S.04: E.05

Billion Dollar Baby

with Mike Lee

November 5, 2019 • 19:43 min


  | Billion Dollar Baby (w. Mike Lee )


eSports is a booming billion dollar industry. With internet technology improving every day and access to high speed internet spreading to all reaches of the globe, eSports are a hub of focus for brands wanting to leverage this actively growing market. With the constraints of reality lifted, it’s up to the most creative, innovative companies to define what this new customer engagement frontier looks like. To get a grip on the dynamics of the situation, we talk to Mike Lee, a top eSports agent at UTA with an eye for strategy and a front row seat in this exciting arena.

Be sure to follow Mike on Twitter and LinkedIn.

To hear more about how UTA is evolving the eSports industry, connect with them @UnitedTalent on Twitter, LinkedIn, and Instagram, or catch them at Home.

Written, hosted, and produced by Kenzie Haynes.

Kenzie: Welcome back to It's Worth Doing Right, a collection of conversations about the creative side of strategy. I'm your host, Kenzie Haynes. Today on the show we're talking to Mike Lee, a top agent at leading global talent and entertainment company, United Talent Agency, and a leader on the front lines of a booming industry, eSports.

Kenzie: Mike has an interesting background, having come up through different key roles and strategy, marketing, advertising and live events, and he sees a lot of untapped potential in this already billion dollar industry. Let's dive in.

Kenzie: Welcome to the show.

Mike: Thanks for having me.

Kenzie: Mike, what is eSports?

Mike: eSports is really just electronic sports. But to us, the definition of eSports is such a broad term. Here at UTA, we work both on the professional player side, and also on the live content creator side.

Kenzie: I think for most people when they hear video games or even eSports, they might think of some guy eating Cheetos in his basement and I don't think that's what this is at all. I'd love to get kind of a history of the industry from you, and sort of a state of the state. Where are we in eSports today?

Mike: You can argue that it started all the way as early as in the 70s, whether it was Space Wars, Pong, all the way to the local arcade. Now that the Internet has broken down the barriers for eSports, we're seeing competitions on a global scale between the best players in Korea, to the best players here in the United States, all the way to Europe, and really trying to find out who the best player in the world is when it comes to electronic competition.

Kenzie: I saw an article actually that the 2020 Olympics in Tokyo, there's actually going to be an eSports pre-event. It's not an official event, but it is kind of tagging onto the Olympics. I also saw that high schools are creating varsity teams for eSports, so it's moving and shaking.

Mike: You know, we're just excited about how many people are getting voices in this community, and how many people are getting representation. You no longer have to be a six foot five athlete for you to be able to compete on a global level. We're seeing kids who have the fastest reaction time, people who have the fastest visual recognition skills, and being able to compete and test your skills not just to the person that's next to them in an arcade, but someone online that's able to compete with them from LA to New York, but also across the Atlantic Ocean.

Kenzie: I think you have really interesting background that kind of probably shapes the lens through which you see this industry. Can you walk me through your background, and how to got into the role that you're in today?

Mike: Yeah. I really started my career as a media buyer over at OMD for almost six years in the late 2000s. I was able to see the digital media industry quickly evolve, the rise of social media platforms, NCN, programmatic buying. Being on the Call of Duty account at OMD, we were able to see a lot of different pricing and packages in RFPing.

Mike: A lot of the top networks, whether it was ESPN, Turner, IGN, Machinima, and being one of the first early advertisers of Twitch. For us, coming into the space and really understanding what is a CPM, cost per view, or cost per acquisition. It's very different than what a traditional agent negotiates just against a studio, or negotiates against a publisher. We really are building a truly native digital business for a lot of our clients.

Mike: I also came from a background running digital marketing, and sponsorships and partnerships over at Insomniac Events, one of the leaders when it comes to music festivals and electronic music such as EDC Las Vegas. I was to be part of this emerging growth industry of electronic music, and see really hyper active, hyper passionate, 18-24 year old audience coming and spending hundreds of dollars to spend a weekend enjoying a great time with their friends.

Mike: When we saw all the different and non-endemic advertisers such as 7Up, Smirnoff, Uber get into the space, and having daily conversations with all the brands, really got to tap into what were these brands looking for. Coming into eSports and being an early advertiser of Twitch, we really saw the same trends as what a YouTube content creator, and an Instagram content creator, or even a Vine content creator saw almost a decade ago.

Mike: Seeing that opportunity and see that a lot of these young teenagers and young pro players really needed the help on representation, and really understanding what their value is out on the market.

Kenzie: How is this different from the traditional sports industry? Are there parallels in how this industry is growing, or are they pretty much completely different?

Mike: There are a lot of similarities when it comes to traditional sports. When you think about the average basketball fan, or the NBA fan, they're tuning in because they want to see the best of the best compete at the highest level. I would say that's the same when it comes to Legal Legends, Fortnite and Overwatch. These kids have put so much time and so many hours into playing Overwatch. eSports is really a way for them to see who is the best in the world, what strategies are they using, what types of plays are they using, what characters, and how are they using these characters.

Mike: Some of the biggest differences is that no one really owns the sport of basketball or owns the sport of football. When it comes to eSports, the other party that's invested into this, outside of the networks and outside of the athletes, is actually game publishers. With Legal Legends, with Fortnite, with Overwatch, you have Variet, you have Epic, and you also have Activision Blizzard, who are very involved and get to control a lot of aspects of the game.

Mike: Only in eSports do you see the balance of the game change on a monthly basis. On Overwatch, we are seeing new characters introduced every other month. In Fortnite, they're adding different elements to the game and changing the map, and changing how the game is played on such a routine basis.

Kenzie: Is that in response to eSports, to keep it interesting and kind of support this industry? Or is that more like standard operating procedure that just makes this a more interesting arena?

Mike: I think that's really the core at eSports, and to keep people on their toes. Legal Legends, I say, does it best or makes it the most interesting. I think at one point, they were doing it maybe a little bit too often. But they're really known for before they go into a big tournament, they'll actually change what they call the meta. They'll change how much damage one ability does versus the other. They'll introduce new characters or champions that really affect the way the game could be played.

Mike: Some of the best players in the world are expected to be agile and flexible enough to compensate, or leverage, or find new strategies. Before each tournament, you actually see a lot of these teams and a lot of these pro players investing so much more time into practicing and learning, and trying to understand what are some new strategies that they can develop with some of these new changes in the game. That's what makes eSports so exciting, is because you don't know what's going to happen, and you don't know what kind of out wire could happen in the game.

Mike: Specifically in Legal Legends, actually before each games there's a banning process. So with Legal Legends, there's over 100 different characters that you can pick from. Before the start of each game, each team gets to ban some champions that the other team or both teams wouldn't be able to use.

Kenzie: Wow, it's like jury selection but for the team roster I guess.

Mike: Yeah, it really is. That's really where the coach gets involved. You see before each game the coach on the microphone speaking to each of the players and saying, "Hey, this pro player is really known for using this champion. We should really ban this champion." Or, "We've seen this using this character on Twitch. We know his strategy. Let's make sure to ban that person." There's this whole other element that you don't see in basketball or football in saying, "Hey, maybe they can use this kicker." Or, "Maybe they can use this type of shoe, or these types of conditions."

Mike: It's always super exciting to watch as a viewer because there's so many different elements to the strategy of the game.

Kenzie: I want to talk to you about the live events. Can you set the stage for me? What does a live event look like? What do I hear? What do I see? People are on their computers, I guess, so what kind of draws people to these huge live events?

Mike: I think it's the camaraderie and being able to meet your community. As eSports gets more and more permeated throughout our culture, I think we're just starting to see weekly events with Legal Legends and Overwatch, and people are able to come to a stadium and watch their favorite pro players compete on a weekly basis. For the longest time, some of these events like ESL and MOG were once a quarter, twice a year. So the only time that you got to actually meet your peers were at these larger eSports tournaments.

Mike: It's the same passion that you see at a traditional basketball or football game. It is no different than what you see at eSports. If not, I would argue that it's even more fervent in the fact that you see all the fans chanting for their favorite players, or their favorite teams. You still see people with face paints, jerseys, hats, merch, representing who their favorite players are, and it's actually pretty exciting.

Kenzie: At a football game, I might see a bunch of players running around the field. What am I looking at? What am I watching at the esport live event?

Mike: The live event experience is actually becoming more and more a higher production. We're seeing AR technology with Legal Legends, being able to bring in a dragon, doing K-Pop concerts. Ryan has been able to kind of show the actual map and project it onto the floor, and be able to have the whole audience be able to see the mini map actually moving in real time on the floor of the Staples Center.

Kenzie: Wow. I know streaming has been kind of a lynch pin in unlocking this industry. Can you talk about sort of the beginnings of... Before Twitch and all that, how was streaming played into the evolution of the industry, I guess?

Mike: Yeah, I think streaming and what Twitch has really pioneered for a lot of these eSports pro players, is be able to give the fans a more intimate connection and an avenue to express their personalities. Only in eSports can you go onto Twitch and see your favorite pro player playing the game that they're best at or they're known at, for four to six hours a day. Then you're also able to see them play some of the newer games, or some of the older games like Minecraft, or Call of Duty, or Fortnite, or even Borderlands.

Mike: Twitch has really been able to give a lot of these players a daily touchpoint with their fans, and something that you don't actually get to see with a lot of traditional athletes. We always say that Twitch is not only just a gaming platform, but really just a live content platform. So you're seeing verticals and channels like Just Chatting starting to rise up in viewership on Twitch, because people really want to know what people think. A big category of Just Chatting is people just browsing Reddit or browsing the Internet, and watch YouTube videos together with their fan base.

Mike: With streaming, it's giving these pro players an opportunity to build their social following and really raise their value to teams, and make them more appealing to individual sponsors. We're living in a world where social numbers actually can help determine what the value of a player is, because driving scale and being to drive eyeballs and engagement is really important to the brands right now in eSports.

Kenzie: Do you see different audience segmentation between the different... Is the Call of Duty fan base a lot different than the Minecraft fan base, for example, or is it pretty mixed, similar?

Mike: No, I would say they are very different. Thinking about traditional sports, it's like comparing an NHL fan with an NBA fan, an NFL fan, or even an archery fan. Everyone has their game. When you invest eight hours a day, or 20 hours a week playing a game as a casual fan, you're obviously drawn more towards watching that specific esport. You do have people that watch multiple different types of eSports, but I'd say it's more common to have one person really dedicated to one or two different sports.

Mike: We are seeing these eSports fans really gravitating towards the game that they play, because they want to see that level of competition.

Kenzie: What are brands doing today to leverage this platform, to leverage eSports and their kind of branding and marketing efforts? What's currently being done?

Mike: Yeah, I mean imagine being able to work with one company and being able to advertise at every single basketball court across the country, or even across the world. That's what these publishers are being able to do, is letting brands tap into the playing field of ever single Fortnite, Legal Legend, Call of Duty or Overwatch player in the world. So brands are starting to figure it out. Ad agencies, PR agencies, media buying agencies are able to start figuring out that gaming is a new passion point, and it's this new playground. Instead of advertising at the local gym, marketers are now able to reach out to a publisher and really create big opportunities for brands to give out either additional merchandise or just digital real estate for these brands and market it.

Mike: We've seen Call of Duty innovate Oakley Shades jeeps into the cars. We've seen Avengers have a game mode within Fortnite. We've been able to John Wick 3 create special characters, and a Keanu Reeves character within Fortnite. I think as these publishers are trying to figure out how to monetize these brands, and these marketing opportunities are coming to the publishers and trying to get in front of this audience that is spending the majority of their days playing video games. The traditional method of just running a commercial on TV isn't actually the best way to hit this younger audience. It's actually to get in front of them inside of Fortnite, inside of Legal Legends.

Kenzie: Yeah, maybe not even be limited by the same laws of physics as the real world, or the same cultural context as the real world. I think there's so much interesting creativity that could be had there. Let me ask you this, why is eSports a billion dollar industry? Why is it so popular?

Mike: eSports is a billion dollar industry because the shelf life of a gamer is much longer than your typical athlete. When you look at the typical basketball, football or a hockey athlete, the number of active players actually diminishes after you hit high school and after you hit college. The number of people that are actually able to be competitive on the college or collegiate level is actually much, much smaller.

Mike: When you think about gaming, gamers actually keep playing and are still active throughout the rest of their age. When you look at advertising traditional sports, we get this question all the time of why is advertising in eSports, or why are the rates so high? It's because you're actually competing against real estate space, against endemic brands like PCs, computers, gaming laptops and headphones, and microphones. So instead of trying to sell a $2.00 can of soda, what you're really trying to sell is a $2,000.00 laptop, or an $800.00 graphics card, or a $200.00 set of gaming headphones. These non-endemic brands actually have to compete with these brands.

Mike: eSports is really just limited by Internet bandwidth. As more of these regions such as India, Africa start adopting faster Internet speeds, as cellphones and mobile phones start becoming more and more advanced and powerful, we're going to start seeing a lot more people participating in eSports, and through that, a lot more viewers coming into the space. So we really are just bounded by unlimited, by how many people have access to the Internet. That's what created this hockey stick growth for eSports.

Kenzie: Mike, are you a gamer?

Mike: I am a gamer. I actually grew up playing a lot of Starcraft and Counterstrike in the old PC bang days. When we were at home with 56K modems and DSL, and we couldn't play at home because every time your mom picked up the phone it would kick you off your game. Yeah, I really grew up with mIRC, trying to find streams with Counterstrike, going to a PC bang every day after school, and paying $2.00 an hour.

Mike: Back then, we used to go to these PC cafes because our computers couldn't handle the growth of graphics cards, and upgrading your computer was so expensive and hard to do, and the Internet connection was so shotty. Now, we're starting to see this resurgence of PC cafes and land centers, because people just kind of want that community feeling.

Kenzie: As a gamer, or as a professional in this industry, what do you see as the virtue of gaming?

Mike: Gaming has provided a career for thousands of people all across the world to show their skillset in a different way that doesn't require them to be able to run the fastest, be the tallest, jump the furthest, jump the highest. We're really excited that these personalities that are coming into the space are really able to find an audience, and an audience being able to gravitate towards people that look like them, that act like them. What Twitch and a lot of these live platforms have been able to do is create communities.

Mike: We're starting to see some of these up and coming rising stars that actually look like me. As an Asian American, you didn't see, until recently, any Asian Americans playing NBA, or being in the NFL. But now we're able to get behind some of the best eSports teams and roles that are actually based in Korea or China, or see at the highest level of Legal Legends, or even Fortnite. Chinese players, Japanese players, and Korean players. I'm really hopeful for the future that more people are given a platform to express and show off their personalities, and make a career and make a revenue stream out of just being super talented.

Mike: Just like SoundCloud was able to find rappers who were maybe not the most appealing to record labels, but were able to find an audience through the music through SoundCloud, Twitch is giving this whole community and segments of our communities that people may have never have known if it wasn't for gaming.

Kenzie: What are you excited about right now in the industry?

Mike: eSports is going to continue to grow. With cloud gaming and 5G around the corner, we're really excited to see gaming just become more and more accessible to people all around the world. People always say with gaming there's the PC versus the consoles versus the mobile. As cloud gaming becomes more accessible to everyone, just like how Netflix made movies and TV shows more accessible, we're going to see the pools in the audience of people become much larger. With that, we're going to start seeing more spectators, more viewers. We're going to see a higher level of competition. This is what really makes eSports exciting.

Kenzie: That's our show. If you'd like to learn more from the Accomplice team, visit us at itsworthdoingright.com, or drop us a line at podcasts@itsworthdoingright.com. See you next time.