In recent years, the majority of business focused esports articles I have read tend to be overwhelmingly positive about the future of the sector. Every few months there are reports of the sector's 'rapid growth' and how it will soon become a 'billion dollar industry'. There are regular stories of new companies/celebrities investing in esports. New statistics are periodically released showing improved viewership metrics that often smash previous records.
Therefore, when something happens in the industry that presents (at least on the surface) a different narrative I am always eager to dig a little deeper.
In the past month, two stories have appeared that don't quite fit the usual narrative. The esports organisation Echo Fox, founded by former NBA player Rick Fox, released a number of its players, and shut down their Call of Duty and Gears of War operations.
Within days of the Echo Fox story breaking, Infinite Esports, the holding company that own Optic Gaming following a $33m+ acquisition of a majority stake in 2017, laid off 19 of its then 70 staff including the now ex-President, Chris Chaney.
Both organisations had substantial financial backing and had ties to traditional sports organisations. Inevitably, there were concerns from investors, sponsors and other stakeholders. Were these companies in financial trouble? Is the esports bubble bursting? What does this mean for the future?
It's not time to panic
Like any other emerging market, organisations are constantly having to adapt and evolve in relation to various market forces and this is particularly true for esports. Esports organisations are often multi-faceted and run teams in more than one title with some of the larger organisations running teams in more than ten.
The big difference, when compared to traditional sports, is that new sports aren't invented every few years. However, new games create excitement, audience viewership shifts and suddenly what was seemingly the most popular title on the market might just as quickly fall out of favour.
As an example, let's think about the rise of Fortnite. Many of you will have heard about Fortnite, a 'battle royale' style game that rapidly grew in popularity and turned into a craze that swept the world. Last week, Activision Blizzard released their own take on the battle royale genre as part of Call of Duty: Black Ops 4 and the discussion about whether it will take Fortnite off the battle royale throne has already begun. So who knows, by Christmas there may be a new champion.
Back to Echo Fox and Infinite Esports
Back to Echo Fox and Infinite Esports - why should investors, sponsors and the market in general remain calm?
Both organisations are responding to changes in the market, as any other business would. Echo Fox has identified a shift in the popularity of some of the titles they operate in and have made adjustments accordingly. If the aforementioned Call of Duty battle royale mode becomes extremely popular it would not surprise me if they re-open their call of Duty operations.
Infinite Esports grew extremely rapidly and this restructuring signals a correction rather than economic trouble. It signals a level of maturity. Yes, esports is fun and it would be great if everyone could participate in everything and every game was constantly popular, but this is not the case in the real world. For esports to grow sustainably, these type of decisions are incredibly important.
As the industry matures, I think stories like this will continue to crop up. As with many other emerging markets, the future is uncertain and adapting to change is crucial to survival and ultimately growth - despite actions such as downsizing, appearing to show the opposite. If the story was that, these organisations had exited the industry entirely then I would be a little bit more concerned - but even then, the exact circumstances would need to be examined. For now, watch this space, keep calm and keep playing - the esports industry is not going anywhere, anytime soon!
In the past month, two stories have stood out in the esports news cycle: the layoffs at Infinite Esports & Entertainment and Echo Fox dropping many of its fighting game players, along with its Call of Duty and Gears of War teams. Both stories have raised alarm bells for those financially involved in the esports space, whether it be sponsors, investors, or organizations looking to gain a foothold in the industry. If these two organizations—both with massive financial backings and interest from traditional sports owners—had to cut back in their operations, what does that mean for the future of the industry?