Peter Guber and Bruce Stein See Bright Future in Esports BusinessOctober 31, 2016 Via ESPN
LOS ANGELES — As roughly 21,000 fans gathered at Staples Center in Los Angeles for the League of Legends World Championship, two of the country’s most well-known media influencers and businessmen, Peter Guber and Bruce Stein, sat in the Los Angeles Lakers’ suite in the arena.
Guber and Stein are former executives at Sony Entertainment, and Guber is a co-owner of the Golden State Warriors, Los Angeles Dodgers and Los Angeles FC. Their time at the League of Legends World Championship affirmed what they believed to be true when their ownership group purchased one of the most popular esports teams in the United States, Team Liquid, several months ago.
Guber says there were two reasons his new esports ownership group, aXiomatic, invested in the bourgeoning esports industry.
“One, I’m attracted by the sport itself, which is a digital play, millennial play, it’s an over-the-top play in a sense,” Guber told ESPN on Saturday night. “It’s an engagement that can be at home. You get the chance to get very close to the players, which is not as easy in other sports. You can participate in the sport easily; some of the games are very complicated — like, wow — but you can participate in it. You can follow the sport in a way that’s unique and unique to that audience.”
According to research company Newzoo, esports has over 148 million fans, with an additional 144 million occasional viewers. Furthermore, within the United States, of the 20 million people who are esports fans, six million do not watch other traditional sports. Guber’s second reason for investing comes from these demographics and similar numbers that he believes makes this investment worthwhile.
“I saw the psychographics and demographics of the audience, and Bruce and I talked about that; the idea that it isn’t a fad, the median age keeps getting older, older and older as it goes through it and the bottom is also growing too,” Guber said. “So you get both things growing — the tail and the head grows. It’s a tsunami, it has that effect. It’s an influencer, too — it influences product, it influences sponsors, it influences behavior. It has all the components that makes it a viral activity.”
Talk of Guber’s investment in the space began in early 2016 as he and his associates discussed a potential purchase of Team Liquid. The deal was finalized in late September, a day after the Philadelphia 76ers announced they had purchased Team Dignitas and Apex Gaming.
The seeds of both deals, and perhaps other NBA interest in esports, were planted after a late-2015 NBA Board of Governors meeting, which featured a presentation on the growth of esports. Guber, for his part, says esports was already on his radar before that presentation.
“Really, it just drew out of my experience of being around Sony and running Sony and part of my experience of way back,” he said, “being an amateur radio operator and building my own rigs. [It] came out of my experience of recognizing that I’m in the audience business. When you own the Dick Clark company with all of the attractions, when you own sports teams, big sports teams, and sports media companies, you’re in the entertainment business.
“You’re engaging audiences. That’s what your job is, to engage audiences, and when you see an audience that is engaged as this, it’s magnetic, it’s exciting and you want to try and be a part of it.”
While Guber did not say exactly why his deal with Liquid took the better part of a year to complete, he did say that he and his associates felt it was best to take it slow before moving into the esports officially.
“Bruce and I have a view: You can put all the ingredients together and if you take it out of the oven too soon, it’s chocolate pudding,” he said. “If you leave it in the oven enough, you get a soufflé. We’re in the soufflé business.”
Out of multiple options possible, Guber and Stein both say Liquid was the obvious option for a number of reasons: brand authenticity, popularity and the willingness of the organization to think outside the box with the deal to be purchased.
“The [Team Liquid] brand was incredibly strong with gamers who view authenticity as valuable,” Stein said. “It’s a very valuable and authentic brand.
“Two, management: [Liquid co-CEOs] Steve [Arhancet] and Victor [Goossens] were really important to this. When you have short-term player contracts as a sport, it has in almost every game, you have to have a very responsive group that can deal with the changes. Steve and Victor were the two people who stuck out to us as partners that we could be invested with both in time, energy and resources over the long haul.”
Guber and Stein’s group has chosen to retain Arhancet, formerly of the Curse Gaming esports team which merged with Team Liquid in late 2014, and Goossens, the original founder of the Team Liquid StarCraft clan in 2000. The 76ers instead moved the Team Dignitas and Apex Gaming founding members, Michael “ODEE” O’Dell and Michael Slan, to operations manager positions.
When asked why aXiomatic decided to keep Goossens and Arhancet in their current positions, Guber laughed.
“Seventy-sixers, Warriors, 76ers, Warriors,” Guber joked, in reference to Golden State’s rising success in recent seasons. “You do the math.”
“Steve and Victor are progamers at heart,” Stein said. “If we lost a drop of the authenticity, there would be brand diminishment. Our intention is to keep every bit of the authenticity and add best practices from other areas. I think we want to take what Steve and Victor have done, acknowledge the dynamic that has changed in the business [money and other management], and add an ownership group from NextVR, Dick Clark Enterprises, every sort of imaginable traditional business and bring those practices to the sport. That’s what we add.
“As far as team management, players and constructing it, we’re advisers and partners of Steve and Victor, but that’s what we think of it, and we’re following their lead in that regard.”
Joining Stein and Guber in their endeavor is Ted Leonsis, former AOL CEO and current owner of the Washington Wizards, Washington Capitals and the Verizon Center; and Hall of Fame point guard Earvin “Magic” Johnson.
“[Ted is] a leader in digital technologies and software, he owns the Washington Capitals and the Wizards and a whole bunch of other sports teams, too. He’s just giant and over the top,” Guber said. “He’s an unbelievable leader with resources, he’s a major participant and player, a full owner and partner in this, and his leadership, strengths and talent is going to be fundamental to us being successful.”
Moving forward, Guber says aXiomatic isn’t just interested in owning an esports team. Guber compares his ambitions to that of what he has done with the Warriors since the purchase by him and majority owner Joe Lacob in 2010. Since the purchase, the team won a NBA championship in 2015 and is planning to open a new stadium in San Francisco by the 2018-19 season.
“I would say that [aXiomatic] should become a platform for the elements that are center and surround [esports], whether it’s engagement of venues, merchandise, peripherals or products that support the teams,” Guber said. “This a multifaceted enterprise, this sport is a multifaceted enterprise.
“If you’re in baseball, you’re in — bam — you’re in venue management, you’re in hospitality, you’re in fan management, memorabilia, you’re in a lot of other elements that depend on the success of the sport and the success of your team. We expect to grow [our new] business horizontally as well as vertically.”
Image via: Gail Fisher for ESPN