Is Houston The Next Call Of Duty Franchise?

TNL Take: Last week on Activision-Blizzard’s Q2 earnings call, CEO Bobby Kotick revealed that the 8th slot for the upcoming Call Of Duty League has been sold. However, while the previous 7 slots have all been named, there was no mention of which investor or investment team purchased this slot and for what city.

The Next Level has been investigating this a bit, speaking with several industry insiders and researching additional information sources.  We want to qualify this take by noting that we do not have direct sourcing or confirmation, but based on these industry conversations and piecing together the clues, the Next Level believes that Houston will receive 1 slot in the upcoming Call of Duty League. Let’s see how the dots connect.

1/OVERWATCH LEAGUE FRANCHISES

(Photo: Activision-Blizzard)

(Photo: Activision-Blizzard)

As reported by Jacob Wolf of ESPN last June (who seems to breaks almost all Activision-Blizzard related news), franchise owners in the Overwatch League have been given a first right of negotiation for the upcoming Call of Duty League slots.

That’s exactly what happened in May of this year when Activision-Blizzard announced the first 5 cities:

  • Atlanta (Overwatch League Team: Atlanta Reign)

  • Dallas (Overwatch League Team: Dallas Fuel)

  • New York (Overwatch League Team: New York Excelsior)

  • Paris (Overwatch League Team: Paris Eternal)

  • Toronto (Overwatch League Team: Toronto Defiant)

2/INFINITE ESPORTS AND ENTERTAINMENT SALE

(Photo: Infinite Esports and Entertainment)

(Photo: Infinite Esports and Entertainment)

As reported by Jacob Wolf in May, LA based Immortals raised a $30M series B funding round, rebranded to Immortals Gaming Club and were one of a few bidders looking at buying Infinite Esports and Entertainment, the parent company of OpTic Gaming and Houston Outlaws.

In June, Infinite Esports and Entertainment were indeed acquired by Immortals Gaming Club. However, Immortals Gaming Club already have an Overwatch League team with LA Valiant and Activision-Blizzard prohibits franchise owners to field 2 teams in the same league.

3/IMMORTALS GAMING CLUB

(Photo: Riot Games)

(Photo: Riot Games)

Following a similar pattern as the first 5 cities, Immortals (Overwatch League Team: LA Valiant) acquired the 6th slot for Los Angeles for the Call of Duty League in July. Immortals Gaming Club and Splyce are currently the only esports teams to have teams in all 3 current franchised leagues: League of Legends, Overwatch League and Call of Duty League.

The 7th slot went to Minnesota via acquisition by Wise Ventures, an investment firm founded by Minnesota Vikings owners the Wilf Family and VaynerMedia CEO Gary Vaynerchuck. This is the sole slot without a companion Overwatch League franchise.

Also Minnesota is a state, why wasn’t it Minneapolis-St.Paul, unless location is still being determined?

4/HOUSTON OUTLAWS SOLD

(Photo: Activision-Blizzard)

(Photo: Activision-Blizzard)

2 weeks ago as reported by Jacob Wolf (seeing a pattern yet?), Houston real estate investor Lee Zieben agreed to buy the Houston Outlaws for $40M from Immortals Gaming Club. The deal has not been executed but is expected to close in late August.

5/NORTH TEXAS

(Photo: Complexity Gaming)

(Photo: Complexity Gaming)

While southern California was initially the leading geographical area for teams, developers and startups, north Texas has quickly established itself as the next dominant domain for esports. Envy Gaming is based in Dallas. Complexity Gaming opened a massive complex adjacent to the Dallas Cowboys stadium in Frisco, which was also home to OpTic Gaming prior to their sale.

5/HECZ

(Photo: Heczquarters)

(Photo: Heczquarters)

This is the biggest wildcard of all.

I first met Hector “Hecz” Rodriguez 6 years ago during my time at Major League Gaming. Not only is he one of the nicest people in the esports industry, the growth of OpTic Gaming, his hustle and drive are inspirational and he deserves significant credit for where the space has gone.

How popular is Hector? Just read the thousands of Twitter comments made during the OpTic Gaming transition. His recently launched Heczquarters merchandise is already sold out.

Hector is still based in Frisco, Texas and why wouldn’t you want someone who has been around the Call of Duty scene for many years and created the most popular team for that title. There is no confirmation on this but would fit perfectly. Yet another dot?

Hector created the OpTic Gaming brand and in my opinion the “new” LA OpTic Gaming is not the same without him.

This narrative is our hypothesis that Houston will receive one of the Call of Duty League slots. To end with the same qualification, while hearing from industry sources and putting together this thread, it’s still not 100% confirmed. 

The Next Level reached out to The Zieben Group for comment but has not heard back as of this publication.

But again, the dots we are threading are:

  • Overwatch League franchises tied to Call of Duty League franchises

  • Recent purchase of Houston Outlaws by a wealthy investment firm

  • The growth of the esports industry in North Texas

  • The potential involvement of Hector “Hecz” Rodriguez

 

Doesn’t it make sense?

eSports Franchising: Who Made The Cut - Part 1

ESPORTS FRANCHISING: WHO MADE THE CUT PART 1

eSports Franchising: Who Made The Cut - Part 1 (Graphic: The Next Level)

eSports Franchising: Who Made The Cut - Part 1 (Graphic: The Next Level)

By Feature Writer Jordan Fragen

TNL Take:

Franchising continues to be one of the hottest topics in esports and we’ve already analyzed the differences between Riot’s North American LCS and Activision-Blizzard’s Overwatch League.

TNL Infographic 053: NALCS vs. Overwatch League (Infographic: Jordan Fragen)

TNL Infographic 053: NALCS vs. Overwatch League (Infographic: Jordan Fragen)

 

And this is with good reason.

In recent years, the instability of the NA LCS and many other esports leagues have deterred potential investors. Afterall, nobody wants to see their team get relegated and their investment lose value. Two perfect examples are NRG and German soccer team FC Schalke 04 who both lost their LCS spots last year.

This year, both Riot and Blizzard offered brands the chance to acquire permanent franchises in the NALCS and the Overwatch League respectively. Many of the lingering questions were finally answered this past week. Today, we’ll bring you a quick overview of this recent burst of news and the landscape of the upcoming leagues set to start next year.

 

NALCS

Riot Games' LCS (Photo: Riot Games)

Riot Games' LCS (Photo: Riot Games)

This week, Riot ended the speculation as to who’s franchising applications they would accept.

While many were initially concerned that Riot was actively seeking to partner with non-endemic teams, it appears that this is not the case. 6 of the 10 teams currently control spots in the NALCS.


So who’s in?

TNL Infographic 062: Franchising - Who Made The Cut (Infographic: Jordan Fragen)

TNL Infographic 062: Franchising - Who Made The Cut (Infographic: Jordan Fragen)

ENDEMIC TEAMS

TSM

Off of a 3-year streak of not making it out of the group stage at Worlds, fans were itching for some good news. Turns out they wouldn’t have to wait for long.

Given the team's dominance with Bjergsen and the management’s ability to remain profitable, TSM was perhaps the most expected team to meet Riot’s requirement. However, nothing is guaranteed in the world of esports. Fans can rejoice though as TSM will remain as one of NA’s permanent teams.

 

COUNTER LOGIC GAMING

CLG was one of the original teams in the NALCS and for years they dominated the North American scene. Today, they are not as prominent as they once were, but with an investment from the Madison Square Garden Company, it appears that Riot is confident in the team’s future.

 

TEAM LIQUID

After finishing 2 splits in a row in 9th place, Team Liquid has not necessarily met everyone’s expectations. Given that the team received a huge investment from Axiomatic and it’s many investors, including the majority owner of the Washington Wizards and a minority owner of the Golden State Warriors, the team’s performance has not followed suit. However, this does not appear to have deterred Riot from accepting their application.

 

ECHO FOX

If anyone had a good week, it was Echo Fox. Along with announcing that the team had just received an investment from the New York Yankees, Echo Fox’s future in the NALCS was confirmed. Likely, these two stories were very much related to one another, but it’s unlikely that official sources will confirm this any time soon.

 

FLYQUEST

As the newest team in the NALCS, Flyquest’s acceptance is probably the biggest surprise on this list. As Wes Edens owns both Flyquest and the Milwaukee Bucks, they have the traditional sports pedigree that Riot clearly was looking for in franchises.

The team is also investing in other esports such Rocket League and the upcoming NBA 2K League. This commitment to the industry may have also played a factor. Either way, Flyquest will also remain a permanent fixture in the NALCS.

 


NON-ENDEMIC TEAMS

 

GOLDEN STATE WARRIORS

While Peter Guber is an investor in Axiomatic and by extension an owner of Team Liquid, the majority owners of the Golden State Warriors have not yet been involved in esports.

That is until this week when the Lacob family’s application was accepted by Riot.

Given the recent success of the Warriors, it is no surprise that of the traditional sport teams that reportedly submitted applications, they would be one of the lucky few to be chosen. Additionally, they are also participating in the NBA 2K League though the branding is not likely to overlap.

 

HOUSTON ROCKETS

Way back in December of 2016, the Houston Rockets hired Sebastian Park as their Head of Esports. It was truly only a matter of time before the team was involved in the ecosystem.

While they are not one of the 17 teams in the NBA 2K League, they did show commitment to the space through his hire and entrance into the NALCS.

 

CLEVELAND CAVALIERS

Like the Golden State Warriors, no one can deny the success Cleveland has had since Lebron returned home. Similarly, they are also participating in the NBA 2K League. 

But that wasn’t the only announcement coming from Cleveland. Former competitive Call of Duty player for top team OpTic Gaming and successful streamer Nadeshot is reportedly involved.

While initial reports have him serving as the Director of Esports, sources close to the Cavs say that his role may not be one you are currently seeing across other teams.  Regardless, Nadeshot being attached in any capacity to the Cavs is very meaningful for the team’s content strategy in addition to the opportunity to help monetize his upcoming apparel line.

[Edit: Dan Gilbert via Courtside Ventures has made several investments in the space with the most being the super successful exit for Beam]

 

In Part 2, we will look at who made the cut for Activision-Blizzard's Overwatch League and the two teams that made both - Cloud9 and OpTic Gaming.

Activision-Blizzard's Overwatch League (Photo: Blizzard)

Activision-Blizzard's Overwatch League (Photo: Blizzard)

Exclusive: Underworld eSports Raises $10M From Grizzlies Kaplan, Survivor's Dr. Zahalsky

EXCLUSIVE: UNDERWORLD ESPORTS RAISES $10M FROM GRIZZLIES KAPLAN, SURVIVOR'S DR. ZAHALSKY

Underworld eSports Raises $10M From Grizzlie's Kaplan, Survivor's Dr. Zahalsky (Photo: The Next Level)

Underworld eSports Raises $10M From Grizzlie's Kaplan, Survivor's Dr. Zahalsky (Photo: The Next Level)

TNL Take: Money continues to pour into eSports teams. 

The Next Level has learned that Memphis Grizzlies co-owner Jed Kaplan and current "Survivor" season member Dr. Mike Zahalsky have invested in Portland based Underworld eSports.  Kaplan is also an owner of Swansea City Football Club of the English Premier League.

While the overall investment total was not revealed, the rumored figure is as high as $10M - which is an extraordinary amount for a team which currently competes in four titles ranging from Call of Duty to Vainglory.

Two other interesting aspects of this investment.

First, we’re beginning to see the second wave of professional sports owners who are seeing big investment opportunities in eSports.  Stephen Kaplan, co-owner of the Memphis Grizzlies as well, previously invested in team Immortals back in November of 2015 via Oaktree Capital.

TNL Infographic 027: NBA eSport Investment (Infographic: Jordan Fragen)

TNL Infographic 027: NBA eSport Investment (Infographic: Jordan Fragen)

Second, as Pro Sports team owners continue their involvement within eSports, what's the new investment trend?

Athletes and celebrities.

From NRG's recent investment from both Marshawn Lynch and Jennifer Lopez, Underworld eSports investment also includes Dr. Mike Zahalsky from the current season of "Survivor".

The deal was brokered by Bill Yates of the Sports Advisory Group who has also been linked to other eSports team investments.

Disruptive Technologies for eSports: ICO's

DISRUPTIVE TECHNOLOGIES FOR ESPORTS: ICO'S

Disruptive Technologies for eSports: ICO's (Photo: United Artists)

Disruptive Technologies for eSports: ICO's (Photo: United Artists)

TNL Industry Guest Post 008: Over the past 13 years, Anton Ferraro has helped develop numerous esports focused properties including tournament broadcasts, television programs, streaming platforms, branded campaigns, digital products & live event activations.

Anton began his career in 2004 by organizing and playing at local Halo events and shortly thereafter joined Major League Gaming to assist their media efforts. After 8 years with the company Anton transitioned to the West Coast and helped build the Azubu streaming platform as Director of Content.

Anton currently resides in Brooklyn, New York with his wife and pug and too much of his time is spent playing Overwatch. You can view his work at www.AntonFerraro.com

TNL Take:  In the first post, we looked at the potential disruption that blockchain technologies like Ethereum could have on eSports

Now that it's already been a month, we've moved onto the next hot buzzword of the moment: ICO's or Initial Coin Offerings.

As with anything hot and new comes the inherent risk - hence why we will look at the good, the bad and the ugly that comes with each.

Two of the main tools we will use to examine ICO's are White Papers & CoinMarketCap.com.


White Papers are technical papers provided by the team who are selling the coins. These papers aren’t audited by any government entity so their accuracy should be taken with a grain of salt. They’re not ideal but it’s usually better to have some insight as opposed to having none.


CoinMarketCap hooks into the API’s of various cryptocurrency exchanges and calculates a volume weighted average for different coins. Again, unregulated but having some info is better than none.

 

SKINCOIN

Skincoin (Photo: Skincoin)

Skincoin (Photo: Skincoin)

GOAL

“Our main product under this ICO is creating an exchange service with a convenient API for connecting to the third party websites, so that they can accept payments in SKINCOIN without having to open and maintain their own stores.”

 

THE GOOD

Gambling is a lucrative space within eSports with skin betting estimated to be a $5B market. The developers also operate several skin related websites that they hope to plug SkinCoin into. (Steamtrade.net, Skinwin.com, Case.club and Dotashop.net). Outside of those little things like ethics and morality, it seems that the team knows the market they are planning to operate in.

 

THE BAD

It remains to be seen whether SkinCoin will offer enough functionality to be adopted by sites other than the ones owned by its operators.

At the conclusion of the ICO, the market cap spiked and then promptly plummeted to $3.4M. By cocktail napkin math, the creators control somewhere in the neighborhood of 82% of the the tokens.

 

THE UGLY

Valve (and various government entities) have previously attempted to shut down skin trading websites. While these sites are no doubt profitable, SkinCoin is choosing to operate in a very legal grey area. 

Horror stories abound of minors circumventing age gates, getting addicted to gambling and racking up thousands of dollars of debt on their parent’s credit cards before they are even of a legal age to wager.

 

FIRSTBLOOD.IO

Firstblood.io (Photo: Firstblood)

Firstblood.io (Photo: Firstblood)

GOAL

“FirstBlood will be the first decentralized app, built on top of Ethereum, that allows eSports enthusiasts to compete in their favorite games through a decentralized, automated platform.”

 

THE GOOD

FirstBlood completed it’s ICO in October of 2016 when Ethereum was trading at ~$10, raising $5M. In Spring of 2017 Ether spiked to a peak of $391 and has recently been hovering around $300. If they kept their funding round in Ethereum to this point — Firstblood would sitting on a $150M warchest.

Since their raise FirstBlood has built a team, launched a platform, and seen the value of their token spike to $2.05 and then settle at $0.66. The platform currently supports only DoTA 2 but they are teasing the addition of other games in the near future.

Nothing I’ve seen yet is revolutionary but the potential size of their warchest will allow them to experiment and pivot the product if need be. They’re also riding the momentum of the Ethereum developer community which could provide breakthroughs FirstBlood could capitalize on.

 

THE BAD

FirstBlood is following in the footsteps of ESEA, Gamebattles and a slew of other competition platforms in attempting to package a competitive skill based system. Before assessing the benefits of using a crypto currency for this service, it’s important to understand the intrinsic difficulties that come with operating such a service:

/01 Publishers & Developers have greatly improved their in game matchmaking and competition features [Edit: As well as the platforms themselves] .

Many other tournament platforms have been launched and shuttered (Virgin Gaming, XFire, Avyd, etc and from a user perspective the value provided by these services is not worth the difficulty of using an outside service. Yes you can get introduced to other serious competitors - but managing accounts, reporting matches and  managing disputes is tedious - which in large part has prevented these services from scaling.

/02 Skill based platforms tend have sharks who prey on newer entrants. A few of the top players will take money from newbies, drive away the newbies, and ultimately stifle growth.

 

THE UGLY

When I reached to reference the accuracy of the archived FirstBlood White Paper linked above a representative for the company said that there is no current White Paper for First Blood. This leads me to think that the product has pivoted beyond the vision that was shared prior to the ICO.

 

NEVERDIE

Neverdie (Photo: Neverdie)

Neverdie (Photo: Neverdie)

GOAL

“The purpose of the NEVERDIE Coin and Teleport Token is to turn the mechanics of buying a new life in a game or traveling within a game or between games into a utility that requires universal tokens. With a limit to the number of tokens in circulation, these utility tokens gain an intrinsic value as the demand to utilize them grows.“

 

THE GOOD

MMORPG’s have millions of people playing them with the digital goods found in these games having real life dollar value with NEVERDIE hoping to become the currency that is used to trade these goods. They have two products on the market — the NEVERDIE Coin & the Teleport Token.

The market cap for virtual goods is increasing, so this is a good place to be. To aid with strategy Neverdie has secured the services of Richard Garriot — a pioneer in MMORPG development.

 

THE BAD

What value these two tokens can provide remains to be seen. Exchanges for MMORPG digital goods exist, however publishers are incredibly wary of secondary markets and Neverdie is going to need their support to improve their product.

 

THE UGLY

Neverdie has the lofty goal of creating 1 billion jobs in virtual reality worlds. In practice, the wages for these type of jobs are incredibly low and in the past has resulted in unscrupulous digital slave shops to be built.

 

HUNGRY PANDA

Hungry Panda Games (Photo: Hungry Panda Games)

Hungry Panda Games (Photo: Hungry Panda Games)

 

GOAL

“The HPGC token can be used to pay for premium in-game content, compete in eSports competitions, share in yearly game revenue payouts, or sell on an open exchange.”

 

THE GOOD

HPG hopes to finance their video game studio and projects via Ethereum and the blockchain. Looking back to 2009, Riot benefitted greatly by being a first mover in the freemium space. If the Ethereum model succeeds, Hungry Panda Games could find themselves owning a financing pipeline that could grant them a lot of freedom to experiment and innovate.

Profits from the studio will be split among token holders and a percentage of studio revenues will be used to buy tokens back. This “stock buyback” program may serve to drive token prices up, which is lucrative for token holders.

Finally the studio says it will focus on traditional forms of distribution as well thereby diversifying risk by also incorporating traditional monetary systems.

 

THE BAD

Hungry Panda’s website states that they have a 15 member team that has worked for various studios - which would be more compelling if more information was provided.

 

THE UGLY

Their team identity hasn’t really been revealed, the website is amateur looking and everything found online is from their press release. For all their AAA experience it’s surprising the limited amount of credibility Hungry Panda Games has managed to establish.

 

 

Conclusion: The ICO space is incredibly active. There will be a few huge winners and many losers. Unikrn with Mark Cuban and Na’Vi’s past owner are also offering huge ICO’s in the eSports space and there will be more after them. Cryptocurrencies have spiked and it remains to be seen to what degree this will be a sustainable market. 

We will look at the upcoming batch of ICO's in the next part of the blockchain series.