GGL Wire

GGL’s Reid Landeen translated this article from its original source.

2007 wasn’t exactly a very good year, as far as China’s e-Sports tournaments were concerned; most people still view the scene as being in its infancy. Perhaps it is bound to falter a bit after flourishing, only to be followed by more booming growth.

The same thing happened before, where after China’s e-Sports’ tournaments in 2005 fell into a major rut, 2006 welcomed a total blowout. This was thanks to the nation-wide establishment of high standards, causing them to improve by leaps and bounds, both from a quality and quantity standpoint. But, when everyone raised their head in anticipation of even greater progress in 2007, China’s e-Sports’ tournaments have stagnated into a veritable ice age. In the past 12 months, the majority of the tournament’s sponsors and franchises have disappeared. Obviously, there are some franchises that have pulled through and managed to survive. Let’s look back on these franchises and brands that weathered the storms of the past 12 months…

6 Big e-Sport Franchises Cross the Line of Death

In 2006, from May until the year’s end, a total of 15 large scale e-Sports events were held in China. Behind all of the apparent prosperity, the seeds for 2007’s plunge into decline were being quietly sown by the franchises themselves becoming more and more similar.

When the sporting events reached the point of being all alike, face-to-face competition inevitably flared up. However, when 2007’s e-Sports decline loomed near, some of the competitiveness and vitality of the events had either died, or was on its last legs.

Our statistics indicate that in 2007 there were a total of six organizers that have either disappeared completely, or are no longer holding any e-Sports events. These include: WEG, WSVG, GOC, CIG, WEF, and StarsWar. Even though they all ended up on the brink of going under, the reasons they fell into decline, and the paths they took, are all different.

Among these six e-Sports organizers, the two with the most influence were WSVG and WEG, which both have a background in overseas e-Sports competition. One of them completed a successful world tour last year, and became a world-class franchise. The other is a Korean professional gaming league organizer. They both experienced a rapid growth spurt for a period of time, and the sad thing is, they didn’t pay enough attention to their cash flow and balance, and ended up digging their own graves.

Even though WSVG reported success in operating in America last year, their ever increasing spending did not help their situation. Balancing cash flow should be a basic requirement of e-Sports franchises, but WSVG failed in this area. Following pressure from their competitor CGS, as well as their sponsors losing patience, they suffered a loss of capital, which resulted in the WSVG to collapse like a skyscraper with a rickety foundation.

The events that WEG held were seen as good as bad. Fans of e-Sports liked how it looked from the outside, but inside, the organizers were always worrying about money. With their venture capital from the CJ Corporation almost already spent, they decided to move to try a risky move to Hang Zhou. Despite encountering resistance, they did finally manage to put on a few events in Hang Zhou, but by then it had lost a lot of its appeal. The end result was that WEG lost all credibility as an e-Sports franchise.

The CJ Corporation saw their money as gone, and simply chose to abandon their investment. As a result, this e-Sports event that is held every year will officially stop in 2007.

The three franchises of GOC, CIG, and WEF all more or less share similar situations. They all came about due to various government departments providing the sponsorship and support needed to host e-Sports events. However, whether it was GOC under the Ministry of Culture, CIG under the Ministry of Industry and Information, or Qing Dao city’s two year support of WEF events, none of these franchises ever reached the widespread support they needed.

Unfortunately, StarsWar closed its doors in 2007. In fact, this e-Sports franchise has always had pretty good success in China, and even if it never made huge amounts of money, it never lost any either. Most importantly, much of its fan base has come from very positive word of mouth advertising. Sadly, at the beginning of the year the owners of StarsWar, RN and WE, encountered a withdrawal of capital from IGE. They were not unable to fully protect themselves, nor was there sufficient time to take into account other important matters, so they are going to wait until they are in a more stable situation to once again host events. However, we believe that StarsWar isn’t completely dead, and hopefully will reappear next year.

The demise of e-Sports as an industry is because of several reasons. First is that organizers over-extend themselves and don’t pay close enough attention to the attendance of the events. Secondly, even though franchises are continuing to change, their outdated ideas about events are not gaining enough support and recognition among e-Sports fans. Looking at GOC, CIG, and WEF, they are all government attempts at e-Sports events which have a definite difference with traditional e-Sports activities, and are still fumbling around in their initial stage trying to find their own defining characteristics. These franchises, due to objective or subjective reasons, received more difficulty during 2007 than they normally would. Naturally, they want to survive, but doing so will be exceptionally hard.

Survivors await the next King

Many people say that China’s e-Sports are relatively new in the industry, and operate under unusual restraints with some inexperience. They say that once these things change, it will be a different story. Because of this, under the current circumstances, survivability in the industry is more important than anything else. As long as it survives these hard times, it will eventually prosper.

In the past year, there have been many e-Sports franchises that haven’t progressed, and some have even had serious setbacks, and despite poor business situations, have managed to pull through and survive. For e-Sports franchises that have pulled through these hard times like ESWC, KODE5, and PLU, perhaps the day has finally come, only time will tell, where one of these survivors becomes the next king of the e-Sports industry.

Obviously, mentioning ESWC here is just to highlight China’s best competition. Although ESWC holds trials in China, it is an undisputed fact that after the World Finals in France, ESWC proved that it is one of the best e-Sports franchises in the world.

After reading this, perhaps some readers are confused. Why have e-Sports franchises in China, from their beginning in 2003, had this much failure? Simply put: lack of money. But, this money problem is the fault of the sponsors themselves. ESWC moved around some staff, and as a result, ended up missing out on a 2005 partnership with Intel, which left them with almost no money. The e-Sports events were held anyway. The event was unbelievably crude, and the Warcraft champion only walked away with less than a 3000 yuan purse.

Kode5 had some setbacks this year, but considering the state on the entire e-Sports scene, their setbacks didn’t amount to much. They attracted a lot of investments from overseas, so they were able to hold events without worrying too much about money. But their intentions of how to operate were far from enough too see them through. Having foreign financial backing made them somewhat ostracized, and resulted in them having very small voice in the world of China’s e-Sports franchises.

The e-Sports franchise PLU is regarded in China as one of the best franchises around. But since the organizers have been focusing on StarCraft, they have been earning less and less money, making their life harder and harder. This year found their investor, Neotv, getting rid of most of PLU’s outstanding team. In order to survive, the remaining PLU team partnered with G League from Shanghai, to pool their resources and share profits. Regarding the growth of China’s e-Sports, PLU is pretty secure, but most of their plans to make money have not come through. Finally, PLU didn’t experience any growth in 2007, due to their own weakening franchise. The good news is that at least the core PLU team has survived.

The “survivors” all managed their own way to get through 2007. ESWC’s Chinese regional partner relied on financial backing from Belle International (China’s largest retailers of ladies footwear), and still managed to lose money at their events. This goes to show that e-Sports franchises need to find a financial ‘crutch’ to lean on. Kode5 provided a bad example for everyone. Without a doubt, they are a prime example of having an attitude of just “going through the motions.” The reason they are still around, is because of their foreign investors, giving them the luxury of not having to worry too much about money. China’s e-Sports franchises are usually short-lived, and close their doors after a season. They don’t have the funds for long term development to minimize their risks, so they squander their profits as soon as the events are over, leaving ‘survivors’ as few and far between. PLU is a good example of how, through their own actions, they managed to survive the e-Sports decline. Despite their many setbacks, they put their heads down and powered through, managing to stay afloat through the hard times.

Light at the End of the Tunnel

People have asked, was all of 2007 as abysmally dark and gloomy for the entire world of e-Sports? Is there no hope in this awful mess?

Of course there is! Just how tenacious and strong animals pulled through and survived the ice age billions of years ago, only to go on and prosper after, there are some e-Sports franchises that even in 2007 have managed by themselves to gain recognition and achievements. WCG, PGL, IEST, WGT, and IEF are some of these franchises.

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(caption: IEF’s success this year can be described as sudden and unexpected prosperity)

WCG is without a doubt, the most influential e-Sports franchise in the world today. The biggest difference between WCG and their competitors is that they do not have to worry about balancing their cash flow. Samsung sees them as a marketing tool, and gives WCG a set budget every year. This of course makes other franchises that have to worry about financial problems and events very jealous. But, having strong financial support, and a track record of successful experiences, WCG succeeding in 2007 was an obvious outcome.

In the world of China’s e-Sports, finding a franchise with similar qualities as WCG is as simple as looking at the Lenovo (PRC computer company) sponsored IEST franchise. They have the same flagship and company support, as well as not having to worry about budget problems. IEST lags a little behind WCG mostly because it had a later start, and thus has some catching up to do. But, after some more time is spent preparing and growing, believe me when I say that e-Sports franchises bearing the “Made in China” mark will spread across the world.

WGT basically managed to maintain the same level of success as last year. Despite reducing the amount of Counter-Strike events, internet and mod projects have attracted new interest from the eyes of many e-Sports fans.

Similarly, PGL is an e-sport franchise that has had good success this year. This is one of China’s more traditional e-Sports franchises that have focused on broadcasting live video of their events to reach their main online audience. In 2007, this has brought a breath of fresh air into the e-Sports scene. Using the popular P2P platform PPLive, buying a single broadcast netted them lots of money and access to tons of viewers. This win-win situation will undoubtedly have a significant impact on the e-Sports world, as new ideas and methods are being considered and brought to the forefront.

Of course, 2007 saw two special cases, IEF and CEG. Even though they have the same characteristics as GOC and CIG, the paths they have gone down are different. These two franchises rely on their own events and respective channels to obtain adequate funding. CEG obtained the support of the Korean SKT this year, despite there being rumors of a financial crisis, there was no problems. IEF had great luck this year, when Intel, after abandoning CEG, gave all their remaining sponsorship money (rumoring to be over 1 million yuan) to IEF.

When thinking of the success in 2007 that these franchises have had, many people will probably say, “that is simply because they had money.” But fewer people will consider why they had money in the middle of a very bad time for this industry. Besides IEF’s unexpected fortune from Intel, all of the other successful franchises had their own unique aspects to their business. Their common ground is in providing a good marketing opportunity for their sponsors. WCG and Samsung; people now associate these two companies together. IEST has let many e-Sports fans know about the “Frontline King” gaming rigs made by Lenovo. The slogan, “On PPLive, See the PGL” is the first choice of many fans on the internet. At the WGT events, ordinary computer users could see how awesome the Asus case mods are. CEG allowed SKT, which originally only was a famous Korean competitive group, to gradually help Chinese e-Sports fans come to the realization that a “targeted” event is an effective event, and is how these franchises were able to survive and thrive.

In 2008, the key to the survival of e-Sports franchises is in continuing to find ways to provide a good venue for sponsors to use for marketing their products. Anything less will be unacceptable to the sponsors as well as the fans.