Counterpoint: Esports Orgs are Between a Rock and a Hard Place
Counterpoint: Esports Orgs are Between a Rock and a Hard Place
When it comes to the Esports World Cup, there are a number of reasons why esports organizations in the West feel compelled to participate. Let’s explore some of them.
It would be very easy to vilify esports organizations that are participating in the upcoming Esports World Cup in Riyadh, Saudi Arabia—or participating in circuits that are making stops during the event—but things aren’t always cut-and-dried. and at the end of the day these companies are running businesses.
So today I'm going to play devil’s advocate (not to say anyone is “evil,” it’s just a phrase to explain that I'm trying to reason from their perspective, though it is incredibly important to note that this is pure speculation on my part and not based on any inside information).
First, let us try to think like an esports organization executive by imagining the different types of running organizations in the context of this discussion:
The Anything Goes Executive: Those who will gleefully grab money with both hands from ANYONE at ANY TIME, for any reason. They do this, not because they NEED it to survive but because it’s there and they like to generate revenue. There’s nothing wrong with this; after all, they are running a business. Really it’s only a problem if they care about any backlash.
The Survivors: These executives are running organizations that are on the verge of collapse, so they participate in things even if they are uncomfortable with who they are entangling themselves with because they feel that they have to to survive. That could mean that they feel the need to partner with a gray market gambling platform, sign a deal with a web3 developer, work with a crypto company, or participate in events run by a totalitarian government. These organizations believe they could go out of business if they didn’t take some of these opportunities, so they jump on the bandwagon, hold on, and white knuckle it to the bitter end.
The Change Agents: Perhaps they truly believe it or maybe they are in denial about it, but these executives believe that by engaging in activities with questionable entities, they can influence leaders and people over time, changing the hearts and minds by exposing them to culture, and having ongoing private discussions with leaders in the region. I call this the Will & Grace or Queer Eye for the Straight Guy Effect. They believe that you can support diversity and inclusion while also participating in events where diversity and inclusion could earn you a prison sentence or an execution.
The Forced & Coerced: Executives at these organizations truly believe that they are between a rock and a hard place because if they compete in a certain game (Counter-Strike, Dota 2, Mobile Legends: Bang Bang, PUBG Mobile, etc.) and that game has a Major, a Masters, or a World Championship in Saudi Arabia or anywhere else, they either have to go there or abandon that particular esport.
The FOMO Crowd: While we could be very cynical and say that Riot Games allowed League of Legends and Teamfight Tactics to be part of the Esports World Cup this year only because of money, we know this just isn’t true; teams that already work with Riot wanted these games there and were worried that they would miss out on an opportunity to be on a world stage competing for a seven-figure prize pool. But even outside of the Riot ecosystem, teams want to take part in this event because they believe it is an important moment in history and therefore the pros outweigh the cons.
The I Don’t Give a F#$Ks: These executives don’t care about anything but competing and generating revenue. They are the first to tell you that “they aren’t political,” and they don’t participate in social movements or talk about “social issues” in public ever.
Whatever the reasoning behind the decisions, organization—with their sponsors in tow—have decided to head to Riyadh next month and have adapted the mantra “when in Rome, do as the Romans do.” In Saudi Arabia it is illegal to be gay or trans, and while the religious police (referred to as the Muṭawwaʿūn, Muṭawwaʿīn, or the Mutaween) are not in Riyadh anymore—according to the government—to enforce these rules, it could be perilous for openly gay or transgender individuals to be themselves while in the city. The government is likely to give guidance to attendees that they should “respect the culture while there.”
So how did we get here? The TDLR is that investors finally thought that the juice wasn’t worth the squeeze anymore, or more precisely, the squeeze wasn’t producing any actual juice. Tricked by creative valuations backed up by data from places like Newzoo and Forbes, and puffed up even more by stakeholders like Activision Blizzard (Call of Duty League, Overwatch League), big investment firms and major sports team owners jumped on the bandwagon. Many executives we’ve talked with over the last year or so said that—in the case of franchised leagues—some teams laid out a 10-year runway to a return on investment. At the time, these investors were happy with this timeline, and opened those purse strings.
But after COVID, esports organizations that had sev- and eight-figure funding started dropping off like flies and investors who had been in the business of esports for three years or more weren’t interested in sticking around for that 10-year plan. For one, the valuations were imaginary, and the revenue generation from profit-sharing, media rights, sponsorships, merchandise, in-person attendance, and in-game item sales were not enough to offset the costs of running an esports company.
With investors fleeing, sponsors paying less but wanting more, leagues finally acknowledging that they are failures (hello Overwatch League), and other factors, esports organizations have had to find creative ways to earn revenue. Some, like Misfits Gaming Group, have mostly abandoned esports in favor of UGC (Fortnite, Roblox) and content creation on YouTube, Twitch, etc.; others have turned to new revenue streams in crypto, web3, and gray market online gambling platforms. In this new reality, executives are trying to find ways to generate revenue to pay the bills, even as only a handful of companies now control a monopoly on tournaments.
Enter the Public Investment Fund. I once quipped that some executives are so excited that the Saudi government and its de facto leader HRH Crown Prince MBS wants to invest tens-of-billions of dollars in esports that they think he’s the equivalent of the “esports messiah.” If only they could touch the hem of his garment, they can be healed financially, I joked. But some really believe that all of their ills—whether that’s a challenging environment due to a lack of investment or self-inflicted wounds from financial malfeasance and/or incompetence–can be hand-waved away by doing business with the Saudi government.
But even those who don’t want to participate are finding that they don’t have a lot of alternatives if they want to compete internationally with the Saudi government owning ESL FACEIT Group—arguably the biggest tournament organizer in the world—and the other major TO BLAST working closely with them and the Saudi government to tie the biggest esports titles in the universe to the Esports World Cup. Besides PGL and a few other smaller organizers, competitors in Counter-Strike 2, Starcraft II, Dota 2 (and through BLAST) Overwatch 2, Rainbow Six Siege, Fortnite, and Rocket League kind of have to play ball. After all, if a Major, a Masters, or a World Championship is in Saudi Arabia, you either go there to compete or you miss out on an opportunity.
To compound matters, game makers are also all-in on Saudi Arabia, so if teams compete in games like Street Fighter, TEKKEN, Apex Legends, Honor of Kings, PUBG Mobile, Mobile Legends: Bang Bang, or EA Sports FC 24, they are probably going to have to go to The Kingdom to compete.
Sure, all of these organizations could tell tournament organizers and stakeholders, “we refuse to compete in Saudi Arabia” for whatever reason, but they know they would miss out on international acclaim, big prize pools, and potential exposure of their brand partners and sponsors.
Organizations have a lot of defenses and justifications for participating in Saudi-run events; “we can change the culture” and “we’re not political” are popular, as is the line “we do not want our players to miss out on big opportunities on an international stage.”
Whatever the reasoning behind participating–whether it’s enthusiastically or with great trepidation, the issue isn’t as black-and-white for leaders in esports that have to compete on an international stage. But complicated or not, this doesn’t mean that journalists and the public shouldn’t speak the truth about issues surrounding the Esports World Cup and—particularly in the month of June during Pride Month—the perceived hypocrisy of organizations promoting support for transgender/gay rights while taking part in an event in a country that sees these same people as criminals and degenerates.