Following in the footsteps of the Philadelphia 76ers, does NYCFC’s move signal wider interest to come from mainstream sports?
NYCFC is owned by City Football Group, the sports group that also owns Manchester City, Melbourne City, and Yokohama Marinos. City Football Group made its first move in esports when Manchester City signed Kieran ‘Kez’ Brown to play FIFA for them back in July. With the Philadelphia 76ers and several other pro sports teams owners in the United States getting involved in fantasy-based esports, it will be interesting to see if American sports groups will take a page from their counterparts across the Atlantic who are focusing heavily on virtual sports, mainly FIFA.
I’ve been thinking a lot about the virtual sports market with my teammates at BRaVe Ventures and we recently published a REDEF Original outlining our ideas on that topic. I’ve also been an advisor to Players’ Lounge for a year now and I want to talk more about them.
Players’ Lounge started in 2014 as a bunch of guys playing FIFA for money at bars throughout New York City. They were creating enough noise to get sponsorships from EA Sports and Anheuser-Busch InBev, the beverage and brewing company with brands such as Budweiser, Corona, Stella Artois, and many more. After spending a year hosting thousands of tournaments and analyzing the market, they launched their online platform (www.playerslounge.co) this February. The platform enables gamers to play FIFA online in free or cash prize competitions.
Throughout this journey, I was able to witness firsthand the founders’ hustle. After finding out that Strauss Zelnick, the Chairman and CEO of Take-Two Interactive, was a fellow Wesleyan alum, the founders joined Zelnick’s workout group, The Program. The founders Mark, Austin, and Zach are all Wesleyan alums and notably, Team Captains of the Wesleyan University Men’s Soccer Team in 2009, 2010, and 2011.
The founders went to the 6am workouts every week for six months in a row for an opportunity to meet and to pitch Zelnick, who much to our shame, is way more ripped than us despite being twice our age. The result: Zelnick signed on as an angel investor and serves as an advisor. Another example of their hustle is when Zach wanted to meet and to pitch his idol, Gary Vaynerchuk, who is a co-founder of BRaVe Ventures.
Instead of taking the easy route and asking me for an introduction, Zach wanted to “earn the intro on his own” and (respectfully) told Gary that he would email him every day for 30–50 days until he could get ten minutes of his time. The result: check out the DailyVee 74 to see those ten minutes.
So far, great founders, check. Great hustle, check. What about their business model? The core of what Players’ Lounge does for users is peer-to-peer (P2P) wagering in esports. Right now, P2P wagering is only about 5% of the global esports cash gambling market size as compared to 92% for esportsbook betting and 3% for fantasy esports, according to research from Narus Advisors.
What makes that 5% valuable is because P2P wagering is relatively legal in the vast majority of the United States, as compared to esportsbook betting and fantasy esports. While P2P wagering is mostly legal, it isn’t without problems. The first problem with P2P wagering is the lack of liquidity. A platform needs to have a significant user base to enable players to login and match with someone in an online game of their choice at any given time. Liquidity can be solved by going very narrow, in this case, by focusing on a specific title, FIFA.
Focusing on FIFA makes sense as FIFA President Gianni Infantino unveiled his “FIFA 2.0: The Vision for the Future” plan yesterday. In this plan, Infantino announced that FIFA will establish “a dedicated team to explore opportunities and develop a business strategy that ensures FIFA is responsive to current trends and able to quickly adapt to developing trends in the eSports industry.” Combining the esports ambitions of FIFA with the esports ambitions of EA Sports, the publisher of the most successful online soccer game franchise, makes focusing on FIFA a safe bet.
The second problem with P2P wagering is ensuring that all the highly-skilled players don’t suck all the money out of the ecosystem. That can be solved by building in a matchmaking system or picking a game that already has a built-in ranked system (i.e. Hearthstone). Players’ Lounge has built out such a system called the “PLR” or Players’ Lounge Rating system. It grades you on a scale of 1–99 so you don’t get slaughtered.
Ultimately, both of these problems are frankly not worth solving if Players’ Lounge is only about creating a profitable business based off of creating a P2P platform. Players’ Lounge’s business model is building an engaged community (in this case, playing FIFA for cash) and then creating owned experiences for brands to the benefit of both. Brands entering esports today are often paralyzed by choice overload. What team, game publisher, content creator, esports platform, or tournament organizer should a brand partner with? Sometimes, the easiest way is use a white-label solution, whether it is with Battlefy, NGE, or Players’ Lounge to power a brand’s owned experience.
This has been a pretty exciting week for FIFA, for NYCFC, and for Players’ Lounge. If you’re excited about virtual sports, soccer, FIFA 17, or P2P wagering, feel free to reach out to us on Twitter (Austin, Murph, Zach, Jon).