Franchising has brought a growing circle to Esports, where teams, players and fans can enjoy together for generations.
In many countries around the world, Esports has been recognized as traditional sports. Therefore, Esports tournaments have also transformed into commercialization, i.e. franchising.
Franchise – New trend of Esports
In January 2016, Riot officially announced that the largest League of Legends tournament in North America, the LCS (League of Legends Championship Series) will apply the franchise format for the first time in Esports history. Not long after that, Activision Blizzard continued to announce a branded tournament system for Overwatch and Call of Duty games (Overwatch League – 2018 and Call of Duty League – 2020).
A representative of Riot Games said: “We have considered switching to a tournament franchise model since 2018. We have considered various models and legalities of organizations through the partnership. with a number of corporations. Through this, what we aim to do is create stability and attract investment for teams and tournaments to improve their capabilities and create a development circle. Like baseball or football, we hope that esports will also become a sport watched by generations.”
In February 2020, Riot Games Korea officially applied the franchise model – Franchising for the LCK tournament starting from the 2021 season. This model has been applied to North America and China regions in the year. 2018 and Europe 2019. Among the four major regions, South Korea is the latest to apply this model.
Franchising brings steady growth to Esports
Before the franchise begins, esports organizations that want to maintain their teams will have to find sources of income from sponsorships, advertising, and prize money from the tournaments they attend.
Riot Games has proposed a development circle where teams, players, and fans can enjoy together for generations. When this model is applied, the biggest change will be the elimination of promotion and relegation rounds. This is the core thing because the promotion – relegation will greatly affect the management investment of the organization. Organizations will have more opportunities to invest in their products and sponsors because they can be assured of their position. The profits of the tournament will also be divided among the participating teams so that they can form a more stable financial structure.
As revenue grows, teams can invest in roster quality with the strongest possible team. In addition, the teams are also required to build a reserve squad to ensure future development. With teams and players focused on playing in such a competitive environment, it is more likely to produce star players, thereby continuing to attract audiences to continue to stick around. stick with this game.
Franchising is a mixed development strategy that includes marketing, distribution and sales. In which, the organization owning the brand (the franchisor) licenses an individual or business (the franchisee) the right to do business, based on intellectual property, thereby helping to develop brand awareness and increase brand awareness. finance between the two parties.
This model ensures a safe and sustainable investment environment, protects the interests of investors and thereby enhances the value and quality of the tournament. Franchising was originally applied to traditional sports, and was started by game developers in 2017. Currently, all major regions of LCS, LEC, LPL and now LCK have moved to franchise form.
This change also brings many benefits to the players as they will be guaranteed a more stable source of income. Typically, in the LCK tournament, the minimum wage of a player is 20 million KRW (~16,180 USD ~ 428 million VND) and this number has increased at least 3 times to 60 million KRW (~ 48,540 USD ~ 1. 28 billion VND) after the tournament changed to a franchise format.
Franchising also entails many traditional sports organizations investing in Esports. Even the owners of the NBA and NFL teams also invest in the top e-sports teams in North America.
Franchising provides a stable source of funding, businesses are also bolder to invest because there is less risk. However, this is a big barrier for individuals or organizations who want to jump into this market.
To get a place in the commercialized system, an individual or organization will have to spend a huge amount of money because the league does not have a promotion and relegation mechanism. This also somewhat reduces competition and attractiveness in some tournaments, because teams will not need to fight hard to stay relegated.
Team additions do not always bring positive results, as they can cause the quality of the tournament to go down, and at the same time erode the fitness of players and people involved and operating.
Although there are still some inadequacies that cannot be overcome, in general, the franchise still marks a big step in the development of Esports. The outstanding problems such as salary debt will certainly be solved, in addition to the sustainable investment for Esports organizations. Most importantly, franchising solved the phenomenon where many teams often “jump” from one sponsor to another. Each move changes the name, losing the core value for the brand of the organization.