Harvard Business School’s Anita Elberse, the 2020 Esports BAR+ Americas keynoter, set her presentation around a key premise: If the still-nascent global esports business is to reach its deserved epic heights in the multi-trillion international entertainment industry, its leaders must learn to be as aggressively and strategically competitive as gamers are during professional tournaments.
Called “How To Make the Entertainment Industry Thrive”, the presentation by Elberse, Harvard’s Lincoln Filene Professor of Business Administration and a best-selling author, was informed by her academic course, “Businesses of Entertainment, Media, and Sports”, and her acclaimed book, “Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment”.
Structured under three themes, Superstars, Blockbusters and Technology, her discourse showed what esports can gain from studying the successes of :
- Global entertainment superstars such as Beyoncé, Pharrell Williams, BTS and Lady Gaga;
- Global entertainment corporations like The Walt Disney Company, Hollywood studio NBCUniversal and top-flight European soccer club Real Madrid;
- Global consumer brands that include fashion house Burberry, video platform YouTube and streaming-music pioneer Spotify.
Esports is part of the rapidly growing video-gaming entertainment business that now sees a whopping 3 billion people worldwide being categorised as gamers. As Elberse said:
“It is not a coincidence to see strong links in what is happening in esports and what is happening in other sectors in entertainment.”
Referring to Richard ‘Ninja’ Tyler Blevins, arguably the closest the esports business has to a global superstar, she added: “What I learned is that ‘Ninja Inc is big business’. It is a business big in gaming but it is a highly diversified business as well. The more I looked into esports, the more I realised that this is not a coincidence.”
When Ninja hit the media headlines last year for defecting from Amazon’s Twitch, the leading live-streaming platform where he competed in tournaments and entertained his fans, to its rival, Microsoft’s Mixer, she stated she realised how big his celebrity status was. “The more I learn about Ninja, there are lots of parallels that I see with people like Beyoncé and Jay Z in the music business, Dwayne ‘The Rock’ Johnson in film, and Roger Federer in sport.”
Esports and the Superstar phenomenon
Elberse’s thesis first focused on why the survival-of-the-fittest approach will be key to esports superstardom.
In the entertainment sector, a few high-earning superstars collected a combined US$6.1bn in 2020, despite the damage caused to live entertainment by the Covid-19 pandemic. Elberse noted how A-List celebrities in esports and gaming such as Ninja and his counterparts in music, sports and movies earn vast amounts in remuneration (from royalties, brand endorsements and, more recently, company equity-deals). In many cases, because of their value as entertainment brands, the individual income of the biggest stars could also grow up to 40 times as their nearest 20 competitors over a short period of time.
“Why do we see these big superstars emerge like the Ninjas of this world? The markets for talent are winner-takes-all markets,” she continued.
To illustrate the hard-line strategies that might be required to value top esports talent, Elberse referred to Giannis Antetokounmpo, the US-based Greek NBA basketball superstar who earned almost US$50m in 2020, according to Forbes magazine’s ranking. However, if you look at his accomplishments since 2016 and the demand for his services, the value of Greek Freak (Antetokounmpo’s nickname) “could be as much US$250m”, Elberse concluded. “Those markets have two characteristics. The first is that the rewards are concentrated in the hands of just a few top performers. And those rewards follow from relative performances, not absolute performances. This is not about how good you are. This is about how good you are relative to everyone else.”
Superstars are so influential and powerful, many like film star Dwayne Johnson and basketball phenom LeBron James have their own companies, which are set up as their corporate businesses for negotiating with the Hollywood studios, sports-team owners or marketers they form partnerships with. Esports can benefit from replicating these achievements of similar crossover stars who have several interests. For example, when Ninja caused a furore in the gaming sector for defecting to Mixer from Twitch, Elberse believes he was influenced by his management company.
However, she asked: “If you can imagine a situation where Ninja has his own company, is reporting only to himself and has no other stakeholders to think of, would he have made a different choice? I don’t know. But it would give him more control over the entire ecosystem and how he chooses to play in it.”
She added: “In gaming, although it is still early, you will see big crossover stars, and it is up to the industry to support them.”
Esports and the Blockbuster phenomenon
To be competitive at the corporate level, Elberse advised Esports BAR+ Americas delegates to be ready to take risks, because big gambles increase the probability of the big stakes to be won.
Among the risk-taking entertainment conglomerates, she included Activision Blizzard, the NASDAQ-listed video-game publishing giant and owner of competitive esports’ Overwatch League and the Overwatch, Call of Duty and StarCraft franchises.
“You have to make big bets. There are examples in the gaming space that have lived by the blockbuster strategy. I would put Activision in that category of a company that has always been willing to make really big bets,” she stated.
“There is no way to play it safe. If you work in the entertainment business and think you can eliminate all possible risks, you should find a different home. That is not what the entertainment business is all about.”
Elberse highlighted Disney’s ability to remain the world’s biggest media-and-entertainment multinational by investing more per movie than any of its rivals. “The Walt Disney Studios make fewer films than any of the major studios. But the bets they make are bigger,” she said.
She then wondered if operators in competitive-gaming entertainment were prepared to pursue similar blockbuster “tentpole strategies”. She explained: “These are companies that say: ‘We’re not going to spend our budget equally across a number of products. We bet big on what we think are the most likely winners.’”.
Esports and the Technology phenomenon
Esports has a digital-first format in the way it is created, distributed and marketed. But Elberse questioned whether esports organisations and other gaming companies exploited technology at the mammoth scale adopted by tentpole- entertainment operators like Disney and Activision?
For example, Disney has used technology to create Disney+ to become Netflix’s biggest rival. Activision Blizzard has used technology to become a key esports organisation as well.
Elberse brought up the Long Tail Theory, the business model that points out how a handful of products or services get the most attention on the internet (Netflix, Spotify, Amazon, Facebook, iPhone). Online technology, however, enables the vast majority of smaller players at the long-tail end to be accessible as well.
“It sounds appealing and is sort of democratising change. But if you look at the reality, the exact opposite is happening. Because of the rise of digital technology, the big are getting bigger,” she declared. “We shall see something that is more aligned with the ‘winner-takes-all’ theory in esports – where if we have access to everything, the products that are popular will become even more popular.”
Esports’ future superstar executives
In her interview with Esports BAR+ Americas presenter Robb Chiarini (Gamers.Vote’s COO) that followed her keynote, Elberse emphasised that her theories are not carved in stone, because creativity and technology in the entertainment business are always evolving. She said: “It is one thing for me to say you must be willing to make big bets. It is quite something else for a creative executive to say I am going to bet on X, Y, Z. This is where the genius of creatives come into play. That is why we say it is up to executives to put the right people in the right seats.”
She said there is a new generation of aspiring business executives considering serious careers in esports entertainment. At Harvard Business School, she noticed there are more MBA (Master’s in Business Administration) applicants exploring jobs in esports than in traditional sports.
“There is sense of we’re going to run this as a real business. And we’re going to look at this from a really strategic point of view,” she said. “And that is what we try to do at business schools. We tell them that these are genuine businesses; this is not a frivolous activity where we’re going to just have fun and watch videos.”