Business of Esports TV: Bilibili Overwatch Media Rights

(Livestream #128B)

In this segment, we discuss how Bilibili has acquired exclusive Overwatch League broadcast rights in China and what that means for the future of streaming.

The Business Of Esports brings you news, debates, and all the information you need to know about the gaming sector, the world’s fastest-growing market. With Paul “The Profit” Dawalibi leading the charge, and a variety of special guests, BoE TV is the only place to find insider information on the esports industry!

Check out the rest of the livestream here:

Paul Dawalibi 29:15
Such a smart guy. Really such a smart guy. Okay, can we talk about? Let’s see here. Hang on. Sorry. Let’s start with something that’s a bit more serious. And this is Bilibili in the news again. And the headline here is reported Bilibili obtains exclusive Overwatch League broadcast rights in China. So as part of this report, they’ve they’ve they have exclusive broadcast rights for Overwatch League for the Chinese region. And this is the interesting part of this article for me was the context around Bilibili being the third sort of largest streaming player in China, but yet they’ve now secured so they have Lee Right. They have Overwatch League rights like they’ve they seem to be scooping up media rights much more aggressively like League of Legends. I said when I said league much more aggressively than who we are, do you? And and I’m curious if you guys have thoughts on is it just that they have a different strategy is that that the other two players don’t care because they’re bigger? Like Where are you guys on this like Chinese streaming scene?

Jeff Cohen 30:29
I mean first Yeah, we have to drink twice because we just had Bilibili and Overwatch league. So that pretty much takes two of our you know, typically,

William Collis 30:37
if you’re playing along that’s

Paul Dawalibi 30:40
actually such a fun idea. Let’s what I’m going to have Business of Esports bingo cards printed that you can download and print yourself for something

Jeff Cohen 30:49
entertaining.

William Collis 30:50
Oh my god, Paul, if we did that on the live stream, and there’s like everyone gets their own get

Paul Dawalibi 30:54
a bingo, merge or something?

William Collis 30:57
Oh, that would be so good. I mean, I’ve

Jeff Cohen 31:00
a lot of thought, I think there’s a lot of different ways we can kind of analyze this or take it you know, one I think these rights probably are valuable given Overwatch is more popular in China, I think than the US in terms of Overwatch League. So, you know, good on Bilibili for getting these rights that you think this is probably a more valuable commodity. Normally, hey, Overwatch league selling the rights. I feel like we would come in here and maybe poopoo that a little bit. But I do think China rights definitely have value just given the popularity their second point no, take this in different direction. Didn’t say the price, I don’t believe, which we’ve talked in the past about why that is the case, when press releases are not, you know, don’t have numbers. And usually it’s because the number is not something that the company wants.

William Collis 31:45
In this case, it’s even more explicit, because there’s already a number out for I believe the League of Legends, right? So arguably, if this number were lower, like us would not want that disclosed, because it’s sort of saying our broadcast rights. It’s it’s a very public data point about comp broadcast rights and their competitive values. So for sure.

Jeff Cohen 32:06
To get thoughts, I don’t know what

William Collis 32:08
I mean, I, I think this is Look, I mean, it’s it’s pretty obvious, we in my mind, what’s happening here, which is this is the smaller provider, you know, they have to try something to gain share excluse, this is a broadcaster exclusive content is a pretty good way to get traction, see every streaming service ever, and how they’ve evolved their business models. It’s incredibly smart to go on an acquisition spree and to some extent, I think once you get one it gets it’ll, it makes it a lot easier to get the next one, right. Like once you get the first one and you have that relationship and that credibility, it like it becomes a rep. It’s just like, if you were starting a TV network, and you didn’t have any, you didn’t have the Olympics on it, let’s say right, but then all of a sudden, you’ve got rights to NHL, hockey, right? makes it easier to then go and get another you know what I mean? Like there’s a credibility that gets accumulated here. So I think to some extent to they sort of by buying one, they already levered themselves against the opportunity to go buy more pretty effectively. The other thing I’d say here, though, is it’s a pretty scary strategy in the sense that they are betting that people then stick around, right, like the bet here is you come to our platform for Overwatch League, and you then you stay because of all the other great stuff you have here. And, you know, I have to ask you guys like, do we think that like, that’s pretty obviously the bat, right? Like, do we think that’s true? Like just honestly, like, do you think that if you tune in to a channel for a live sporting event, you will stay on that channel afterwards? Right? You will return to that channel as a port of call.

Paul Dawalibi 33:47
I mean, linear TV bets on that. Right, William? that exact strategy here

William Collis 33:52
they the bets on it? Yeah.

Paul Dawalibi 33:53
Right. They’re like, they’re their big new show. They put it you know, right after their new show, they put it right after their existing, you know, Star Show, like, you know, if they’re, if NBC is launching a new show, they’ll run it after Seinfeld, or whatever, back in the day, right? programming,

Jeff Cohen 34:08
I kind of want to move on.

William Collis 34:09
Yeah, literally, like you just it’s the it’s that you can’t be bothered to change the remotes, whoa, watch that new sitcom, and then all of a sudden, I’m hooked. Right? Exactly. But the difference is, we didn’t see any of this behavior with mixer, right? We did not see any of this behavior with mixer. And the reality might be like, you know that this the switching costs you have on terrestrial TV, right? Like, or just, it’s so much lower in a digital world, right? There’s just so much more content. So it’s like, I essentially I personally think that there is a lot more risk in this strategy than is upfront and apparent, because I don’t if you think about how you consume, like, for example, you’re on YouTube, right? To watch gaming videos, but then you’re not going and watching live streaming like it hasn’t that hasn’t propelled YouTube’s live streaming business to this massive, like the argument in some sense, you could make the same argument here, which is there’s a honeypot of content people will stick around, but we have not observed that with you. Right?

Paul Dawalibi 35:10
But why do you care William right like if Bilibili has done the math and there were no so just let me answer questions resident that none of this was disclosed. So how long were the right spot for doesn’t say in the story? I don’t know if it fits in another article, but I’ve in the articles I saw wasn’t disclosed. Nor was the price. Like do you care that William like that? I don’t think I maybe NBC factors this in when they buy the rights for you know, NFL football, or Fox or whatever, who owns you know, NFL media rights. But I’m sure part of the math is just we think we’re gonna get this many eyeballs on Bilibili, what ads can we sell against that? And, and therefore, it’s worth X to us?

Jeff Cohen 35:52
I think you’re probably right. But I was gonna say didn’t Fox, like very famously overpaid for the NFL to build out like when they were trying to become the fourth broadcast network, like that was sort of their their way. And like they overpaid. And CBS was like, like NFL is not worth and that has no yeah, and then, yeah, they built their programming around that.

William Collis 36:12
You have to assume there were other bidders, right? Like you have to assume it wasn’t like only Bilibili knew these rights were for sale. And only Bilibili put in an offer. Right? You have to assume that it was a competitive process. And I think it’s plausible that the third provider would be willing to overpay for rights to shore up their business that’s probably why you’re seeing it going to the third you know, the third most popular provide

Paul Dawalibi 36:34
and William you’re not bought not bothered me bothers the wrong word. But you’re not intrigued that he endo you continue to not pay up for these media rights. Like why

William Collis 36:45
I’m always the third biggest guy who’s buying that’s sort of what I’m wondering is what, uh, who you are. And all you know, that, you know, that’s the point I’m making is maybe these guys are like, Okay, great. You think that’s how you get a streaming network to work, guess what, you’re gonna have a ton of people come on your platform, you’re never gonna be able to make back the money for the rights you had. And they’re all gonna leave, we’re gonna, we’re happy for you to do this. You know what I mean? Because, like, it’s taking your pressure, it’s taking pressure off of what we know, builds the business, which is and I have no idea but it’s, you know, a great content creator relations program or you know, whatever. Like, I’m I’m totally making it up. But like, the point is like, it is interesting that these guys are willing to let three go in a row. It suggests maybe they know something that Bilibili doesn’t because again, I don’t think I don’t think or Bilibili

Paul Dawalibi 37:33
knows something. These other

William Collis 37:35
Yeah, well, we’ll say,

Jeff Cohen 37:38
well, they both think they know something. Only one of them is going to be right.

Paul Dawalibi 37:43
Sam says returned to watch the events every now and then or return to watch other content other than the exclusive I came for. William, I assume you were talking about other content, other content like other content, yeah. Cam says Where do Chinese gamers stream could this pull streamers? Well, those are the three biggest platforms right? cam it’s it’s Huya Do you and Bilibili, those are those are the three twitches of you know,

Jeff Cohen 38:06
are China aren’t who are who I know you still merging or is that not?

Paul Dawalibi 38:11
I think it’s happened. They’re both owned by Tencent. Now, I think they may operate site. There’s sites are operated still separately, but it’s the same owner. Sam says because in the case of smaller streaming services, acquiring exclusives or specific streamers, I’m usually only watching those smaller platforms for those exclusives. Yeah, so that would that that that backs up the idea that Bilibili is making maybe making a mistake here and who you are no, you’re smarter and realizing that people are only going to come for Overwatch League and not stay for anything else. Ramsey says also might be an extension of the mixer strategy, where they now look for exclusive talent slash streamers since they’ve grown their base. I mean, we all know how well the mixer structure but

William Collis 38:57
I suppose this is you know, I think it’s a more to maturation of the mixer strategy, which is mixer said okay. Maybe it’s the tat the personalities that matter. Right. That seems to have been disproven. Now. This is another bet that says no, it’s the events that matter. Right. It’s the tentpole moments that matter, right? We’ll see how that plays too. But you know, my Yeah, it’s it’s interesting. It’s kind of exciting because it’s sort of like people are trying to figure out what makes streaming platforms work. But nobody really seems to know what the magic rest like what’s the thing you need to cement you it’s really fun to see huge companies take massive bets and just clearly not have been right and there’s no not like you got I thought that makes her strategy was so smart when they started poaching so it’s not a knock on them. It’s just, it’s fun. It’s just it’s a really difficult market to crack you know,

Paul Dawalibi 39:46
and what you need may be region specific, it may not be globally applicable, which is also another interesting wrinkle here. I will say because, and that we alluded to this because the terms weren’t disclosed, guaranteed. This was way smaller. Then the League of Legends media deal media rights deal, and I’m not sure.

Jeff Cohen 40:05
Expect obviously

Paul Dawalibi 40:06
Overwatch league is not thrilled about that number and being out there because I assume it’s quite small. Let me just add one more piece to the story, which I thought was interesting. Bilibili owns an overwatch league team. Does that change any of your thinking they own the Hangzhou Spark? Hangzhou Spark I know I’m actually I’m not actually sure. But the frontier

William Collis 40:29
isn’t that the separate company? Don’t they have two companies now they have like Bilibili, Bilibili eSports. Yeah,

Paul Dawalibi 40:34
but it’s still Bilibili. Does that being being a franchise partner? Does that change? Like, how do you guys feel feelings about the deal?

Jeff Cohen 40:46
It’s a little bit of a conflict of interest, but doesn’t really change that much.

Paul Dawalibi 40:51
Okay, so no one’s I don’t think,

Jeff Cohen 40:54
I don’t think that Bilibili, my guess is the person who runs who did the hundreds of millions of dollars, that TV contract probably sits above on the totem pole than like the person who runs the team that makes like negative money. Like literally negative money. If you’re the owner, I’m guessing they weren’t. I’m guessing they didn’t say like, hey, let’s spend $200 million. So our Overwatch League team can make like 3 million like though that’s not a great economic decision.

Paul Dawalibi 41:20
Okay, but it’s probably really. Yeah, but hold on. If I’m, if I’m the owner of the Shanghai Dragons, right? Am I bothered, but now, the media rights for Overwatch League are owned by essentially my competitor?

Jeff Cohen 41:38
What do you mean?

Paul Dawalibi 41:40
Bilibili,

Jeff Cohen 41:40
who owns the Shanghai Dragons?

Paul Dawalibi 41:42
Someone else? That’s my point, Bilibili owns the Hangzhou Spark, right. But now they own the the media rights for the league. Are you not worried?

Jeff Cohen 41:52
What league teams in the same league are not competitors? Right? Like, they are competitors on the field. But you know, the New York Jets do not, I think compete with the Dallas Cowboys, right? Like they all make money as a league. As the league sells the biggest media rights deals as the league sells sponsorships. The league sells gambling rights, like, yes, they compete on Sundays. And like maybe like from local advertising, they compete. But that’s been the you know, the beauty of these, you know, all of these massive leagues is that they’ve come together as enterprises and like, you know, they don’t love the voice.

Paul Dawalibi 42:29
I hear your points. A good one, Jeff. But let me take it to an extreme right, like, I’m Bilibili. Now, I’m setting up the, you know, the broadcast here and I own the rights for China. And I’m going No, no, like in this four minute intro make sure three minutes is about the Hangzhou spark and only you know, we only cover Shanghai for 20 seconds, because then we’ll sell more jerseys right? Or, or whatever the thinking is, I get it that

Jeff Cohen 42:54
you’re right. It’s it’s a fair rebuttal. I think that that probably crosses the mind of whoever owns the Shanghai team. But I’m sure in the contract, all of these things are probably nigga. It’s like, you know, I don’t think that the team the league would allow the broadcast or do that otherwise, the lease Commissioner is not doing his job right to, to kind of make everything fair and equitable.