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Business of Esports TV: Streaming Platform Politics

(Livestream #129B)

In this segment, we discuss the exclusive streaming rights of certain properties being acquired by companies such as Huya.

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 30:00
Yeah. All right. Let’s talk about was it last week we discussed Overwatch league media rights was last week, right? This week we have two interesting sort of, I don’t know if their responses or you know if they’re connected at all really, but they’re related to that discussion from last week. And the first is an article here where the headline is who he forks out 310 million for exclusive League of Legends eSports media writes in China, okay. And then and then attached to that is this deal with Do you where they renewed their partnership with ESL gaming, where essentially now they will have exclusive rights to broadcast ESL Pro tour, Cisco Warcraft, three, Starcraft two Dota, two and ESL mobile competitions in Mandarin, as well as other Chinese languages and dialects through 2021. No financial terms on this one were disclosed. I thought these two stories were interesting guys, because in the context of Billy Billy, picking up Overwatch league rights for China last week, now you have Billy Billy’s two main competitors in China announcing league rights of their own. Is this like? Well, we want to know, if acquiring media rights was the path to success for streaming platforms. Is it now can we conclude that everyone’s gonna start doing it now?

Jeff Cohen 31:41
Well, there’s two things, I think. I mean, one, I wish we had known this story last week, we could have saved a lot of pontificating and bloviating, about the future of media rights and what it means about Chinese streaming and the internet and of Williams, highfalutin thoughts that are all we’re all good ones. But, you know, turns out, you know, media rights do matter. And, you know, Billy, Billy is the third rate player, not the rate player, they’re the third, sort of the third player. Yeah. And they got kind of the third string League, and turns out who has the biggest and they got the biggest league. So all as well in the world? You know, it’s not like who we you know, because we were we were speculating, oh, maybe who knows something that these rights really aren’t the key to building a streaming platform? Turns out, well, that wasn’t the case. Or maybe they listened to the podcast slash after, you know, live stream and decided that they really needed to get these rights. And then the last six days, they negotiated this $300 million deal as a response, because they were like, wait, we really do need, you know, this, this streaming, you know, media platform, or meteorites. But yeah, that’s, those are my quick thoughts. On Wednesday. What do you think?

Lindsay Poss 32:52
I mean, I just, I’m kind of curious as to what you guys think is going to happen in like this is this is very parallel to what we see in the cable versus online streaming, bundling, unbundling that full debate like this, everything was unbundled and you can do it all on Netflix, and now everything is starting to be bundled and separated off, like, Do you all see that as a larger trend for streaming everywhere? Do you think that that’s going to happen with every league that pops up? Now? Do you think that Twitch is still going to be I mean, obviously talking about the US market here, but you know, do you think like, every league is gonna start off with exclusive media rights? Or?

Paul Dawalibi 33:27
Because you asked a great, like, meta question around streaming platforms, right, which is, what draws the eyeball? Is it the individual streamers? Is it big media rights? Or is it none of the above? Right, where people are loyal to for example, twitch and will never go watch streamers on YouTube no matter what, right like, and so I don’t think anyone has really, to my knowledge really figured out yet you know, what is drawing the eyeballs? Because you know, mixer sort of proves that the big talent isn’t what draws the eyeballs YouTube sort of proved that league rights don’t drive the hype drove the

Lindsay Poss 34:12
start with a really badly to me.

Paul Dawalibi 34:17
And so like, it’s, it’s not clear like what is drawing the eyeballs of their of their eyeballs are obviously there, but what’s moving them is the question here. And, and I just want to sort of back up because when we first talked about Billy Billy, because initially Billy Billy, and they still do have this. Billy Billy still has the rights for League of Legends worlds, like the big tournaments, the mid whatever split in the worlds for China. Okay, so that’s not part of the huya deal here. And Billy Billy paid a lot of money for those rights. And at the time, I think on the podcast, William and I had sort of questioned whether this was just really smart on 10 cents part because 10 cent own Who? Yeah, do you and riot, right? So they’re going, why would I? Why would I give League of Legends media rights to a property I

Jeff Cohen 35:09
own? I’ll go get cash from Billy Billy, right and milk them for this. And then it’s a revenue generator for me. And so that was some of the theory theorizing before why maybe 10 cent who yondu collectively said, Yeah, just sell the rights to Billy Billy. Now, with rights going TO to huya for League of Legends for everything else. Tencent is now clearly directing content to their own platform, which is a switch. In theory, if you were going to do the if what you guys had, what you guys had hypothesized was correct. Wouldn’t that assume when that signal that they think that the price that Billy Billy paid was too much? Because otherwise, if if they thought that they can generate more in advertising and new eyeballs to the platform, clearly, they wouldn’t even if it was, hey, we’re getting 300 million in cash, it would be what we’d rather have the 500 million, like, in theory, Billy, Billy should only be bidding on this. If they can make more in advertising than they’re getting, then they’re paying for the rights. Otherwise, you know, they’re they’re obviously doing a negative NPV trade. So I don’t know what that means, in the context of that, but I just wanted to kind of point that out. Like, you know, you wouldn’t you shouldn’t be signing these contracts. If you think you can’t make more on advertising on the back end, then you’re paying for the rights. And I would, you know, I would think logically

Paul Dawalibi 36:33
Yeah, let me just read some of the comments are Christian says influencers influencers, influencers? I mean, Christian, normally, I’d agree with you, but like mixer mixer couldn’t make that work? Right. They paid a lot of money for the influencers and couldn’t make that work. Well says, I don’t think streaming rights is the be all I can watch the event live on Twitch, but then run back into YouTube for longer for the conversation after. Yeah. switching costs are low nowadays between one streaming platform to the next. Yeah. Yeah, true.

Lindsay Poss 37:02
So high.

Paul Dawalibi 37:04
But but yet we’re not. I feel like we’re not seeing large movements of audiences from one platform to the other based on like moves that they’re making. doc says, I have one, I assume that’s the question. She asked the question. That’s what we’re here for. The real nylen Hey, guys, sorry for being late. So glad I can make it to a live stream. Again, real nylon, thank you for being here. No problem that you’re late. KENNETH says, in my opinion, it would be interesting to see competitive eSports treat media the same way that large creators do seeing them interact with all of these different social media platforms, and playing the game. Like influencers do. Are you suggesting kind of like, be on all platforms?

Jeff Cohen 37:48
I think that’s hard to do in practice, because you want to sell these exclusive rights and get if you’re a team owner, like it’s way riskier to try to play that game of, you know, doing multiple different platforms versus selling, you know, upfront and getting that, you know, $300 million. I would also imagine, you know, that the you’re getting because you’re going exclusive, you’re probably getting a better price.

Paul Dawalibi 38:12
Yeah, I yeah, he says the game being the growth game, not the actual game. Yeah. Like, the media rights are just so attractive to sell right now. Because it’s like, it probably feels like free money for the developers, right?

Jeff Cohen 38:27
It’s 10 it’s point like, you know, put it everywhere because it’s free marketing for your game, which is actually where you make the money. So basically, just completely saying eSports you know, let’s turn back the clock. eSports is marketing isn’t you know, where the real juice is coming from? That kind of juice.

Paul Dawalibi 38:51
Says for eyeballs I think it’s more about the way the platforms are designed by default YouTube’s better for content that’s not live twitch for live content. I think it’s the way the platform is made. Yeah, you know, here that’s true. And I do think YouTube is not very good for live and that has sort of proven itself out. But in China, it’s a it’s an interesting situation here because like Tencent owns the two biggest streaming platforms and the biggest esport right and and owning all three with a smaller player in Billy Billy makes for like this interesting dynamic. Are they taking advantage of Billy Billy and milking them? Or Or like, like, Why keep some things to themselves and let Billy Billy have others. I find that there is a weird dynamic there. That’s what

Jeff Cohen 39:44
what do we make of the price is usually these deals. The price is not always announced, but here it was. Is that a one year deal? Or is that over multiple years? Like what’s the

Paul Dawalibi 39:54
2021 to 2025 for exclusive media rights? For League of Legends eSports for 310 million. Okay, so it’s not a small price tag, right? That’s that’s five years, right?

Jeff Cohen 40:12
So 60 million a year,

Paul Dawalibi 40:14
60 million a year.

Jeff Cohen 40:17
There’s, you know, I

Paul Dawalibi 40:18
suspect if you probably ran the numbers, there’s a large enough audience there that you can sell 60 million of advertising a year against it, I would think. Which is probably why I went to a 10 cent owned platform. Yeah. And maybe this was the plan, right? Get Billy Billy to spend big time on worlds like on the big events, so they have no cash to, you know, leftover to pick up the rest? I don’t know. Kevin says probably easier for business, but not for eyeballs. Yeah, but everyone’s just measuring the eyeballs right now to that that’s part of the problem. No one, no one really cares about profitability. Ken says I just don’t understand why they’re trying to treat new media like old media. With exclusivity being cross pollinating is a much better long term recipe for success. Look at Dr. disrespect, his numbers haven’t been great being isolated to just do to

Lindsay Poss 41:15
go, but that’s only true until someone does it. Right. If it can be done right as well. Like, no one has done the exclusivity things in the proper way yet. But I mean, I I agree. And I think cross pollination is probably better. But it has, that doesn’t necessarily mean that it’s the only model that ever is going to exist.

Paul Dawalibi 41:35
I think at some point, when if the esports get big enough, right? The real again, right? Like the competitive eSports. with audiences, like we’re talking strict eSports here, that gets big enough, then I think the publishers have power to cut cross platform style deals. I think today, they’re just taking the free money that’s being thrown at them. And so this may change over time. It’s just like, what’s the alternative? If you’re, if you’re Overwatch League, right, like, and someone’s telling you, we’ll pay you money to stream exclusively on our platform? Would you say no? I like what, what is the alternative for them? Right, people are willing to pay for exclusive rights.

Jeff Cohen 42:19
Yeah, I think you’re absolutely right. In terms of at the end of the day, this will all get sliced and diced as you become bigger. I mean, in kind of like Williams, you know, everything every good company becomes Disney. I think every good sports league eventually will try to be the NFL. Right? And if you look at what the NFL has done, I mean, they’re selling like, every tiny little right, they possibly can like the Thursday night game, they have, you know, one partner for linear one partner for you know, online, one partner for streaming, you know, Sunday night, same thing, like they are getting every last drop of revenue, because they’re, it’s such a hot commodity. So as these leads get bigger, I imagine you will see more of that, like multiple streaming platforms getting the rights even, they’ll sell some linear rights, which some leagues have, to some moderate success. So I agree. But right now, to your point, these they’re getting the best deal they’re getting is probably the exclusive because these platforms think that you know, at least our hypothesis is that it helps build viewership. And, you know, they’re seeing the data. So if these platforms are still doing these deals, I have to imagine that they’re seeing enough data to suggest that that is growing the community.

Paul Dawalibi 43:31
I agree, I agree. And I like we may end up seeing, you know, Monday night Call of Duty league is on YouTube, but the Saturday you know, big thing is on Twitch or something like that, right? Like I do think we may get to something similar.

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