The impact of COVID-19 on the esports organization OverActive Media / MAD Lions
Interview with Christopher Overholt, CEO of OverActive Media, about how a Canadian organization entered the European esports market, the challenges of COVID-19 and the relevance of non-endemic partnerships.
What are the changes that the COVID-19 pandemic has brought to esports organizations? MAD Lions can illustrate the changes since the outbreak of the pandemic from the perspective of the esports teams. We interviewed Chris Overholt, who has more than 25 years of experience in the elite echelons of the sports industry and now leads Toronto-based OverActive Media Group, one of the most diverse and influential esports organisations globally. That global esports stable includes the Toronto Defiant (Overwatch league), the Toronto Ultra (Call of Duty League) and the MAD Lions (League of Legends / LEC and CS:GO / Flashpoint).
Dear Mr. Overholt, please explain to us how a North American esports organization with two Toronto-based teams found its way into the European market.
To say that we are excited about the European piece of our operation would be dramatically understated.
We, as an organization, started with an Overwatch Franchise in Toronto as our first reach into esports. We began with the intention of building a global company. While looking at individual markets, we realised there could be significant opportunities in the Spanish speaking esports market.
There are 400 million people that speak Spanish in the world. Yet we couldn’t find a single organization that could claim to be an authentically Spanish esports organization at a significant level. With that in mind we started looking into Spain as a first step to identify a strategy there.
Last year, your teams under the Splyce brand were merged with the newly acquired MAD Lions and subsequently rebranded. In what way does this complement your vision?
In 2019, we secured our slot in the European League of Legends competition LEC. At the time, we had largely been afforded that opportunity through our Splyce team (Editor’s note: Splyce originally had its origins in the USA). In fact, in our first year in the LEC, we were playing under the Splyce brand.
Before we identified the opportunity around the MAD Lions, we thought about how we could transplant the Splyce brand into Spain. When the opportunity arose, we were excited to acquire the MAD Lions as an OverActive Media brand as that was the chance for us to be authentically placed inside the Spanish speaking esports community.
As a result, we have been very well received by the community at large – not only the Spanish speaking community that supports our SLO team in Madrid but more broadly by the Spanish and English speaking fans of LEC and League of Legends.
In a short period of time – largely because of our Spanish position under the MAD Lions brand – we became one of the more popular teams in the LEC.
Let's play! 2020 - The European esports marketopen in new window Visit the website
And this popularity in turn will result in commercial benefits for your organisation?
I think the European market place generally is quite fractured in a commercial sense. For instance, there are few Pan-European brands. In recent weeks, we announced new relationships with imaginBank and Kappa. These are both very focused on our presence and reach in the Spanish audience.
This supports our regional approach to marketing and commercial attachments. We believe that the change we will see in esports in the coming years is less about global organisations because the fanbase – and as a result the commercial attachment to that fanbase – is more city-based or regional in its orientation. Both of our teams are positioned as MAD Lions so that Spanish fans can cheer for both of them and commercial partners in Spain can have direct attachment to the teams.
When we joined the LEC in the first place, we were very intentional about choosing Spain and the SLO as our regional attachment. All of our research showed that the Spanish fans were highly engaged, very passionate and loved and supported their teams. They were also overly supportive of League of Legends as well.
You just mentioned your new deals with Kappa and imaginBank.* Could you give us an assessment of how non-endemic brands engaging in the esports market might change the dynamics of the industry?
From the beginning, it has been core to our strategy to work with non-endemic brands. We are thinking on a long-term basis because this is the only way to reveal the potential of this industry.
When we announced imaginBank as our new banking partner, this post produced over 200 million media impressions for imaginBank and MAD Lions together. That is the third highest media impressions registration in our history and is mostly driven out of the media audience and social media following among our Spanish fans. We couldn’t be more excited or optimistic about what we are doing in that regard.
Our relationship with imaginBank is entirely predicated on their broader strategy for reaching into the lives and having early influence in the financial planning of millennials and Gen Z. They have a prolific reach into that market place – as do we with our core influencers and player following.
Our deal with Kappa will likely be a three year deal. Their experience, marketing background and e-commerce expertise will allow us to understand e-commerce and how to do it strategically in a way we could not afford if not for Kappa. It’s very difficult not only to build the structure but also the strategic and financial support you need to set up a proper e-commerce solution. For Kappa this deal offers the possibility to bridge their brand into esports.
The potential of our brands both in Europe and in North America lies in strategic relationships. We focus on how we can bridge non-endemics into this space and do that credibly and authentically.
* Shortly after the interview, the MAD Lions announced a further deal with DYVIP, a Chinese betting provider.
One element that ought to provide planning security for both teams and financial investors is the franchise mode introduced by multiple leagues. What is your overall assessment of the new format, especially as you compete in the LEC?
As an owner and operator, it’s very liberating not to have all the weight that traditional sports carry to be forced into having a relegation system.
To give an example, our Splyce team performed beyond expectations last year, finishing 8th in the World Championships. However, our team consisted largely of veteran players who were free agents and would have demanded more money than we could have been expected to pay in the first year of operations of our new organization.
So for the most part we let them move on and instead focused on scouting and identifying promising young players. The result now is that we have a very exciting team of young players who have been playing brilliantly and have built up a wonderful social media following.
If we were worried about being relegated, that might have caused us to think differently and we might not be in this position now. This way, we are liberated from that pressure and liberated to do the right thing long-term for our fans, our investors and our commercial partners.
European audiences are traditionally considered friends of the promotion and relegation system, as it brings excitement to the competitions and gives newcomers and underdogs a chance to establish themselves.
I don’t think it’s appropriate to draw a straight line between what traditional sports have been and what esports is or will become. We compare esports to traditional sports because it’s our frame of reference. There are some ways in which both are similar and there are some reasons why it doesn’t make sense to compare the two.
Similar to traditional sports, we believe that the strongest esports brands over time will largely be built around a regional fan base because you can target and be authentic to that community and draw a connection to them in ways that you can’t if you’re trying to be a brand for the whole world. Part of the reason we love the Madrid Lions as an opportunity is because we love the city, we love its energy and the passion of the Spanish people. We see something that we can hold onto and build around there.
We follow that same model with our Call of Duty and Overwatch teams in Toronto. From the very beginning, we thought about how we are going to build a home not only for ourselves but also be a de-facto home for esports in Canada. In that regard, esports can be compared to traditional sports.
However, I don’t think our community thinks about a relegation system at all or would ever insist that it should be a part of the LEC. There is a whole generation of fans who only have a peripheral interest in football. Clubs like Barcelona and Valencia are starting to demonstrate that they think about these audiences. Barcelona, for example, have a Rocket League team. I don’t think all of the conventions that come with traditional sports are necessary for esports being relevant to this audience – they like what they like.
We need to show to our investors, our commercial partners, the leagues that we engage with and the fans that we are professional in the approach that we take. However, we need to – and perhaps more so than traditional sports organisations – be listening and be sensitive to the feedback of our fans.
The COVID-19 pandemic has changed everyday life as well as the dynamics of the esports industry. How has the daily routine of your organisation changed since the outbreak?
While we are all at distance and are using video communication to stay in touch, our organization is probably more connected than ever before. We are more in tune with the thoughts, intentions, frustrations and concerns of our people.
In a strange way, it has been a wonderful plus for our organization to be focused on each other and the things that are important. It has been good for us to be reconnected through all of this in a positive way.
The time has not been without its challenges though. From a player’s perspective, it’s been hard for these young people who are typically living away from home. In times like these, people want to be close to their family and loved ones. At the same time, our players are best when they are close to each other and can relate and talk to each other. It has been difficult for us to explain to them why they need to stay here and honor their responsibilities to their teammates and to the business.
Those have not been easy conversations but we as an organization and the industry in general has managed the crisis very well. I have to credit our league partners – whether it’s RIOT or Activision Blizzard or Flashpoint – they all found a way to still reach our fans and at the same time retain relative competitive integrity.
You mentioned the pressure on these young players. How do you as an organization make sure the players can cope with this pressure?
We have been spending a lot of time thinking about what it means to be a pro esports athlete. That’s a conversation I try to have as often as I can with our players.
There is more money arriving into the ecosystem whether it is from investors, marketing partnerships or league revenue shares. All of that is great for the industry and great for team organisations like us. It’s equally great for the players. As long as there is more money coming into the ecosystem that can only mean good things for them and good things for how they are compensated for the thing they do so well.
It’s equally true that if you are a player today, you are on the downside of the career by the time you are 24 or 25. We are working hard on establishing discipline, protocol and processes as an organisation.
What exactly does this hard work look like?
Players need to understand what it means to be supported by a team psychologist or somebody than can help you with your physical well-being. Their physical and mental wellness are a priority for us in our conversations and in our planning.
We are looking at different partners and technology that can help us with things like sleep, nutrition and hydration and how they all matter to performance. While players might not necessarily think of these things normally, it might extend their career by two or three years and they might make more money in the last three years than they did in the first five.
We want to be an organization that has a reputation for helping players with that. We want to be a place that might not be the easiest place to play for because of the expectations that we have but we might offer the best chance in terms of having a long, successful and economically rewarding career.
Your descriptions show that you have been able to adapt your processes quickly and flexibly to the new challenges posed by COVID-19 while maintaining your competitiveness. Does this create opportunities for your organisation?
First it needs to be said that if we could wish all of this away we would. It’s been a difficult time for a lot of people. In these circumstances you look for positive unintended consequences to hold onto. Even though we had planned a number of live events and they were all cancelled, we have managed to pivot our relationships and have found new ways to bring value to our marketing partners.
I think whatever curve the industry was on before COVID-19, it has been accelerated by two or three years in several ways. Marketing partners are realizing the very sizable opportunities that exist around the global audience of esports. Non-endemic brands particularly are starting to understand the reach, influence and impact of esports.
We have seen a rise in audience numbers. We currently achieve average viewership numbers that are record setting as it goes to League of Legends globally. The audience is more significant and more engaged and as a result, partners are taking notice of all of esports’ potential.
Do you expect this effect to be a lasting one?
It will be interesting to see how it will look like once the pandemic is over. My expectation is that the gains that we’ve seen in esports will not be undermined with the return of traditional sports.