MLG CEO on profitability and investors, KeSPA, future goals
At the head of a long conference table, on the 32nd floor at 3 Park Avenue, Sundance DiGiovanni, CEO of MLG, scrambled to find an outlet to charge his phone. Briefly checking it, he stood up and sat down. He seemed tired. He was working all weekend to deliver the first ever League of Legends Arena to thousands of expectant viewers after all. At the same time, he seemed very relaxed, with an easy smile and a sharp look in his eye.
Since its founding in 2002, MLG has operated on the fringes of the traditional e-sports industry by giving a professional platform to console gamers. But in July of 2010, Sundance announced that MLG would be adding StarCraft 2 to the Pro Circuit, further bridging the ever-present gap between console and PC gamers.
MLG was welcomed into the traditional e-sports fold. However, the question remains: Are North American e-sports ventures profitable for businesses, and has MLG’s growth since the addition of StarCraft 2 garnered profits for the organization?
“Last year was the first year we were shooting for breaking even and we made some changes this year, it's another break-even year. There's not a tremendous amount of profit being made. I'm saying that because it's reality,” Sundance told ESFI. “We've been doing this for quite a while and we do about 20 million in revenue. But we're spending, investing a lot as well. So I think the main reason you're not going to see that is because everyone's privately held, and there aren't amazing things to put out there, and there's no reason to put it out there,” he added.
Major MLG events have become the largest e-sport tournaments in North America
Last March, e-sports fans scrambled to read into a Security and Exchange Commission document filed by MLG. While many speculated, even stating that MLG was “exploding”, financial analysts told ESFI that little could be gleaned from the filing. It simply meant that MLG was a company selling shares to foster growth, a practice that couldn’t be more common for smaller sized companies.
To raise venture capital and accelerate the growth process, MLG has relied on two investors.
“So when we go out and we speak to our investors, of which we have two-- so we've been in business for ten years; we've had two primary investors for about seven of those years. We've gone back to them a couple of times to raise more funds. That's a testament to their belief in what we're building and their patience and support,” Sundance said.
And when it comes to investors, betting on e-sports organizations may not be something venture capitalists are looking to do.
“…the reality is that when we get called into a meeting [with potential investors] we're not getting compared necessarily to other e-sports organizations, they're looking at things like the UFC, even the NFL, and saying, how do you track against these things over time?” said Sundance.
Later, Sundance remarked how important demographics have become to his business in attracting sponsors and advertisers.
“We obviously are predominantly male, picking up more female viewers over time, but not necessarily as quickly as we could if we had more focus there. I think we'll skew younger in the age standpoint, but here's a point we can't track. We're really not supposed to go much below 18, so even if we have a huge fan base of 12-year-olds that's not something we can really report back to marketers,” he said.
Photo: Zhang Jingna
While MLG’s reception into North American e-sports since July of 2010 has been overwhelmingly popular, the company has struggled to expand its international audience. In May of 2011, MLG partnered with its Korean powerhouse counterpart – the Global Starcraft II League (GSL). The North American community was ecstatic, as was MLG. But just a short time after the partnership was announced, it fell apart.
“I think we fell in love very quickly. It was a very short courting period. We were very into one another and then it kind of got complicated as we started to figure out how it was going to work out long term,” Sundance said.
But, as MLG partners up with KeSPA, Sundance is taking his experience with the GSL and applying the lessons learned to the future.
“What we're going to do is we're going to take our time and be very weary and mindful. Well I don't want to say weary but we want to be mindful of what the potential upside is for the players and for the teams and for both leagues,” he said.
"It's good to be be a little wiser going into this one, but we're not shooting for the moon each time out."
“It's good to be be a little wiser going into this one, but we're not shooting for the moon each time out. We're going to try to incrementally add pieces of what KeSPA has to offer to what we do and leverage what they’re offering us in exchange for that, which is nice. It's a balanced relationship as opposed to being too one-sided,” Sundance added.
Unquestionably, Sundance is in this for the long haul – and looking at the future, Sundance isn’t interested in cashing out and moving on.
“When you get to the position we're in, where for 10 years you've been building a business, people come along and say ‘Hey, how about we capitalize’ or ‘How about taking in strategic money?’” he said.
“The reality is that we're not thinking about those things, we're just thinking about being a strong and healthy business and scaling,” Sundance added.
As the e-sports community looks toward the future and potential growth, Sundance himself is looking to make his business more transparent, especially considering that the North American e-sports community and MLG are in it together.
“I think my goal for the rest of this year and going into next year is to be as available, as transparent as possible in these decisions, because my vision is a vision of competitive gaming and e-sports that we've all built together.”
Interview conducted by Thomas Shifrer