Last month, I made the rare trek out of my city to New Jersey to do one of my favorite things: watch “League of Legends.” At the Prudential Center in Newark, thousands of diehard fans of Riot Games’ arena battler packed the stands to spectate the final two series of the League Championship Series season. The event was an energy-filled montage of fights and scuffles, packed with the excitement of the most diehard players, with chants echoing from the rafters which culminated in team favorite Cloud9 getting demolished by underdog NRG.
But even in that flurry of confetti and celebration with fellow nerds, it all felt a bit somber with a familiar elephant in the room: Esports are in a weird place right now. The once-dreamed fantasy of getting together with a bunch of friends to play games as a job has been warped and deformed over the past decade under the massive weight of venture capitalist money and the ever-growing desire for brands to appeal to the $250 billion gamer market. Now, as the hype machine dies down, fans and organizations alike are facing a cold, dark winter.
A Cold Night
Dubbed the esports winter by experts in the space, a once-promising industry has started to dry up. According to Statista, venture capitalist investment in esports has dropped by more than 40 percent over the past year. Brands are spending less on sponsorship deals, making it harder for events and organizations to turn a profit. Some of the most popular and successful esports organizations are struggling to find sponsorships, with titans of the industry Team SoloMid and 100 Thieves having rounds of layoffs earlier this year.
The Guard, the esports arm of Kroenke Sports & Entertainment (which has stakes in multiple sports teams including the Los Angeles Rams and Arsenal FC), laid off its entire staff in February. But, somehow, it still continued to operate a wildly successful emerging team in “VALORANT,” Riot Games’ incredibly popular team shooter. The Guard’s scrappy group of five guys managed to claw their way up through the amateur scene to winning the VALORANT Champions Tour, which was supposed to secure them a guaranteed spot in 2024 international events.
But on August 29, Riot Games tweeted that The Guard had failed to agree to the league’s “Team Participation Agreement” before its deadline and all five team members would be unable to compete next year. Head of VALORANT esports Leo Faria added in a post on X that The Guard signed the agreement in “escrow” (basically agreeing to sign if they won the event) but “after two months and several follow-ups, we had to make a very hard decision in order to not compromise the start of the season next year.”
The whole situation left a nasty taste in the mouths of the esports community, with fans and esports lovers taking to social media to share their upset.
“This just goes to show the difficulties with franchising and the lack of promises kept by Riot to enhance the tier-two scene,” George Geddes, a VALORANT reporter, told Passionfruit. “VALORANT pros are and always will be at the behest of Riot Games, it is not their esport to play, it is Riot’s, and always will be.”
This story does have a happier ending—after just two days of fans and players sharing their disappointment with the ruling, Riot Games announced that the players have been released from contracts with The Guard and are free to pursue other opportunities with other teams.
This situation with The Guard proves the problem with VC-funded esports organizations. In order to reach the top level of play, pros need to practice nearly every waking moment and skip out on a social life just to maintain enough skill. That large amount of capital can front large training spaces, top-of-the-line coaches, and expensive chefs, but can also cripple teams that don’t have that funding. Because of a few bad decisions at the top of a corporate ladder, the dreams of these “VALORANT” pros were almost squashed and all that hard work was wasted.
What message does that give to the scene?
Broken Promises
Stan Kroenke, with his son Josh, got their self-named Kroenke Sports & Entertainment company into esports in 2016 off of a promise from friend Activision Blizzard CEO Bobby Kotick that Kroenke’s “Overwatch” League would be the next big thing and he could get a franchised spot for $20 million. Kotick had a vision for an international, league-based competition where players would flock to sold-out stadiums to support their locally-based esports team, like Kroenke’s LA Gladiators.
“When you start talking about a global esports audience that could reach almost 600 million people next year, he was quickly able to get his head around the industry because the numbers speak for themselves,” Josh told the LA Times in 2019.
But Kotick’s vision never really formed. Stadium play was supposed to start in 2020, but a pandemic happened and the popularity of “Overwatch” massively declined. Though a free-to-play sequel was released in late 2022, the damage was done and team owners will soon vote if the League even continues. Kroenke seems to be cutting his losses. (Kroenke did not respond to a request for comment.)
So Kroekne was left holding a multi-million dollar bag for a competitive scene he never really cared much about to begin with. So like most laissez-faire capitalists, he’s decided to eschew The Guard and cut his losses, almost abandoning a group of skilled players who put their trust in his hands.
“Kroenke, worth 13 billion dollars, decided to screw over his players, his teams, his employees, and the fans, because he never really cared in the first place,” Esports journalist Rod Breslau told Passionfruit.
But the cold reach of professional gaming has crept far outside the most popular games, leaching its operational problems into the world of creators.
Web3 Enters The Chat
On Saturday, Jimmy “MrBeast” Donaldson released one of his usual videos where he destroys a bunch of expensive things for ad revenue. While crushing a Lamborghini, he mentions the Creator League, a new gaming competition created by events production company eFuse featuring big names like Bella Poarch, iShowSpeed, and Clix. For $20, fans could purchase a pass that lets them support and potentially even play with these creators.
But the announcement didn’t go as planned because it turns out that the passes are held on blockchain, making them very similar but not exactly NFTs. That information was also hard to find, it wasn’t mentioned on the event’s site or on any of the social media posts. The shady hiding combined with the stigma of JPEG monkeys was so strong that public opinion quickly soured and competitors, like creator CDawgVA, pulled out completely.
eFuse tried to squash the fires by releasing a statement on X that they “are not considered NFTs” but will be taking a hiatus. That same day, the company laid off 30 employees, roughly 30 percent of the company. Just two years prior, eFuse raised $6 million in post-seed capital funding and now it seems like it’s on death’s door.
A few years ago, VCs became obsessed with the potential for Web3. The creators of Bored Ape Yacht Club, for example, raised $450 million in seed round funding. So with the money flowing in, game companies like Ubisoft and Square Enix started to experiment with NFTs which the gaming community collectively cringed at. Having a public ledger to store transactions is nice, but ultimately it has yet to culminate in a way that provides any value to gamers.
Is Esports Dead?
Though things may seem dire, esports can bounce back. If you remove the greedy capitalists and energy drink sponsorships, you are left with a community of fans who want to see their games played at the highest level of competition. They want to scream, cheer, and trash-talk the competition as their fingers dance around a controller at speeds too fast for the human eye.
I’ve covered the esports world for nearly a decade, bringing me all over the world and introducing me to friends I never would have known otherwise. To this day, no concert, comedy show, traditional sports game, or stoner park gathering has had the same level of passion and energy as an arena full of esports fans.
If esports is to survive this dark hour, it needs to go back to the roots of competition. Put the giant paychecks and buy-ins aside to allow those who genuinely care to take control. The question is will Riot Games, Activision Blizzard, eFuse, or any of the other multinational corporations allow a less profit-hungry scene to exist?
We will only know if we start to see the flowers bloom in esports spring.
What are your experiences in the Esports Winter? Email tips@passionfru.it to let us know—anonymous tips welcome.
