Sam Mathews had a tough decision to make. Keep his automobile or sell it off so that his startup e-sports team could enter a video game tournament in Las Vegas. Matthews chose the latter option, parted with his prized car, and the rest is history.
That was 2004. Today, Mathews runsFnatic, which has become one of the most prominent professional e-sports teams in the world. The e-sports team has transitioned from earning thousands of dollars in prize money playing Quake to participating in Counter Strike and League of Legends tournaments with millions of dollars on the line.
The risk of entering a space before it is recognized.
Mathews was set on starting not only an e-sports team, but a brand. However, he entered the space before anyone was talking about e-sports and prior to taking on tournaments where millionaires could be made overnight.
"To be honest, it was a lot less competitive and there was lot less money involved, but there were still big names in the scene," says Mathews about competition in 2004. "When we started, we were very much the underdogs. It took about 4 years before we were the most consistent team. Our philosophy has always been to be the best, authentic and provide players the best support. And never over-promise. Back in the day a lot of people over-promised."
As Mathews built his brand, e-sports picked up the pace and now awards the top teams with substantial sums of money. By staying true to the aforesaid goals, Mathews has been able to keep his team among the top of the industry.
Building a brand is more than demonstrating success.
Mathews says that he created Fnatic in 2004 with the intention of being a brand first and foremost. He wanted to represent video gamers who not only excelled at the games they played, but looked the part, were dedicated to training and could speak to an audience.
"Picking the right people is the same in any business," adds Mathews. "It's not rocket science. We provide nutritional advice, apparel licensing, distribution. We are a long way ahead of other teams."
Fnatic is not always number 1 in every game (it recently placed in 4th at The International 6 Dota 2 tournament, cashing approximately $1.44 million). But Mathews admits that Fnatic is much more about being a brand on top of being a team.
The organization recently launched its ownline of headphones and is now getting into the creation and sale of apparel. It is also launching its first e-sports concept store in Europe, which will be its version of what retail in e-sports could be like. It is being launched in partnership with HTC, Twitch and ESL. The store will sell various es-ports teams' jerseys as well as host visitors to watch live tournaments and bring influencers to meet with consumers.
Today, Fnatic has roughly 55 people working for the team. Mathews admits that at least American teams are becoming similarly structured.
Growth of competitors can result in positive results.
Mathews acknowledges that thee-sports industry has experienced an influx of investment from professional athletes and teams. Recent investors in the space include the Philadelphia 76ers, Boston Celtics forward Jonas Jerebko and Brooklyn Nets guard Jeremy Lin.
"Every person who enters the space and brings legitimacy to the space is good," says Mathews. "Obviously, some people will get burned. It's not organic revenues that you would get from traditional sports and broadcasting rights. I don't feel very threatened by other sports people coming in, although it's heightening the cost structure of the team. But that was inevitable."
Belief that an industry outlook is modest in approach.
Mathews was not convinced when he sawa report that e-sports revenues are predicted to reach $493 million this year and that they are expected to grow to $1.128 billion by 2019.
"I thought wow that looks low," says Matthews. "It doesn't take into account game revenues, how much a company likeRiot makes off of e-sports. Maybe it is accurate if talking about media rights and ticket sales, but that's probably the least served part of e-sports right now. It's going to take a while to realize higher numbers through sponsorship, media rights and better packaging."