AFK Weekly: Is Playstation Reviving Console Esports?
Hello everyone! It has only been a few days since the New Year, but esports is already off to a wild start with European organization Team Vitality announcing a $56M USD investment which would be utilized over the next three years to build European teams capable of winning in the biggest esports titles. Additionally, Vitality has also inked a partnership with blockchain network Tezos. The details of what that three year deal entails are still pretty vague, but according to a release, the partnership is expected to reward and educate its fans on blockchain and its benefits.
However, the start of the year has also not bode well for all esports and gaming organizations globally. The Chinese government’s ongoing freeze on video game licenses has extended to 2022 with no end in sight. The crackdown has reportedly resulted in 14,000 gaming-related companies going out of business and mass layoffs.
Here’s a breakdown of this week’s most impactful and important esports business news and more in the latest edition of Esports Business Insights by AFK Gaming.
- Vignesh Raghuram, Supervising Editor, AFK Gaming
PlayStation Tournaments for PS5 could reinvigorate console esports
Sony Interactive Entertainment is looking to bring esports to everyone (who can actually get their hands on a PS5) with the announcement of a tournament feature coming to the console this year. The feature was teased at CES 2022 by SIE President and CEO Jim Ryan, revealing the update known as PlayStation Tournaments would be coming to the highly coveted console some time in 2022.
Very few details are known about the feature at this time, but Sony filed a patent for “Online Tournament Integration” last Summer, suggesting that the feature could allow games without any competition support to run tournaments through the console.
Key Takeaway: While third-party tournament organization websites are plentiful in the esports space, we often underestimate the barrier to entry that console gamers have when trying to engage with esports. So much of the industry relies on PC functionality and features. While it is unlikely that PlayStation Tournaments will itself create a robust global tournament ecosystem for any game, these sorts of features are critical to giving more casual gamers a taste of the competitive world. PlayStation Tournaments could play a key role in converting more console gamers into esports fans in the future.
Tencent reduces stake in Free Fire-owner Sea to raise $3B
Chinese tech giant Tencent has divested some of its shares in Sea Ltd, a Singapore-based holding company for Free Fire developer Garena and ecommerce platform Shopee, to raise $3B amid China’s antitrust clampdown.
Tencent sold 14.5M shares in Sea at $208 each, reducing its equity interest in the company from 21.3% to 18.7%. Following the announcement of the divestment, Sea’s share price reportedly fell 11.4%, closing at $197.84 on Tuesday.
Tencent's voting power in Sea is expected to be reduced to less than 10% after the divestment. The tech giant will also be restricted from selling any more of its Sea shares during the next six months, due to a lockup period.
According to Tencent's announcement, the company intends to retain the substantial majority of its stake in Sea for the long term, and added that it would continue its existing relationships with the company. Tencent also noted that the $3B capital would “fund other investments and social initiatives.”
The divestment has also led to a significant dip in the net worth of Forrest Li, the chairman and CEO of Sea. According to Bloomberg, Li has lost almost $11B of his wealth since the American depositary receipts (ADRs) of his company peaked on Oct. 19, nearly halving his net worth.
Key Takeaway: In the short term at least, Tencent's divestment is a problem for Sea's stock price and its CEO Li, who lost $2B in the last couple of days, but Li will ultimately benefit from Tencent's lowered stake, giving him improved voting power of 57%, up from the 54% he currently enjoys. Prior to this, Sea’s stock was already on a downward trajectory, a trend that began in October of last year. As for Garena, it will likely not see any long-term effects given that its mobile battle royale game Free Fire will continue to be one of the most popular games in the world; it was the second most installed mobile game worldwide in November, with nearly 22M installs, representing a nearly 19% increase from November 2020, according to Sensor Tower data.
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Call of Duty Cheat Maker Sued By Activision
Call of Duty (CoD) publisher Activision Blizzard has filed a lawsuit against cheat maker EngineOwning for "unlawful conduct" and diminishing the experience of its games for "legitimate customers." The company is seeking maximum damages of $2.5K per violation and has alleged that the cheat makers had enabled “at least tens of thousands” of cheating incidents. EngineOwning currently sells cheats for multiple CoD titles, Overwatch, Battlefield, and Halo Infinite, amongst other titles.
Super Smash Bros. is the most popular fighting game among esports fans
According to Internet-based market research firm YouGov, Super Smash Bros. emerged as the most popular fighting title in esports with 14% of hardcore esports fans following the title. In November, Nintendo partnered with Panda Global to officially announce a championship circuit for both Super Smash Bros. titles. The community will have the opportunity to increase its lead over second placed Mortal Kombat, which also enjoys popularity amongst 14% of hardcore esports fans.
Honor of Kings introduces new Social Credit Score system
Tencent Games is implementing a new social credit score system in Honor of Kings, one of the most successful esports titles in the world, generating $2.8B in global revenue, according to Sensor Tower. Henceforth, players with a credit score of anything lower than 100 points will not be able to use features such as the voice chat and other social functions. According to the company, the credit rating is measured by assessing account details such as daily activity, game assets, security contribution, and punishment for cheating.
DRX acquire Vision Strikers’ parent company eDreamWork Korea
South Korean organization DRX has acquired eDreamWork Korea, the parent company of esports organization Vision Strikers. Following the acquisition, Vision Striker’s current Valorant, Warcraft, and Tekken lineups will play under the DRX banner moving forward, with the two organizations expected to fully merge its lineups in the near future.
Virtus.Pro claims to have achieved profitability in 2021
In an annual financial report posted on its website, Russian esports organization Virtus.Pro (VP) has claimed that 2021 was its first-ever profitable year since its inception in 2003. The company earned $2.9M in prize money in 2021 and extended their partnerships with various companies including Parimatch betting, HyperX, and Haval automobile. It also signed a three year deal with ByBit, making it VP’s official cryptocurrency platform and NFT partner.
On the Horizon
It is time once again for one of the most-watched annual events on Twitch. Each year the best speedrunners gather together for an intense marathon charity event known as Awesome Games Done Quick. The telethon-style event will raise money for the Prevent Cancer Foundation, hoping to surpass last year’s total of $2.7M. In total, the Games Done Quick organization has raised over $34M for various charitable causes over the years.
AGDQ is a unique event on Twitch, combining technical prowess, competition, and nostalgia in a way that no other gaming event can match. If you’ve ever wondered how a game you spent months beating could be dismantled in mere minutes, it’s worth a watch.
It is also nearly time for the League of Legends competitive season to begin. China’s LPL will kick things off on Jan. 10 with the LCS Lock In tournament soon to follow. There is little time to rest in the esports world as Edward Gaming had only two months to recover before beginning the road to defend its World Championship title.
People on the Move
It's been a busy week for the esports and video games industry as people return to work from holiday vacations and finally share their secrets about new jobs. In fact, there were so many that we couldn’t include all of the promotions, hires, and exits we found this week. Here are the most notable plays:
Dr. Claudio Kasper has left his role as managing director of FC Schalke 04 Esports. Team BDS acquired the organization’s LEC slot last year for roughly $31.54M.
Dominic Kallas, former head of U.S. operations at Gen.G Esports, has joined TSM FTX to take on the role of VP of esports.
Astralis names Mads Rasmussen as its new senior partnership manager and Mikkel Schiott as its partnership manager.
Michael Schwartz has joined OG Esports as its new head of esports. Schwartz left Immortals Gaming Club in November and has previously worked at Los Angeles Valiant and CLG.
Tracy Parkes has been promoted to the new role of national sales & partnerships manager at Team Liquid.
Benson Te joins Galaxy Racer as its new commercial & partnership director for APAC. Te joins from Mineski Global where he spent more than seven years in various roles.
eUnited renews its contract with Matthew Potthoff, who will continue on in his role of general manager and VP of esports.
Penta Esports appoints Anand Rajwanshi to the role of chief creative officer.
Former FIFA exec James Woollard joins BLAST as its new head of commercial solutions.
Ben Hosford has been promoted to the role of commercial operations executive at BLAST. He joined the tournament organizer in June of 2021 as commercial operations coordinator.
Chris Hana leaves SBJ/TEO to join the executive team at Epics Collectibles.
Former MAD Lions E.C. FIFA pro Javier Miranda will take on the role of games sales and esports coordinator for WarnerMedia in Mexico.
Tiidal Gaming names Tom Hearne as its CEO and a member of its board of directors.
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