Can Esport Leagues Be Profitable?

foreign [Music] gaming podcast where it is our mission to explore the business and future of video games we bring together the industry's brightest Builders investors and thinkers to keep a full sun current events dissect emerging Trends and games share Lessons Learned and have a great time this podcast is also part of novik's growing ecosystem which ranges from free and premium research to Consulting and advisory services for more information visit www.navic.com now let's jump into the episode hello everybody and welcome to the navic gaming podcast I'm your host Alexandra Takei and this is the interview and insights segment so Esports and Esports leagues it's the top thing every single one of my Goldman Sachs or private Equity friends approaches me about what do you think about Esports they'll say and it's usually first from a point of like utter Fascination that it exists and B this

misconception that Esports is an incredibly lucrative business the other day my real estate Professor told me that his golf buddy asked him to invest in this thing called team Envy he was like so you know games and what is this team envy and should I do it and so beyond that being a little bit of a boomer giveaway it's honestly a good question um I've had some long-standing personal opinions on the Esports business it's margins it's p l is the overall purpose in the games business especially given my experience on the OverWatch league and so today we're going to be talking about one of these leagues I'll be albeit it's not a city-based league and how to bring Esports organizations to positive net income and what responsibility Esports has in shaping a healthy Gaming Community and so to do so I'm incredibly honored to have on Nicole Lapointe Jameson the CEO of Evil's Geniuses an Esports organization that actually has its roots back in 1990s as a quake clan in Canada and so today it's a group with over 14 million followers across the Globes with Partners like Ultra gear Peak 6 Chevron and secret lab it probably has one of the most diverse Creator collectives I've ever seen around like 50 female

with a surprising number of minority groups represented um you know I hate to say that that's a surprise but it is um and holds franchising across games like valorant CS go and Call of Duty and so I'm super excited to chat and welcome to the Pod Nicole thank you so much for having me Alex it's exciting to be here and hopefully uh share some of the hard truths but change your mind on some of the not truths of our space very nice yes I'm definitely of the um I'm in this I'm in the skeptic I'm in the skeptic category I'm in a skeptic Camp too but the good news is there's a lot of uh there's a lot of opportunity to still be uncovered and developed so don't worry we'll get into it all right so I've given eg a little bit of a standing ovation in the intro but I would love for you to tell me a little bit more about your background and how you came to run EG yeah um so I guess at face value a quick Google would show you I worked in investing for a PE firm

um which is kind of the boring answer of how I came to EG so I I bear with me editorializing I want to go back like 15 years um to a little girl named Nicole in Connecticut who actually was born without fully formed Achilles tendons so I was in walking therapy wheelchairs surgery the whole Gambit until about Middle School um until I had bilateral Achilles attendant extensions and I swear this strange tangent is relevant because unlike other little kids that made friends through team sports or gym class or recess I was the kid who had to try to convince other kids to play board games with them in the nurse's office and that love of gaming as the only way I could socialize and engage with my peers like truly was like the impetus for something that became a personal passion throughout my entire life um now you jump ahead 20 years I'm working for an investment firm focused predominantly on distressed asset turnarounds which is just like the unsexiest of the unsexy things that need

a lot of help as well as managing very excited early on in my investment career managing my own portfolio in Tech AR VR as that was what was really exciting at this business stage and where we invested at this time and then soon enough this Esports organization came to us not EG one of our current competitors and I remember looking at it and going this makes no [ __ ] sense like what is this to be fair never Venture right we we are not investing in the Flyers we're investing in areas that we saw opportunity to actually add value optimize and grow um and usually longer Hall investors um Peak six Investments run by Matt and Jenny have a lot of background in sports a lot of background and financial services and they tend to hold more Evergreen Investments so Esports didn't make sense but once you're on the radar of here's people that look at Esports oh my God the floodgates opened more and more teams more and more teams were like this doesn't make sense doesn't make sense doesn't make sense for us and then

um right as rain a little business called Evil Geniuses came to us and it looked very different from the rest of the Esports teams we looked at um they had no CEO they had no leadership at all actually it was six dudes who were all kind of frat brother friends from University of Washington who essentially came and were like listen this is a brand that has existed for over 20 years and is beloved and deserves to continue to survive because if you think about the tech changes the accessibility the connotations of gaming for one brand to survive for 20 years The Passion of that Community is valuable um but we also haven't paid payroll in two years we're kind of squatting in a facility in Redmond Washington and we just have a DOTA team everyone's grumpy and not to sound totally lame but that's when your distressed asset turnaround brain goes that's right this maybe makes more sense to me because all the like boring back-end business I'm gonna come in I love the space right I've actually

I've been a fan of one of the EG fighting games players Hello Kitty Ricky for some time so I knew the brand loved gaming I'm like I can add value all the crappy back-end stuff throw me in there um and what turned and what started as let's come in let's stabilize and build now coming on my four year we've we've massively grown and not just stabilized but we've Diversified the teams that we're in we're now now no longer just in Dota we're in League of Legends valorant Counter-Strike fighting games kind of the breadth of the community we've also grown from just having really DOTA fans funds to a whole new profile of fandom and Community which includes women which includes lgbtq individuals which includes people of color which did not exist in the EG community at this volume and this vocal majority before and that makes me proud because the struggle with Esports organizations today and where we're looking to keep going forward is

that are we sports are we entertainment and how do we monetize and support and scale that tension or that even the flow of the dollars looks different and how do we continue to survive and grow for another 20 years and continue to be excellent the titles we do so short stories that CG that's all that's awesome and I mean I think that's a huge conflict is is it entertainment or is it sports right and I think when you look at some of the business models which we'll talk about a bit later I think that identity crisis is the impetus for a lot of the choices around business models um and so before we jump there right I know that you know because we've talked before but I wanted you to explain a little bit more about the pillars of business and the mission of EG we talked a little about that it's history it's how it originated to six dudes who are like a brand they were playing DOTA but no one's getting payroll right um but now it's more evolved into this into not only an Esports organization that sponsors um teams across a variety of PVP titles um but it's also has a sort of like triple bottom line impact as well and so

can you share a little bit more about what is the mission of the organization in addition to its uh profitability Enterprise yes so the current mission of EG really evolved after I'd come in true sponge mode just focus on fixed stabilize but then realize it's not enough when we don't have the privilege like many traditional sports teams do of I live in Seattle like why am I a Seahawks and a kraken fan because I live in Seattle do I actually watch the Seahawks the Kraken not really but I know the brand right that Geo affiliation that Hometown team love exists it doesn't exist in Esports where the the platforms that we compete in are digital and we love the global pie I love that we have fans in China fans in Ohio and fans in Seattle um and so how do we create a brand why that excites people to be fans of more than just the players or the titles that we're in that are more loyal and thus spend money and so realizing we had to

not just create a brand purpose that trickled to our operations but then really what what sparked this particular thesis we've owned and run with was um when we were looking at expanding some of our titles and changing players coming from not the Esports space I assumed it operated more like sports give me the reports tell me what the scouts say let's figure it out and I was told pretty quickly no no no no yeah ask the players who they want to play with and that's who's on the team and so being Devil's Advocate as you'll all pick up really quickly Devil's Advocate pragmatic Nicole I was like there's no way that is the most logical way that we should be approaching Talent Development because it becomes incestuous and it was incestuous and especially for EG where we received a League of Legends franchise slot um essentially entered a new title in an off-season period so we had a very quick time to get Talent having no floor of no

coach to ask or players be like who do you want to play with posed a huge fundamental problem of how this space grows and matures and so knowing what I know best what's scalable what's operational leverage data just like every traditional sports team that's not a digital platform I saw opportunity for us to leverage data and what's interesting is when you're more empirical with your approach to scouting and development new not only can be more thoughtful around spend and how you engage competitively but also really interesting subsets of that found that the more empirical wide net open-minded we were the more diverse Talent came from in-game to boardroom at EG we were able to front our first mixed gender roster um in a first person shooter Title valorent by scouting empirically we were able to find a 15 year old fortnite player and identify that he was going to be the next Superstar League of Legends

um ADC JoJo Pyon who still is today we were able to really do a lot of interesting first through that empirical and experimental mindset and really what I would say our mission has been not just use data which is kind of a lame Mission but we need to think with inclusion so you we believe you can't sacrifice competitive cultural and Commercial Success in all that we do and so leading with the why and the intent of cast a wide net and the best of the best no matter where they are or where they come from can have a home here is the grounding principle of everything we do do at EG yeah that's honestly pretty epic and I think that that's just such an interesting Dynamic that it happens in Esports too I mean this is like basically that bringing that level of meritocracy to Esports right and being like Oh like I'm only going to play with my friends um and who wants to be on the team oh it's a guy that I played with before I think that also is basically part of the flywheel and the and the cycle of why there's also a lot of like gender

imbalance in Esports and toxicity and Esports as well and so we're going to talk about that later on but for sure I want to nerd out on your paper that I read where it was exactly this right players like I don't want to play with a girl because they're not good but when you poke and like why do you think you look at the data right you you start to realize that there's really not a lot of difference between performance between male and females Etc um but we're gonna get into that topic a little bit later um but first want to talk a little bit about the the business model and the profitability of Esports um so this might be a very dumb question but even I find myself doing this incredibly convoluted because of the OverWatch was done so much differently than some of the franchise leagues who owns your Esports teams that it's not a dumb question because it is it is confusing so let me break it down and if I am way too pedantic or juvenile this just shut me up so we operate think of us like a University's athletics department so I went to Columbia pretend Colombia is good at sports

um so instead of our football team I didn't choose to row for Columbia I wrote for Penn so that was like the one we're going to ncaas so I'll use our better sports for Denver yeah fencing we have rowing you know yeah I don't know um but instead of those titles Counter-Strike uh valorant the Nuance with that is we have to be prepared to operate all of those with distinct players distinct Seasons distinct fan bases but what's also uniquely distinct with Esports is the game is owned by a company basketball isn't owned by a company so that also means the rules of basketball tend to not change that much it is easy to understand and believe in the tenure and stickiness of basketball but I'll use fortnite as an example a title if you look at EG's history we've come came and went so many times because fortnite used to play in quads then you played with trios then it became an individual Sport and so it's very hard

for us that treat our operations like true Athletics we drink our own Kool-Aid and we believe in the nature of the sport to have a very unstable floor is hard to participate in then you also make a more complicated constituent Matrix where now for valorant and League Riot the game developer is a partner or in Counter-Strike valve is a partner but also the people that operate the tournaments are a partner and so the flow of dollars is actually not as streamlined as it is in traditional Sports and organizations like Esports can't it's not sufficient to usually just be in one game title because the sum of the parts creates bigger holes for how we monetize versus just one title like just having a basketball team and so it's that's why you look at when you look at different Esports organizations they manifest their brand but also how they monetize through merchandise through content through lifting trophies differently

because there is no one playbook for how this makes sense today and it will require years of investment and intentionality to figure out what continues to have stability I you know one of my board members he's from Chicago he always likes to make a joke he loves what he loves this business not because we make Oodles of dollars today which we don't right he loves it because he goes I bought the Cubs 10 years before the Cubs and he understands this is a 10-year slog as we figure out what is name image likeness look like what does IP ownership like like what does meteorites look like when you're digital there's a lot of open-ended questions that the good news is there's very brilliant people trying to figure out and solve and push forward but it is not a this isn't a venture let's have great dividends in two years fix whatsoever right and so okay so right now you don't have specific individual key Motors in the same way that the Cubs are owned by

a specific individual so we we do have investors and EG the word owns is gross like we are the employer and the rights holder to our athletes and our creators which is different we look more like music in that way than traditional Sports um and we run as a business owned by predominantly Peak six Investments but um it's the games that we play on we do not own sure of course yeah yeah absolutely that makes sense and I think a lot of this is really paralleling a lot of like where my mind goes from the OverWatch league is very distinctly different from EG and for those in the audience who didn't who don't know how the OverWatch League was built but the OverWatch League was built on a geographical model so exactly trying to tap into this like Zeal that oh if I were a fan of uh a team in Dallas I would also be a fan of a team in Dallas if it were an OverWatch team as well um and then we actually sold the teams

um two individual owners much like in a very similar Sports league so this is a very distinctly different um model um and that obviously has implications on the business model Etc and so I kind of like want to dive into though like you basically came from an investing background and we talked about business models but I remember from my experience that Esports at least the way that we did the OverWatch League was a very fixed Capital intensive business incredibly reliant on semi-permanent revenue streams like Partnerships and team sales and as they say in private Equity it's all about cash flows is cash flow cash flow specifically levered cash flow and you were recruited from the world of investing to bring a lot of financial discipline to EG and so I would love for you to tell me about what is the first thing that you changed when you became CEO of EG well the actual first thing which is totally ridiculous is I had to change all of our plumbing and hire a plumber because no woman had ever used our office bathrooms um so that was my actual first business expense which was ridiculous but I would say to answer your question non-cheekly

um we besides the recruiting and scouting I saw immediately the understanding and building the empathy of especially an EG's case 20 plus years of we do this because we love it everything else be damned but they were in a spot where like that wouldn't work anymore the business would go under they like and even the word of this is a business was a cultural shift and creating that vocabulary of we love our players we respect them we treat them as humans but people make money in sports through trading of players we must think similarly we must think similarly in an agility sense in a volatility management sense and a lot of those concepts of how do we need to value and spend against the things that matter that was a a cultural shift that

was really it was almost like a house divided because that also posed and I have deep empathy right people were here because they cared for it not because they wanted to make money not because they really understood that if you you know can't play pay players you're not going to get the best players um and they didn't see those problems and just creating that awareness took a while and if you you know EG in the time since 2019 where I had come on not only has grown in volume of people but the demographics of who worked for EG have changed significantly and I don't just mean by gender or Creed uh at the time it was people who had either it was their first job ever working in the space or they'd only worked in Esports now we have people who have grown up in Esports mostly come our internship program that matriculate in but we bring people from traditional Sports from traditional media from Fortune 500 companies from consumer

product fans like getting different experience of what business models make sense and best business practices was a huge huge Focus so then I also changed how we recruited people um because if if I was just going to the same 30 staff in the space either new ideas would not be coming in and it doesn't mean we always got it right or did the best thing but we always did the best that we with the information we had at that time and tried to stay very Nimble in our approach got it so you've burgeoned the pipeline of the people that come in mostly to be the impetus for new business model ideas Etc from different Industries um and you know John Needham actually the right scheme um president of Esports um published an article the other day called building the future of sport ride games um which talked a lot about like digital goodies um and changing shifting away from the traditional broadcast and media models which also from my experience hasn't really worked that well um and so he's partially kind of put

together this aberration of like this is why this is the business model that we're going to go with and this is why it will work um but it kind of in my opinion I think it really mostly bolstered my conviction in the LCS not really in Esports as a whole because of the power of league as someone who built the pick the pacing and forecasting models for the OverWatch League MTX system um digital goodies is a game works but not necessarily across all games and so what is the business model now for EG and does it kind of speak to a lot of the points that Needham had kind of written about in his article um for the LCS yes and I have to say not Shameless Shameless plug what Riot is doing to be thoughtful and taking the feedback of we have to commercialize differently as exactly what you said the the media rights and the hopes that linear distribution like traditional TV would buy this and understand how to integrate it and then we'd make money from it that hasn't panned out so we have to try something different until it does because this whole Space was kind of built as a reverse triangle and so how

EG's monetization comes in is the the top part of the triangle or the pyramid is huge awareness like this is the thing for people under the age of 35 it is the next movement of pop culture in terms of participation um inclusion and how especially gen Z gen Alpha just view gaming like music like fashion and you see that in the stats right wasn't League um from an average of an audience perspective like the third most popular team sport for people under the age of 25 like there's huge markers of continued excitement engagement and the creation of multi-generational awareness but then it's like how do you build trust and engagement at a deeper level that leads to monetization that part of the pyramids being figured out and so how we have manifested that um is in kind of two key ways with a little bit of opportunistic upside on either end the first is revenue derived from our Athletics itself some of that

is League Revenue that comes from what games we participate paid in either minimum guarantees upsides for viewership upsides for other metrics anything you would see like in traditional Sports where hopefully meteorites and these things that Riot is doing and John mentioned those Revenue pass through to us as well and that helps us support the funding of those teams prize pool I feel like is the the beautiful red herring of the space everyone loves to talk about amazing prize pool EG in particular has made over 30 million dollars in prize pool but most of that goes down to players because that is the gift you get when we own rights nil the competitive upside has gone historically to the athletes um and that always shifts there's always some upside there especially as prize Pools and More Global events are increasing again but um that's not usually a a monetization stream we Bank on or plan for um and then of course the the not surprising uh pillar is sponsorship

sponsorship I'll Asterix because if I talk to sports people about sponsorship they're like yep Sports sponsorship if I talk to marketers about sponsorship like that's just advertising because we live in that in between of well what are we sponsoring and what are we selling and some of it looks like um like you see with our LG partner they are the presenting partner of a team team they're integrated in this equipment we use they're on the Jersey and then you see some of our partners like the work we did with Tumi where we co-developed an Esports travel bag and we sold the bag so the bespokeness of yeah oh it's actually great okay it has a little slot for your headset and your keyboard things that some of the listeners might go what in the world but if you have a couple hundred dollar keyboard and you travel 200 days of the year like our athletes you care about that nice travel bag um so because we have more flexibility and you add all this with the fact that we are really good at engaging youth

culture in a way that many traditional Brands can't very well um so that advertising that brand Affinity that fandom reach that consumer conversion tends to be how sponsorships also manifest but as you mentioned it's it's frothy um it is semi-permanent I think is the word you use I don't know if I love or hate yeah but um so always trying to figure out those additional ways to create more permanent revenue streams um is is the name of the game but that takes time so got it I mean so it sounds like okay so and I actually want to dive in I'm glad that you mentioned the the the sort of there's a sponsorships part and then there's also the kind of the revenue share and the mg part um which is a very similar structure and in Needham's article he talked about um detailing like lowering the entry fees to basically like be a franchise team for Valen or be a franchise team for for league so I think you know like there's actually like almost like this like weird trade where you as a league have to pay in to potentially be considered

to be part of the franchise league so my question to you is what do you think should be happening on the game developer side like you said you don't basketball is free to the universe but league is not it's owned by a company what do you think that the game developer side like a riot or a blizzard or um valve should be doing to make the team entry more egalitarian and make that Revenue share a little bit um better because I think the problem at least for the OverWatch League was that once you started splitting it amongst the parties you started splitting amongst the game team that was making all the tech to run the OverWatch League the cameras the shots and the Skins themselves then you had the team owners then you had the players themselves then you had like blizzard and once you basically started splitting this money up there wasn't enough to go around so just to kind of walk me through how you're thinking about about that it's an interesting one and what I think I have good opposite examples of what I see today of the more egalitarian the less valuable a slot is right and so a good example of someone that operates

this way is Val valve truly believes five friends can get together in their garage and make it all the way to land and something about that is beautiful in terms of accessibility you see that manifest in the tournament so there's a lot of play-ins but also that means the value of that game and how much a team really wants to spend on investing and thus tenure of Brands and stickiness if it becomes a one-off I'm going to do this for a year with my friends because it's fun versus this is a viable career path for me it gets challenged that also means then the subsidiary revenue streams like sponsorship based on brand recognition go away and so does that does egalitarianism or democratization of access come at the detriment of long-term stability of the title from a competitive scene where then you flip it to like valorant or League of Legends with Riot controls number of franchise operates like the NHL or the W and then you think about strategic expansion opportunities that have the right

partner come into play where you're not then a free-for-all everyone can participate but you have a more controlled narrative um limited number in the scarcity value of a position that then also makes sponsors and other third parties more confident in their sponsorship investment partnership add value um you see kind of that tension in some scenes like fighting games which is a free-for-all Nintendo doesn't really touch the Esports universe that well um Activision Blizzard did a lot with this and I think the the to answer the question more succinctly what developers need to do is also realize it this is where knowledge of running a sport is really critical and I love that everyone's kind of exploratory but I what I would really Echo is the valorant partnership in franchising which is the newest kind of game that's come out that's had limited slots was done

probably with the best hand-in-hand balance if they like a traditional sport franchise application you had to go into due diligence and really explain the why and the what why you're a valid partner there was no fee to enter which was great so it created opportunity the rumor mill has it that over 250 people or groups applied for just the North American valoret slots which is amazing in terms of demand but then they get to pick and find the right Partners who understand the game understand the passion and our validated long-term Partners but what's the winning method none of them win yet and it's not necessarily because none of them win because the structure is bad the problem is the cost of talent far out sizes the revenue you receive from gaming today um and like far out sizes as in some teams pay 12x what their minimum guarantees are just for their roster and

that's what makes it unsustainable versus is the structure really the problem it might just be a spend diligence problem and discipline problem yeah and then I guess in that yeah that's actually one of the questions like what what revenues got to go up what costs have to come down when you're like looking at the p l and um how how do you incentivize like your players though to come play for EG if they might get paid more playing um for TSM or Team Liquid this is a tough tough challenge because of course you have the players as a constituent here that you have to manage and that's just like in any business right if you have it if you're a regular hardware company and you have an internship program you know your interns are going to look at other things before just accepting yours and it's sometimes the pay sometimes it's other things that you offer as well as the culture and the quality like all the soft and hard assets you give to any Talent um matter and EG we are very upfront and transparent about this I think our

players know and the Agents know when they work with us like we're going to deliver what we say and we're going to be really tight and narrow and specific on it but it's not for everybody it leans into a lot of our data usage and thesis too because I both don't want to as well as likely can't afford the 10 million dollar shiny star because I'm not going to make 10 million dollars in that title so to find the up-and-comer give a chance to a rookie and develop different story lines and competitive advantages through how we operationalize that's it's a long-haul exercise but we're getting amazing headwinds then there which help us create Edge and that's unique to us um and so that managing that spend is important what I'd say though too is an interesting constant a loud constituent in this area that's not the players it's actually the fans because subconsciously I don't know if the community really realizes Esports has been generally paid a win if you've bought the most expensive players because again think about that incestuous like the best of

the best asks for the best the best they collectively bargain for the best the best um and so when you break that mold plan C cheap or unknown and they're like EG gave up on the roster it's not ever usually that everyone's here to win um everyone's here to do something right but how do you make the most what you have and then how do you actually develop athletes more like an Arsenal model versus like do you have to buy and hope the culture cohesion works we're also a couple steps ahead there and figuring that out as we go got it I actually love this this is basically okay so this is like Moneyball you're playing The Money Ball strategy I hope so to find it's not we're not in the making it Mass popular stage right now popularity we're truly I think Evil Geniuses and like if you ask people on the street like what do you think of EG they're like oh my God doing this great thing you're like they're [ __ ] crazy but someone has to try something different because what everyone that what Mass populace is doing in Esports doesn't work right so right interesting

yeah I think that that's just it's so true a player like Faker or whatever is going to cost millions of dollars right and obviously oh my God buy balls to your to your group but right then you're probably you like you said you're paying 12x the end the the the mg that you're receiving on the other side and so this is just completely lopsided business it's fascinating um before we shift actually to the building Esports community and speaking to the part about like how you acquire a talent or labor I was wondering if you could briefly comment on what you think the role of the streaming platforms is such as YouTube and twitch um a lot of the time that I spent in the Partnerships team was trying to sell some of the meteorites move to Twitch and YouTube do you guys have that relationship where there's almost like there's like a million parties and there's chefs in this kitchen there's a developer there's you guys the teams the fans the other leagues that also play and then there's obviously like the the the the viewers um sorry the streaming platforms how does that work with you guys in twitching so you especially if you were selling on the media rights there you

know we got uh we got capitalist yes yeah well we have years ago so basically twitch and YouTube realized they own the thing so why pay people and I'm like I respect that but it sucks yeah I do respect I know in the non-like really ridiculous answer like I that's why I wish and what's interesting I feel like we're Armin arm with uh women's sports in the US right now of people watch this you have to care about it who's gonna pay to get this fandom loyalty is it Roku is it YouTube is it ESPN2 there's some challenges as a funny anecdote actually ESPN2 hosted League of Legends I want to say summer finals once but they um ran their ads during pick band right like how you convert how you convert a digital stream experience has different Cadence than linear TV requires some finesse so people like what's happening and everyone was grumpy but I think there's definitely some learning but it would be remiss to not

realize this is where like the future of consumers lives and engages and every brand all the Savvy ones are aware of this and are showing up and media rights especially for these streaming services hungry for Content um I mean I even think I watched Counter-Strike on a Delta flight recently like there was some esea tournaments on I'm like whoa like people are looking for content and are continuously being more open-minded around okay yeah gaming is content gaming has eyes and hoping people will continue to spend in that media right so the challenge is as an individual team you can only do so much the leagues the developers have to be open-minded and what I think is an interesting turn is blast a Counter-Strike and um I think Apex Legends tournament operator actually started blast TV their own media rights and distribution platform where it has integration with real money betting partners and other ways for fan monetization and I'm curious to see for

the developers that have development resources if twitch and YouTube aren't paying Wonder well that will continue to grow and and go yeah absolutely yeah thank you for for sharing your comments just such a total duopoly yes um and so it's just so difficult to actually like have any kind of negotiating leverage and I would suspect it's probably even worse from the league side if even if it's um if it's that way for the game developer um so so our five so our final topic we juggled how to bring profitability to an Esports league and now I'm going to talk about bringing equality and diversity to an Esports League um and so I'm going to run through some stats first I recently wrote a research paper with a colleague in my racial bias and Equity course this past winter on the gender bias problem in Competitive Gaming and of course you're familiar because I sent you the paper and we chatted last so um and this is what you leave and breathe you live and breathe this every day so kind of bear with me but um the tldr is the following gaming is big number one two players used to be all men but now it's around 50 50 40 60

split depending on the genre of game and so this is obviously Blended across platforms and genres so on the consumer side gaming is becoming a lot more egalitarian and 50 50. number three but six percent of video games feature a female lead character number four on the industry Strat side women only make up 24 of the gaming industry and like one of the top 14 gaming companies have more than three women in leadership positions and number five on the Esports and Competitive Gaming side only one of the top 500 earning professionals is a woman and the women who play Esports earn only sorry point zero five percent point zero five percent of what male counterparts earn and so we broke this down into a couple of ways that gender bias had spread and operate operated into Competitive Gaming into a few buckets first um widespread and generally accepted belief among players that women are bad at playing games so if a woman's good she's cheating two harassment um in gaming disproportionately affects female players from microaggressions

online um toxicity and voice chat um unwanted sexual advances by team members and coaches um this happened to the founder of method gaming and they had several allegations of inappropriately Crossing personal boundaries and third the total absence of female leaders um except for you uh thank God if you don't see them they must not exist and such the bias perpetuates and so we come up with all these recommendations in our paper but I'd like to pause here and ask what do you think is the solution to all this and what are you guys doing in an actionable way at EG to counteract some of these forces I I really appreciate because I did read your paper I got excited um I appreciate that you don't undermine the impact of like social culture in the space you know people will often come to me and go what do you mean you don't have like women and men playing in the same game and I go you gotta understand where we came from when I came to EG we had two rented homes in you know out of Illinois

and out of Alameda where the players would live okay well if you're a woman woman you probably don't want to live with for other dudes if you're a person with kids you don't want to live in a house if you're a person with a pet you can't live there like the Esports wasn't constructed with and I don't think it was as intentional that fortunately as manifested to be gate kept but it wasn't structured with bringing all people along in mind it was more like survive and just do versus think about the impact so a lot of the things we had done like I ended no more team houses I like strongly don't believe and you need to live where you work I know it's it's actually an unpopular opinion so my players like but I don't how will I bond with my team if I can't live with them and I'm like go out for coffee like the normal human being and please develop a life because when they sleep when they drink water when they feel good and have friends that are separate from their work environment just like any other person

they tend to perform better and so I hate it sounds very like professionalism one-on-one but those were a lot of the things we had to put into place to encourage people to apply and be and want to be a part of EG um so the cultural nuances were huge even like goofy stuff like we had to fire our um our old Jersey vendor because when we had jerseys made for women so I don't know like the crests usually is like your team Crest is here and the presenting sponsor Crest is here but on a woman where does that sit it was like can't put that Jersey there and finding a jersey provider that would make Esports jerseys that are a volume that wouldn't be like hey look at my boobs um took some time it wasn't we didn't go with an endemic partner like so goofy things from A to Z really have to be thought of differently even the fact that like we were actually one of the first resource organizations to have an HR department um and creating an outlet for opportunity was is really

it just didn't exist so we built from zero pretty quickly um and are always learning because the the Finesse part that we still are always trying to optimize is you need a standard floor but then you also have to be able to be bespoke by individuals right EG has non-traditional athletes besides just women we have um non-binary individuals we have transgender individuals we have furries we have parents with kids we have people uh the Candy Crush moms like we we have like very different it's not a one-size-fit-all service and so for our you know 90 Talent members with a staff of 30 right we have to be really scaled to support in high volume and then you have time for the traveling all over the world it's a lot of work it requires a lot of intentionality and you have to be thoughtful we're not always going to get it right but we're always going to try to do better um especially as our athletes and players skew young first like I feel like my my finance team who I tease they

all come from big Fortune 500 companies and they're like why does every player ask us how a paycheck works I'm like this is the business that we're in like you guys know day one of an athlete they're like what is this why do I have to pay Medicaid you know like they just you it starts from zero and do you think this would be open-minded this stuff is hard so and Palo Alto my car got broken into the other day my three thousand dollar Razer gaming laptop got stolen in Palo Alto so everybody beware um RTX um stolen everything I've ever done in like my life stolen but I learned that a deductible is not what I thought it was and I may have just really embellished myself would you try to write off your laptop but I think it's really it's really relevant I think like depending on what you what where and when you grew up you may not have the same Financial um uh like education and that kind of

stuff that's really important especially if you have young players who might be coming into a lot of money or more money than they had before right but they're 14 or 15 and they're living in the hype La Tick Tock type house right and they have no idea what's going on 100 and I don't this is like the uh the controversial part of diversity take I think we also need to remember that so much of the space what I think is an amazing underserved diversity opportunity is gaming because it's very relatively accessible the social Mobility opportunity un like there's a reason why poor black inner city kids tend to play basketball and not Polo right it's how do you get access to opportunity resourcing mentorship gaming can change the face of who can participate in sport but historically because it hasn't been a well thought out industry it skews individuals who can afford to not have to go down a traditional work path right they're not they know they don't have to support a family they know

they can go big or go home and it's okay or they have nothing else right it's like a bimodal distribution of desperation or privilege that we have to even out because it's it shouldn't be that way and the economic mobility and economic diversity of Esports is also something I think we need to explore um and support because a lot of my job too is also convincing parents that hey like this is a real business your kid has amazing talent like one of my favorite one of my favorite player uh recruitment stories is when I called um JoJo peanut who's our League of Legends Superstar I called his parents and um I was like did you know like your son is quite literally one of the best in the world at this game and I remember his mom going is that what he's doing on the internet all day like she had no idea her son was this [ __ ] rock star and that exposure that awareness and breaking those barriers of like be it see it

so important so yeah wow that I mean that I think I never even really thought about the um the bimodal distribution I think that's actually like really really interesting um uh in terms of like yeah because Esports is potentially not lucrative so you do it whether it's either at the low end or the high end because everybody in the middle would be is like too rational to even pursue something as crazy as this and I'm wondering actually you know I I want to point it out but you know you're I think you're probably the first person um of color and one of the first women to lead an Esports organization do you think that your leadership specifically has affected the employment roster of equal Geniuses and the creators and players who want to play for your league probably not very intentionally um but I knew like I loved gaming I probably have a PhD in like Skyrim for all the hours I spent playing slash modding that game like these are things that I care about personally Beyond professionally um and I I saw and was exposed to Esports of like this isn't a place for

me so it's a little bit like I'm going back to I think it was in the 2010s Fidelity I believe had like an ad where it was like be the crazy Rich Uncle you wish you had like I want to build the org that everyone can play and feel like they have a home because why does it not [ __ ] exist already and so I think that mission I would say from the staff that work here attracted a lot of different people because it if if you came to me straight out of college and was like go work for this company that's in the hole and doesn't have an office that's probably not where I'm gonna cut my teeth without a really strong why but the more we've leaned into Mission purpose join us in building something disruptive let's see where it goes That's where I've been able to attract our amazing I was able to poach I'm gonna brag about my people now but I have amazing team members like the previous creative director of BuzzFeed UK for gaming I was able to convince Antonio to come here head of MLB social

um previous sales at the Islanders like really heavy hitter leaders our HRS from Citadel like like pulling people from really big pedigree names to come and who believe in the why I think that's how I was able to get really great people to work here which happened to be diverse that's awesome that's awesome and then so do you talk about the pipeline that's really awesome you're able to draw them in um on the retention side I think I'd love to ask a little bit about how you regulate and maybe moderate Behavior amongst players I think one of our solutions that we'd written about in our in the paper was leagues need to regulate in police Behavior at a stricter Cadence to to basically insulate and protect those of like marginalized groups whether that be economic gender race Etc um from basically like the encroaching gamerism and the general gaming culture that it can be really toxic and really abrasive and so how do you build that

amongst the people that that play for you guys especially since these kids are like maybe like 14 or 15 years old where they're not at a level of maybe adult maturity right yeah so we it starts even before they step foot in our office we don't so we actually screen so we do social media checks and screen for people that have either broken our employee handbook or have a behavior of harassment or repeated offenses that can't be trained out because we also need to acknowledge we pull from Global Talent that some of it is needs to be taught and is often done kind of mimicky what they see on the internet without them really understanding the Nuance or behavior what that means and what that impacts and we also are really clear that this is a and it splits the room like not everyone wants to play for EG because like this is a job you show up for a job you gotta behave like a job we would never censor what you can say but if you do these things that hurts your perception our perception here's the action we're going to take um it's part

of their handbook part of their onboarding training part of their twice a year sexual harassment and online behavior training part of our All Hands Communications so like repeated messaging to ensure were very thoughtful and it's usually when we see that someone can't change Behavior because if we said no to everybody in the universe that ever made a mistake once on anything no one would work at Ichi right like no one would have a job because everyone's made mistakes but it's those who repeat that behavior or have bad intent that we see that's when we have to act and so infamously I've made a lot of personnel changes on staff and player and Creator side because of behavior and I think even Behavior behind the scenes that people don't see internal comes right it's people love to make guesstimates of what happened here oh my God this was this and did they know as soon as it kind of fills out that scorecard we take unilateral action because it it we can't in good faith claim to be making a

better space but not own our own house in that area right right I mean I think that that's actually like it's it's awesome to hear it kind of speak up to that because I think there are so many often times like where players will do back it will execute bad behavior and never really be reprimanded for it and then that actually just makes it and exacerbates the problem where they find that this is um acceptable and they can continue and and continue on and acting that way but I now have like also in that same vein kind of a tough question for you and obviously we spoke um on the phone about this sometimes our fellow females on Twitch um don't actually make this easier for us and they actually might perpetuate a stereotype um when you have female players that come and again like you said they're they're Global they might be acting a certain way they're mimicking right what do you what do you do in a day-to-day to change to change potentially some of that behavior or do you kind of screen those people out and those people are not really like what EG is looking for so I'll I'll the answer tends to be the

same everyone goes through the same kind of expectation setting we modulate a little differently not just even by gender but for our creators and our athletes in this way our athletes is you come here for your Athletics so if your motivation is intent work ethic expectations of how you should show up are different than a pro athlete you're probably not going to be here for very long because you're going to be unhappy and we're going to be unhappy and we're pretty consistent in that communication and expectation setting and support um on the Creator side where especially their brand and their representation is how they monetize how they grow um we love self-expression like I love that we have hired individuals that push boundaries and share narratives so making sure similar to my answer before like before they even get in the door we're aligning of here's our vision our mission our values are you here to uphold those and if so let us help you run wild um because I'll share like one of my actually my little plushies in the background um Sonic Fox is a non-binary fighting

game oh my God Prodigy like just excellent across all fronts and they are very like sex positive figure and sometimes people like is that appropriate and it's like we knew it coming in they're not doing anything illegal unlawful or like they're not harassing anybody um and so we support them showing up as they are in their truth and we always use it as a coaching and learning moment and they continue to be excellent and those are those stories and moments where I'm never to shame someone for being who they are but we do have to be thoughtful and and especially for our creators understand like their brand and their brand perception is a lot of their value as as grossly transactional as that sounds it is the it is the truth um and making sure our creators are educated on that and helping them through situations the best we can do right now got it Nicole this has been so stunning and I want to ask you one last question before we wrap up um if there's one thing that could

happen in the world of Esports that would make your life a lot easier what is it and why I wish leagues figured out media rights once we can get this in the hands of people consistently once we're on a regularly understood schedule of how to watch How to engage a lot of the barriers to entry for new people I think go away if you have never used twitch before and you're a 30 year old who's heard about Esports on the golf course with your friends that's not an intuitive platform um it's more Niche and the more we can make watching and falling in love accessible everything else will fall and be easier but I can't do that by myself I need everyone's help right right right yeah so that's definitely a big one um but Nicole this has been stunning thank you for sharing your journey what Evil Geniuses is doing it might be a little bit sneaky but it's definitely not evil um and so if anybody in the audience is interested in getting in touch with you

um either as a player consumer um how can they reach out to you or your team um yes so if you want to apply as a player I caution you I welcome we welcome everyone's resume but um you feel free to reach out to us on our Discord and our GMS will politely tell you no thanks no I'm just kidding they will they will give good feedback as to why or why not or you should apply for one of our combines or one of the only Esports organizations that host open combines for most of our titles which means you can go from Joe to Pro through EG um if you have pressed please reach out to press EG and if you want to reach out to me reach out to me on Instagram and I um sometimes respond when I remember to reply but I usually read everything and I'm happy to engage and and chat more that's awesome okay so on that note uh we'll be concluding big thank you Nicole for coming uh thank you to our listeners I'll be back in two weeks and so until next time friends feel free to hit me up at Alexandra navik.com if you ever have any questions comments or concerns would

love to hear your feedback and with that au revoir see you next time if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a five star review and if you want to reach out or provide feedback shoot us a note at podcast navic dot Co or find us on Twitter and Linkedin plus if you want to learn more about what novik has to offer make sure to check out our website www.navic.com there you can sign up for the number one games industry newsletter navic digest or contact us to learn about our wide-ranging Consulting and advisory Services again that is www.navic.com thanks for listening and we'll catch you in the next episode