Halo esports from May 2015 - December 2017, but doesn't currently have an active roster playing Halo Infinite.
Ultimately the decision leaves some serious questions about how Microsoft handles esports related to its own titles such as Halo and Gears of War (it officially said goodbye to GoW esports efforts on June 27) and what it might do when it is in charge of Activision Blizzard’s popular franchises such as Call of Duty League and Overwatch League when it acquires that company at the end of this year or in early 2023.
More broadly, this story may illustrate how IP owners like Microsoft may be engaging in gatekeeping; a relatively young esports organization like KCP can do everything right–compete at a high level, create a community, and build relationships internationally–but because it doesn’t have millions of dollars in investments behind it, it may get overlooked for larger, more high-profile teams who will ultimately reap the rewards (such as getting partnered and sharing some of the revenue from the ecosystem) without doing any of the work.
In other news…
Metaverse company Infinite Realty has finalized its acquisition of ReKTGlobal to the tune of $470M USD. The combined post-close valuation is $2.47B, according to the company. With this deal, IR picks up ReKTGlobal's digital media agency Fearless Media, fan engagement platform FullCube, talent management firm TalentX Entertainment, League of Legends European Championship (LEC) squad Rogue and Call of Duty League franchise London Royal Ravens. The acquisition of the esports teams was approved by Activision Blizzard and Riot Games.
European esports organization QLASH announced Wednesday that it has raised $2.64M (€ 2.6M) in a new seed round that included participation from UFC fighter Marvin Vettori, former Italian volleyball world champion Francesca Piccinini, and Spanish soccer player Victor Camarasa. QLASH claims it will use the new funds to build out a community platform and to expand into new markets. The organization fields teams in multiple regions including Italy, Spain, Argentina, and Egypt, competing in such esports as Brawl Stars, FIFA, PES, Sim Racing, Hearthstone, Fortnite, Call of Duty, and PUBG.
A special message to readers
It seems weird to put a message introducing myself at the bottom of this newsletter, but the lead story is more important than this self indulgence, in my opinion. So who am I and why am I writing about esports business? My name is James and from what I have been told I’m a pretty nice guy who has an unhealthy obsession with writing about (and editing) esports, gaming, and pro wrestling.
A little background: I was the senior editor at The Esports Observer for two years (I joined in November of 2018) before I was promoted to esports editor at Sports Business Journal in 2021. I left there in December of last year to “find myself” (I guess), but I haven’t quite figured things out yet.
Anyway, I love writing about this industry (I currently edit/contribute to two newsletters—Esports Business Insights by AFK Gaming and Sharpr, an esports betting newsletter from Cody Luongo—both are awesome and you should sign up for them right now!) and this is as a good a place as any to continue practicing my craft. I hope that you will join me as we explore this industry together, and thank you for reading this inaugural dispatch. - James Fudge.