Ahri's unqualified thoughts #64

Easy to consume content: 1 quote, 1 tweet/storm and 1 article/video.

In this edition, our focus is twofold: first, I’ll share a tweet about Evil Geniuses, an American organization that recently exited the League of Legends LCS. Following that, we explore a related article discussing the expenses involved in operating T1, one of the most iconic esports teams in League of Legends.

1 quote

“Talk to someone about themselves and they'll listen for hours.” Dale Carnegie

1 tweet/storm

Montecristo, formerly a commentator for LCK and international League of Legends tournaments as well as Overwatch, is also known for founding Renegades, an esports team in the League of Legends scene, later expanding to other games. His relationship with Riot Games soured due to undisclosed events, as Renegades was removed unceremoniously from the league (the story goes much deeper, as it involves tampering, Chris Badawi and his whole… list of things).

Back to the tweet: Evil Geniuses, established in 1999, has faced a significant decline in less than five years, attributed to some questionable decisions, to put it nicely

While I have mixed feelings about Montecristo and Richard Lewis due to certain opinions they hold, I respect massively their contributions to esports and their forthrightness on issues, in this specific case: EG.

The core issue is EG's mismanagement. Richard Lewis excellently detailed how Peak6 (the venture capital firm that acquired EG in 2019) and the inexperienced CEO, Nicole LaPointe-Jameson (aka "the Warren Buffett of esports" according to the dismissal email), drove the company into decline, as elaborated in two specific articles: Article 1 & Article 2. There was also the wonderful rebranding. Side note: esports business is hard, see the article in the 2nd part of this blogpost.

Beyond business woes, the company's treatment of their young League of Legends AD carry prodigy was inhumane and overlooked by the media.

TLDR: EG has withdrawn LoL after spending an ungodly amount of money, locked their talented but toxic (except potter, she’s the GOAT) Valorant team in contract jail, and generally failed in their operations and ethics. But at least we got that hilariously delusional and tone-deaf email above.

1 article/video

Sheep Esports, a new media venture launched by League of Legends insider LEC_Wooloo, recently published an insightful article on the economic aspects of T1, the iconic Korean esports organization.

T1, known for securing 16 major titles in LoL including four World Championships, has a storied presence in esports. It's noteworthy that T1 originated as SKT, a historic esports team founded with the involvement of SlayerS’ Boxer, a legendary player and one of the first esports superstars, in StarCraft Broodwar. In 2019, SK Telecom underwent a significant transformation, merging its esports division with Comcast Spectator, which now holds 34% of the shares, to form T1, while SK Telecom retained a 52% stake.

I highly encourage you to read the article, but here are some interesting numbers from it:

• Nearly 40m$ losses between 2020 & 2022.

• T1 spends twice as much as it brings in revenues.

• Company has a solid financial structure.

Now, we must ask ourselves a question: T1 is one of the most recognizable esports organizations in the world's most famous esports game, featuring Faker, arguably the most iconic and influential esports player of all time (across all games). Yet, they are losing money annually. Indeed, there's growth in revenue, but it's far from a profitable venture.

Of course, one could argue that there are indirect revenues not accounted for here, and perhaps this might be a passion project for SK (Korea’s 2nd largest chaebol) to engage a younger audience. However, even with these considerations, if we view esports as a business that needs to generate revenue, it's not quite there yet.

I was discussing with some industry friends, and it seems that even on the publisher side, running an esports ecosystem profitably is becoming increasingly challenging. More games are being categorized under the Marketing P&L, rather than having their own separate one.