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MTG acquires majority stake of ESL –The first traditional media big fish has splashed into E-sports

Modern Times Group’s investment is a first-adopter from traditional media into digital entertainment.

In April 2015, traditional media had already recognized E-sports for its financial value. Sweden-based Modern Times Group, owner of the Viasat and Viaplay subscription-based channel brands operated in Sweden, Norway, Denmark, Estonia and Eastern Europe, is largely based in free-broadcast radio and television as well as television subscription and video on-demand services.

As the MTG press release said it:

“the average revenue generated per esports enthusiast in 2014 was just over USD 2, compared to USD 56 for traditional sports enthusiasts, so this global phenomenon has tremendous potential” said Jørgen Madsen Lindemann, MTG President and CEO. “This investment is a key milestone in our digital development. We look forward to working with the talented Turtle team to grow the global esports community, and to make this exciting content even more broadly available online and on TV.” – See more at: http://www.turtle-entertainment.com/news/mtg-to-acquire-the-majority-stake-in-the-worlds-largest-esports-company

Needing to profit aside, I personally dislike their view that e-sports needs to have an “average revenue generated per enthusiast”. E-sports enthusiasts have their PCs, buy games and in general spread their revenue over their lifestyle. In addition to spectating games, viewers play games as well, and most certainly generate more than just USD 2. MTG cannot expect to bottleneck revenue by themselves alone as broadcasters. They, like ESL did, must look toward sponsorships (and advertisements) to boost their own broadcasting profit, rather than expecting the viewer to pay towards their profit expectations.

ESL, owned by Turtle Entertainment, have been widely successful due to their active liaisons with PC-industry sponsor companies such as PC-peripheral Company Razer, BenQ for their monitors (actively featured). Intel, which has piggybacked the ESL brand on many a Tech IT has shown how side-by-side advertising is both cost-effective as well as efficient. In fact, in 2013, during the Singapore IT Show SITEX, ESL held their Starcraft 2 and League of Legends under their flagship tournament Intel Extreme Masters (IEM) adjacent to the show itself.

ESL plays host to a huge range of sponsors, all powerhouses in the PC-industry. Credits: MTG

MTG recognizes where Turtle gets their revenue in their press release, but I will want to see how the media giant reacts to their Turtle’s business model first before giving them the benefit of the doubt. Having a single major investor makes decision-making much more streamlined – you just talk to the biggest guy – but having an investor from outside the industry raises potential ideological conflicts. MTG aims to provide traditional media coverage for ESL, “expanding their reach” through this avenue. From the ESL’s news article on the purchase –

“What does the sale to a media group with TV stations mean for ESL, esports and online viewership? It allows us to reach an even wider audience and explore new opportunities. We will continue to work with our longstanding and awesome online partners but can now also explore avenues and channels which were previously difficult to get into.”

– Traditional media have its name for a reason, and I rather not have any ironies occur from the “Modern Times Group” in terms of business practices when it comes to bringing new content into a dated field.

MTG has acquired 74% stake in ESL, paying Turtle Entertainment EUR 78 Million for it. Turtle Entertainment will retain total control over themselves business-wise, similar to the Twitch-Amazon deal. MTG is simply investing to grow the company whilst enjoying some of the potential growth this industry has to offer: “Turtle is expected to grow its revenues [sic] by 50% to approximately EUR 50 million in 2015.”