Understanding the macro challenges within esports, Interview with Steven Salz, CEO at Rivalry
Further to our article earlier in the week, How can an operator prevent the sports bubble deflating?, we’ve taken a more macro level view on the challenges in the esports industry, through high level insight provided by Steven Salz, CEO of Rivalry.
Steven addresses issues like integrity, ways we can rally together as an industry, relationships with game publishers, and what it’s going to take to get esports to the level of traditional sports.
We’ve seen esports come under fire recently with an ESIC investigation into Bug Exploitation, are esports players more susceptible to match fixing?
“Not at all.
The incentives are not there, as they may have been previously, where professional players made little to no money.
Players now they get paid hundreds of thousands of dollars per year and some more than a million. Not to mention after an esports player retires from the game they can go on Twitch and be a full-time streamer/content creator and you see many make this transition.
As a result, the longevity of their potential career is massive and so is their income potential, so the incentive to throw a match at the highest level of esports is just not there.
I think it’s really important for people to know that most of the issues that occurred historically and ones that crop up recently are often in lower divisions of esports where players aren’t being paid well.
Most sportsbooks that offer esports don’t offer those kinds of divisions. In traditional sports, you see something similar where incidents of match fixing more frequently occurs in the lower divisions.
The standards that sportsbooks, odds providers, and tournament organizers have now, especially in terms of selling the data and offering odds, has only gotten better over time as well.
The integrity parameters provided by groups like ESIC tighten this further and there are player unions now. The oversight level is getting comparable to traditional sports.
From our perspective, everybody loses from lack of integrity. The community loses, the fan base loses, the sponsors lose, and other esports teams lose because outsiders start to think that esports has no integrity.
Nobody benefits from it aside from the individual players financially, so the control structures I mentioned earlier are now getting very good at handling this one group and reducing the incidence of occurrence.
It’s really important that people intimately understand what the real cost benefit analysis is here. Who’s really winning, who’s losing, and if this is actually a systemic issue in esports, which it’s not.”
How do you feel the industry can work together to overcome these types of challenges?
“Having as many sportsbooks participate in and be part of ESIC as possible is a start. There’s an ingrained integrity parameter for the kinds of things that you offer.
Also, if you work with the blue-chip odds providers like Sportradar and Betgenius for example, they have similar parameters where they don’t offer odds on certain matches with perceived low integrity.
If you think about traditional sports, there are the well acknowledged professional leagues. For example, you have the Premier League with their player unions and then there are all the oversight committees.
We’re seeing that infrastructure developed in esports as we speak.
You’ve got the games publishers also ensuring integrity now, like Riot Games with League of Legends and then the big tournament organisers like ESL.
It’s about all the operators in this space buying in and realising that they have as much of a role to play as all the other parties in ensuring there’s integrity in esports. It comes from working together and agreeing or accepting the same very high standard of integrity set by these organizations.
As long as everyone’s aligned in that way, we’re good.
But there’s always still going to be the odd very grey market sportsbook that will offer whatever they want, and you can never get rid of those.
It’s just about reducing the volume of those groups that exist by having the tournament organisers, publishers, data providers, and ESIC rally together and exclude them. Then the product weakness will organically push customers away and over time reduce their impact.
This will also help the customer become educated about who have reputable licenses and who do not.”
The game publishers hold most of the power when it comes to how a game’s integrated with a betting platform and a brand. We’ve seen them quite hesitant to make partnerships in the past. Why do you think that is and is this stance likely to change soon?
“We’ve heard some whispers that some of the publishers are starting to work or looking to work with betting operators. For example, Riot recently did a deal with Sportradar.
If you go back a few years, none of those deals were happening.
The publishers didn’t want anything to do with gambling as they felt the majority of their audience were under the age of 18. They didn’t want to be affiliated with gambling in that way.
However, as the leagues have grown up and become professionalised, everyone has inevitably realised there is a pretty tight correlation between viewership and betting on a sport.
It also increases the media rights value as there are more viewers because of the betting, and this flows up to the publisher and allows the rest of the ecosystem to monetise better.
The sportsbooks also help to ensure integrity in the league because it’s often they who see something fishy is going on early and report suspect matches.
ESIC actually have an internal alert system where sportsbooks cross report things that look kind off. So publishers can benefit from sports betting in this way which will be happening anyways as the viewership grows.
All of those things together, the growth of esports, the average age of the fan going up, the professionalisation of esports, have resulted in data deals starting to happen.
This is the first step.
The second step would be to allow brand level partnerships on the front end with sportsbooks. You don’t see this currently, and definitely not the same way you see in the Premier League for example.
You do see stuff like Pepsi, RedBull, or even Sour Patch Kids.
They’re still at that stage, but I would say we’re within one to two years from a big publisher taking the step and allowing a brand level partnership with a large sportsbook.
I think it’s definitely coming.”
We’ve seen a huge rise in esports activity over the last few months, but there’s still quite a way to go before esports gets to the level of the more mainstreams sports like Soccer or American Football. How long do you think it’s going to take before we reach these levels and what’s it going to take for us to get there?
“I think it’s just time. Esports is a demographic inflection point story. What has happened over the last few years is the average viewer and player went from their parent’s credit card to an income. The economics of esports has thus changed dramatically in the last few years, production values have increased, and viewership along with it.
Counterstrike has been played for 20 years and there’s been professional StarCraft in Korea that’s been televised since the early 2000’s. It just struggled to monetise well because the average viewer was so young. Now, the viewer has had one or two jobs and has some savings/spending money for entertainment-based experiences. It’s going to be the same with betting, as the average customers get older the turnover is going to continue to increase and so on.
I don’t think there’s a silver bullet to necessarily get there faster. The overall percentage of the fan base warming up to betting and it’s just a matter of time. If you look at some of the comments from DraftKings and of the larger sportsbooks in Europe, a lot of them see the writing on the walls. The entire industry is aware of it, actively seeking to service it, and will be there when the customer is ready.”
Editor’s Note: From speaking with Steven, it’s clear that the integrity issues esports has been characterised by maybe a little excessive. Just like any other sport, it’s had its teething problems.
With relationships between odds providers, publishers and operators evolving at a quicker pace than ever before, its only a matter of time before the infrastructures are comparable to that of the highest level of traditional sport.
Based on its current trajectory, esports seems firmly set to cement its place as one of the most viewed sports on the globe. On the basis we continue to rally together as an industry and guide this flourishing discipline in the right direction, we can all continue to reap the rewards.
The only thing standing in its way is time.