Regardless of one’s view on the long-term prospects of Overwatch as an esport, leadership at ATVI and Riot Tencent are quite smartly beginning the process to bring structure to League of Legends and Overwatch, which will necessarily make both leagues more hospitable to investment from outside the industry.

Details surrounding OWL have been scant and largely shrouded with mystery over the past few months.  The industry scuttlebutt increased dramatically after the much-maligned Morgan Stanley report published on March 26th sought to illustrate the potential for OWL as accretive to ATVI’s stock price.  Some further details have emerged, through what appear to be orchestrated press leaks and quiet whisperings among those briefed by OWL representatives over the course of the past year.

Until the offering to new owners is finalized and published, it is unproductive to opine on the virtues of paying a hefty multi-million dollar franchise fee to enter OWL.  However, in the course of discussions with numerous prospective OWL team owners, one common theme has emerged among those seriously considering the OWL investment; namely, fear of missing out (FOMO).

FOMO is a common market phenomenon, usually exacerbated by recency bias.  Few people, not even billionaire sports team owners, want to feel left out of the club if they fail to act now.  The OWL has many markers positively correlated with FOMO behavior; (a) hot sector (esports); (b) respected anchor/early investor (Kraft Family), and (c) industry buzz (self-explanatory).  OWL is quite smartly trying to create an environment where FOMO will drive otherwise skeptical or conservative actors to take the plunge.  More importantly, it seems to be working, at least for now.

We continue to advise our clients and those seeking our advice to take a patient approach to OWL and wait until all the details are finalized.  ATVI’s management is very clever and we expect them to shift and conform the details to maximize demand for their team slots.  In the meantime, the old investment wisdom of portfolio diversification remains impactful, even within esports.  The great thing about esports is there is likely to be multiple entry points for those owners and investors looking to make a prudent investment in the industry.

We think there’s a difference between “isn’t a [immediate] priority” and “isn’t something we care much about,” and clearly the former is closer to the case with Bluehole. While “esports isn’t a priority” is the tagline of the interview, Greene also notes that Bluehole has already hired on well known caster and PUBG leaderboard regular Chris “Panky” Pankhurst as an esports product manager for the game, and it’s clear the team is thinking about key core esports product questions like how to fine-tune spectating capabilities for the game.

It’s very clear that the esports team behind PUBG clearly lives and breathes the game. Given the format itself, which is very different from more traditional five-on-five style team esports like MOBAS and FPS games or even 1v1 fighting games, it allows for unique esports product innovations. Greene described a Hunger Games-esque idea he has batted around where “you have a [Hunger Games type] showcase match where the audience can interact with the game from their phone.” He also mused about the idea of “64 players sitting in the centre of the arena and having the first person have to get up and walk off and that kind of big, massive player base playing for a massive crowd.”

Time will tell what formally organized PUBG esports looks like, but in the meantime Greene and the PUBG team are taking their time to get the details right and also looking to grassroots support for the game to help guide their product roadmap which has traditionally been the most successful way to nurture a competitive esport.

Without going too deep into why the price of the slot is what it is (EU vs NA, sale time window, other inventory), I’ll focus on the binary decision at hand: to buy or not to buy? The reasons not to purchase the EU slot are diverse: Riot is likely going to sell franchise slots in 2018, there is no guarantee that current LCS teams have the option of staying in the league, operating costs of a LoL team could be over $1M per year, and time and effort it will take to rebuild a LoL brand when the org could focus on other titles could prove disastrous. Without the threat of impending franchising, this may be an effort worth seizing however, spending over $1M to play in the EU Summer Split is not worth that price tag.

On the other hand, this could be a play by NiP to woo a potential investor (and Riot) into securing a franchise spot once the details are confirmed. A recognizable esports brand that gained notoriety through its successful CS:GO roster paired with a partner with existing infrastructure of a pro sports team is a combination that wouldn’t quickly be glossed over. In addition, NiP may have existing sponsors (a collection of the usual endemic brands) interested in extending their current arrangements or non-endemic partners ready to engage the CS:GO powerhouse that will have diversified their game offering and by extension, their fan-base. For now, we’ll have to wait to see how this decision will play out for Ninjas in Pajamas.