EG’s been getting a lot of questions about the situation, and I’d like to clarify our stance on some of the issues.
Why isn’t EG part of the MLG referral program for the Winter Arena?
MLG offered us the opportunity to participate in their referral program for the upcoming event, but we declined, for several reasons. Before going into why we declined, I’d actually like to applaud Sundance, Lee, and everyone at MLG for a moment, because they took action and proactively composed a revenue-sharing program of sorts, which is the kind of thing that we desperately need to exist between teams and tournaments in this industry. It’s a notable first step, and I think they deserve credit for being willing to go there.
With that being said, allow me to elaborate on why EG declined to participate in the program. Our overarching reason ties directly into another common question we’ve been getting:
What do you think of the $20 price point?
I think it’s too high - especially within the context of how other SC2 content providers’ packages are priced. I think that the weekend should cost $10. I think MLG would actually make more money with a $10 price tag for the weekend pass, because I think they’d get more than twice the subscribers at $10 than they’ll get at $20. But that may be just me.
Anyway, that’s the primary, overarching reason why EG is not participating in the referral program. As a pro team, in participating in any referral program like this, you’re essentially agreeing to try and convince your fans and community to buy a particular product. You’re basically saying, “Hey, we think this product’s pretty cool, we think it’s worth your money, and ohbytheway, if you enter this code when you’re buying it, you’ll help us earn a commission on the sale.” In that sense, participating in a program like this inherently involves some kind of product endorsement (y’know, the whole “we think it’s worth your money” part), and we at EG just don’t think the weekend pass is priced correctly.
Bottom line: we weren’t willing to ask our loyal fans to spend money on a $20 dollar product that we think should’ve cost $10, while also ourselves profiting in the process. And that’s the main reason why we’re not in the referral program. To be honest, we weren’t really thrilled with the details of the program itself either, but that reasoning was secondary to the aforementioned.
But with all of that being said, and after spending three paragraphs explaining why EG declined to participate in the referral program and why I don’t think the Winter Arena pass is priced correctly, I’m now going to try and warm you guys up to buying it anyway (and, remember, as someone who declined to be a referrer, I’m not making money on this). My reasoning ties into another common question we’ve been getting from the community:
Why PPV-only in the first place? Why no free stream?
Look, I mean, I’ll be the first one to say that I’m not thrilled - at all - with any event being PPV-only. Every pro team, as a business, acts as a reseller of advertising services. Team A essentially purchases advertising space from Player X (via a contract that requires the player to, for example, wear a particular shirt), and then resells it to Sponsor Y (via, for example, placing the sponsor’s logo on said shirt).
This is what pro teams have to do in order to stay viable as businesses. And, inherent in this model is a huge reliance on tournaments (third-party businesses that teams usually don’t have any kind of formal relationship with) to do their part, construct the virtual (or real-life) stadium, and bring the virtual (or real-life) spectators. Because, if there are only ten people watching an event, it doesn’t matter how many logos are on my team shirt, or how big those logos are, they're still only going to be seen by ten people.
So, as someone who’s relying on MLG to bring in big viewership numbers in order to maximize the value which I can correspondingly report to my sponsors, the prospect of a PPV-only event (which, it seems, will result in an 80-90% decrease in spectatorship overall) isn’t something I’m happy about.
...But at the same time, I absolutely get why MLG wants to/has to give it a shot.
We’re at (and when I say “we,” I mean, teams, tournaments, content providers, everyone) an incredibly crucial moment in the lifespan of this industry. We’re at a point at which we, as an industry, need to become less reliant on third-party, outsider revenue (like corporate sponsors), and increase the percentage of our revenue that’s generated within the eSports ecosystem (direct-to-consumer revenue like subscriptions and merchandise).
The reason for this is that it’s actually still way too hard for teams and tournaments (including those you guys view as the most prestigious and the richest in all of eSports) to make things work financially. Trying to remain viable as a business based on sponsorships and non-industry revenue alone is an unbelievably dangerous path to walk, and it’s just not sustainable in the long term. And I say this as the mind behind what is commonly viewed as the richest pro team in the industry right now.
eSports companies, whether you’re talking about EG, or MLG, need to increase their direct-to-consumer revenue in order to survive long-term. For EG, that means selling more merchandise in our store, and offering a monthly EG subscription package for our fans (which you’ll see later this year, with the release of our new website). For MLG, that means - very similarly - selling more merchandise in their store, and, you guessed it, offering more subscription-based stuff (such as the Winter Arena weekend pass).
Now, does this mean that it’s okay for entities like EG or MLG to force subscription packages down your throats this year? No, of course not. I’m a huge proponent of freemium business models, and I plan on structuring EG’s upcoming subscription stuff accordingly. I wish (for a variety of reasons) that MLG would take a freemium approach (i.e., free low-quality stream, PPV high-quality stream) to their Arena events, just as they’ll do for their Championship events.
But, the bottom line is that they’ve decided that, in order to be viable as a business in the long-term, this is where they need to draw the line in terms of where to generate more direct-to-consumer revenue. It’s not that Sundance is trying to Scrooge McDuck it up and swim freestyle through Olympic-sized pools of money. He’s just trying to make his business sustainable in the long run - and that’s something I can absolutely empathize with.
You guys, as a community, talk a lot about “supporting eSports,” and really do a great job of it. I think that the StarCraft community, in particular, is better at doing so, and overall more generous, than any other professional gaming community. You guys support your pro teams (to those who’ve bought EG merchandise: thank you very, very much), and you’ve also spent a lot of money on premium content (like the GSL, and, ahem, MLG). And I hope - I truly, sincerely hope - that after reading this very long blog, you’re more open to spending $20 on a weekend pass for MLG’s upcoming event (yes, even though I don't think it's priced correctly).
For those of you who came into reading this ready to spend the $20 because you thought it was the right price for MLG’s product, I hope you still spend the $20. But, for those of you like me, who want to support eSports, and want to see prominent eSports companies like MLG stay sustainable long-term by increasing their direct-to-consumer revenue, but at the same time still think that $20 is too high of a price point (and/or think that the Arena broadcasts should be free/discounted for those who previously purchased Gold packages), please do one of the following:
A) Purchase the $20 pass for this upcoming event, but make it abundantly clear to MLG (either via emailing them, or posting on this TL thread, or Tweeting Sundance) that you will not be purchasing a pass for the next Arena event unless the price point is reduced.
B) Don’t purchase the $20 pass for this upcoming event, but make it abundantly clear to MLG (through the same avenues of communication as above) that you would have bought a pass if the price were lower and more reasonable.
C) If you’re a Gold member, whether you purchase the $20 pass or not, make it abundantly clear to MLG that you feel you deserve, at the very least, a discount on the Arena events.
or D) If you don't like any of the above, reach out to MLG in some kind of meaningful way, and tell them what they need to do in order to take your money. They'll listen.
Just, whatever you do, don't decide to punish MLG by giving them no feedback at all. It won't help them, and it certainly won't help you get what you want.
As for myself, I've selected option A. Sundance has my twenty bucks this time, and there's already an email in his inbox right now stating that, if he decreases the price for the next Arena event, he'll be able to take more of my money.
Thanks for your time.
-Alexander (CEO, Evil Geniuses)
@ottersareneat on Twitter
Edit: Added the polls.
Option A (235)
Option C (172)
Option D (75)
1781 total votes
Your vote: Which option will you pursue?
I'd pay $10, but not $20. (945)
I'm fine with the $20 price point, but I'd gladly pay $10. (205)
I bought Gold, and I think I should receive the Arena passes at no extra charge. (169)
I bought Gold, and I'd pay $5 if the regular price were $10. (111)
I bought Gold, and I'd pay $10 if the regular price were $20. (67)
2456 total votes
Your vote: How much would you pay for MLG PPV?
(Vote): I'm fine with the $20 price point, but I'd gladly pay $10.
(Vote): I'd pay $10, but not $20.
(Vote): I wouldn't even buy it for $10 or less.
(Vote): I bought Gold, and I'd pay $10 if the regular price were $20.
(Vote): I bought Gold, and I'd pay $5 if the regular price were $10.
(Vote): I bought Gold, and I think I should receive the Arena passes at no extra charge.