June 19, 2018
The Emergence of Competitive Fortnite
Summary:
Fortnite has dominated the news the past six months. The recent announcement by publisher Epic Games that its $100M commitment to Fortnite esports will specifically exclude the notion of franchised leagues comprised of established esports teams, creates further opportunities for esports orgs to create value outside of publisher-run, closed ecosystems.
Our Take:
A recent search of the 2018 Meta Reports reveal just how much mindshare Fortnite has taken up recently as the established most popular game in North America. Catalyst’s co-heads of esports, Avi Bhuiyan and Bryce Blum, had a thoughtful back and forth in the May 22nd edition of TMR regarding what the $100M prize pool might mean for players and viewers.
As the two franchised leagues, OWL and LCS (Europe) embark on further expansion, piggy-backing off the success of the 2017 franchising process, esports team valuations continue to rise. Although not the exclusive reason, among the biggest drivers of valuation increases for orgs has been admission into either OWL or NA LCS, or both, as investors have largely bought into the notion that a permanent placement in a league is an asset with intrinsic value independent from the financial benefit (or detriment) provided by sponsorship, media rights, and merchandizing attendant with the league membership.
Competitive Fortnite may offer savvy esports organizations with an opportunity to create value for themselves without the onerous admission fee charged by publisher-run, franchised leagues. We’ve already seen many esports orgs sign Fortnite personalities under their banners, but the clever ones will find ways to monetize outside of merely folding those streamers under their existing Twitch deals. Team Solo Mid, in particular, got ahead of the Fortnite wave and established its presence (in multiple ways) within the Fortnite ecosystem and is now reaping many of the financial benefits of its prescient move.
I believe the orgs that figure out how to effectively leverage their entrenched positions in the franchised leagues and continue to develop ways to expand their brand into new non-franchised ecosystems like Fortnite will create further value separation between the haves and have nots. I believe we are embarking upon an era of franchised valuations where not all boats will rise with the tide and we will see a handful of orgs pull away for their competition and get outsized valuations and returns for their investors.
Riot's Ruling
Summary:
On Sunday, Riot’s servers crashed during a match between Clutch Gaming and Echo Fox on the opening weekend of the Summer Split of the North American League of Legends Championship Series (NA LCS). While Riot has backend technology called Chronobreak that would typically allow them to restore the game from a recent point in time, that technology wasn’t able to be used in this instance. Riot was therefore forced to either have the teams replay the match from the beginning, despite the fact that Echo Fox had a significant lead, or award the victory to Echo Fox as was expressly permitted under the NA LCS Rules. Riot opted for the latter, marking the first ever awarded victory in the history of the NA LCS.