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02/02/23: FaZe in limbo as stock plummets; Newzoo report showcases mobile’s prominence; EA to shut down Apex Mobile


Medias First Morning Read
Thursday February 2, 2023

Good morning! It’s Thursday and this is your early morning Esports brief.
FaZe Clan’s woes on the stock market are well-documented, and with the company’s stock hovering below $1 per share for more than a week, the esports and lifestyle organization is getting closer to being issued a deficiency notice and delisted on the Nasdaq. FaZe, which has struggled to show its influencer-based business model has commercial viability, has gone from highlighting a $725 million SPAC merger with B. Riley Principal 150 Merger Corp. in July 2022 to a low of $0.71 cents per share after B. Riley’s shares vested earlier in January.

The company has gone from a market cap of around $150 million in December to just over $58 million as January came to a close. To add further context, FaZe was valued at around $1.2 billion in August of 2022. It’s been a brutal fall.

What does this mean for FaZe and for the industry? Well, it’s indicative of the primary problem many esports organizations face: Selling a product to a young audience that doesn’t have much buying power makes it difficult to actually earn money. Clout and high-profile names often cost more than they’re worth as well, with influencer marketing bringing on higher returns for individuals than they do for businesses that activate or, in FaZe’s case, sign.

Forbes writer Matt Craig had an excellent feature looking at FaZe’s decline heading into 2023, and Chris Morris of Fast Company’s breakdown shows that, though the creator economy and one of the biggest brands in gaming are significant sales tools, return on investment and a path to profitability are the most crucial KPIs for both FaZe and the rest of the industry this year.

COMPETITION

Clash Royale developer Supercell will put up a $900,000 prize pool for its world championship in November, the company announced. The Clash Royale League World Finals will take place Nov. 24-28 with the world’s 16 best teams gathering for a to-be-announced offline tournament, and seasonal competition will begin this month. The CRL schedule includes seven monthly seasons that each have a $57,000 prize pool. Winners of the monthly competition will earn a spot in the World Finals, as will the seven top point-earners throughout the year. Two extra World Finals spots are reserved for Chinese teams to round out the program.

League of Legends esports opening week viewership dipped around the world, with North America, Europe/Middle East/North Africa and South Korea seeing declines in peak viewers compared to 2022, according to multiple stream analytics providers. Esports Charts reported the League Championship Series (North America), LEC (EMEA) and LCK (South Korea) stumbled out of the gate this year, though the LCK bounced back from its peak viewership dip to draw 720,000 PVs for a Week 2 matchup. Changes in scheduling for the LCS and LEC might have played a role, as did dips in domestic viewership for the LCK following its transition of the Korean broadcast from Twitch to a new streaming platform in that country. While it’s far too early to draw any conclusions about audience or fan engagement, the numbers are worth monitoring as play continues.

Developer Riot Games announced the Legends of Runeterra World Championship will continue in 2023, with three seasonal circuits leading into a 64-player world championship tournament. The tournament seasons will coincide with expansions, the Runeterra team said in an announcement Monday, and include two open tournaments and one additional world championship qualifier open. Seasons will last three months each, and there will be a last-chance qualifier event ahead of the championship. Exact timetables for qualifying events and the world championship have yet to be announced.

The Women’s Car Ball Rocket League circuit has been postponed due to a lack of sponsorship, and organizer KC Pioneers are seeking new ownership as an alternative to additional funding. The announcement Monday followed circulation of information about a lack of communication and support from KC Pioneers. Williams Resolve team manager and ex-Rocket League pro Euan “Tadpole” Ingram and former Women’s Car Ball tournament director Sophia de Ipanema shined light on their struggles working with Women’s Car Ball and KC Pioneers, and the women’s tournament circuit is now up in the air as the org explores next steps.

SPONSORSHIP & ACTIVATION

ESL will begin streaming its Counter-Strike: Global Offensive events non-exclusively this year, the tournament organizer announced Tuesday. Competitions, including the upcoming IEM Katowice that began Wednesday and runs through Feb. 12, will be aired on both Twitch and YouTube, ESL said. The addition of YouTube streaming will give fans the opportunity to stream directly to smart TVs, some of which don’t directly support the Twitch app, though the app can be connected to TVs via peripherals. YouTube also supports instant replay, with Twitch being the preferred platform for clipping and sharing streamed content on social or natively.

The NBA’s Sacramento Kings dove further into esports Monday via a partnership with Rival to create an esports community platform known as The Realm. The Kings, who also operate an NBA 2K League franchise, hope to use The Realm to “engage with fans beyond the Sacramento region,” Kings President of Business Operations John Rinehart said in a statement. The Realm will host online tournaments with Sacramento-centric prizes for fans around the world, with the first event taking place on Saturday: a free-to-enter Fall Guys tournament with the winner earning a signed jersey from Kings guard Davion Mitchell. Other events will happen monthly with Fortnite, NBA 2K and Rocket League on the table along with other titles.

FaZe Clan and Nike have joined forces to produce LeBron Nxxt Gen, which will be debuted by LeBron James’ son, Bronny James, as part of the partnership. FaZe signed Bronny in 2020 as an influencer, and this deal will once again leverage the esports and gaming organization’s leverage in the creator economy with an industry leader. FaZe has also announced partnerships with Drake’s OVO merchandise brand and automobile manufacturer Porsche in December and January, respectively, showing that despite public market woes, the brand remains a major player in the lifestyle industry.

Razer has extended its sponsorship of esports organization Copenhagen Flames through 2025, the companies announced. The deal broadens the gaming peripheral company’s relationship with the Counter-Strike: Global Offensive organization, which began in 2020 as its provider for headsets, gaming mouses, keyboards and more. Razer is partnered with 20 esports teams, including the Flames and esports powerhouses such as OpTic Gaming, EDward Gaming and the Dallas Fuel. Razer also sponsors individual players such as Lee “Faker” Sang-hyeok, the greatest League of Legends player of all time, among others.

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YOUGOV LIVING DATA INSIGHTS
Affordability keeping gamers from pressing play on new consoles

Amid soaring inflation and rising prices, one in three American gamers (33%) are deterred from buying consoles within the next six months because they simply “can’t afford it.” A similar proportion of them aren’t keen on buying a new one because they’re satisfied with their existing setups.

TEAMS

MAD Lions has signed a new VALORANT roster, the organization announced Tuesday. The Spanish team left the VALORANT scene in September of last year but has reassembled after signing the Dark Ratio roster. Dark Ratio, a North American Challengers organization that previously was independent, gives MAD Lions a presence in the esport as well as a foothold for drawing a North American audience in one of the region’s most popular titles.

TSM has brought on an all-women’s Apex Legends roster to work as content creators and compete professionally. The roster includes Isabella “Avuhlie” Rivera, Jane “Janey” (whose last name is not publicly available), Kornelia “Sabz” Zawistowska and Laurice “GuhRL” Habibi. This is TSM’s second Apex roster, with the main group including Phillip “ImperialHal” Dosen, Jordan “Reps” Wolfe and Evan “Verhulst” Verhulst. The four new members of TSM will play together in content creator events, according to Dexerto, although Apex only allows teams of three. The players will also be able to compete and play individually.

OpTic Gaming continued shifts of its Call of Duty roster with the removal of former coach Raymond “Rambo” Lussier as the lead of Call of Duty League team OpTic Texas. OpTic owner Hector “H3CZ” Rodriguez confirmed the move on-stream with former OpTic player Seth “Scump” Abner, who left the team earlier this year but remains a content creator with the organization. OpTic is currently tied for first in the standings for the CDL Major 2 qualifiers but has stumbled despite its 4-1 match record, with a 13-10 record in individual games so far in the qualifier.

The Shanghai Dragons are moving forward with reworking their roster despite ongoing licensing issues for Overwatch 2 in China, and former players are in the mix to re-join the team, according to a report from Overwatch League insider Arran Spake. Despite Shanghai releasing its roster at the end of 2022, the team is considering bringing back returning players, including former OWL MVP Kim “Fleta” Byung-sun. Fleta, 23, also received some interest from VALORANT teams, according to multiple reports, and is mulling over whether to return to the Overwatch League, jump into VALORANT or, after burnout over the past couple of years, continue on as a content creator instead of playing professionally. The star player’s decision could create ripples in multiple leagues, as Fleta’s prowess in first-person shooters is among the best in the world.

INDUSTRY

EA and developer Respawn Entertainment plan to shut down Apex Legends Mobile on May 1. “Following a strong start, the content pipeline for Apex Legends Mobile has begun to fall short of that bar for quality, quantity, and cadence,” EA, the game’s publisher, said in a statement. “Although disappointing, we are proud of the game we launched, are grateful for the support of the Apex Legends community, and are confident that this is the right decision for players. Respawn and the Apex Legends team remain excited about mobile as a platform and look forward to new opportunities to serve players there in the future.”

Nintendo, Microsoft’s Xbox and Sony’s PlayStation will not be part of E3, according to a report from IGN. Once the most important conference in the annual games event slate, E3 will return this year after a break from live events for the past three years because of the coronavirus pandemic. However, during that time, the publishing and console giants have found organic ways to connect with their audiences, and while Xbox will host a summer showcase adjacent to E3, none of the three companies will have a presence at the Los Angeles-based conference. The decision indicates an ongoing trend for these companies, and other large publishers, to take their narratives and provide reveals on their own timelines, from the Nintendo Direct series to Xbox’s Developer Direct last week.

OpTic Gaming became the latest esports org to lay off staff earlier in the week, with multiple members of the organization saying they were seeking new work. This is the latest cut in a growing trend among organizations looking to steady themselves in a harsh economic climate; 100 Thieves made cuts across multiple parts of its business in mid-January as well. It’s unclear how many people were laid off by OpTic as the organization has not commented on the matter publicly.

Mobile gaming has outstripped PCs and other mediums as the dominant media platform for accessing media and IP, according to the latest report from Newzoo. The gaming data and analytics company released “A New Era of Media and Entertainment” this week, with information about consumer habits for Gen Z and previous generations as well as where and how often gamers engage with entertainment. The report indicates that media consumption has shifted to about 4.3 hours per day on mobile, with gamers using PCs, TVs and other options three hours per day. Social media and video-sharing platforms make up the bulk of engaged screen time, according to Newzoo, and the average person spends almost 12 hours per week engaged with “video games and virtual worlds.” These habits, particularly an ongoing trend of younger generations taking part in more active screen time vs. passive time (think being glued to your phone vs. having the TV on in the background) are a signal that the creator economy and social media platform shifts should remain a staple for any org hoping to reach young consumers. The difficult part, though, is turning those young fans into customers.

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TRIVIA
Speaking of the Xbox Developer Direct, the publisher announced a surprise release that has become a smash hit during that event. What game did Xbox both announce and release during the Developer Direct on Jan. 25? (Email [email protected] with your answer, and be sure to include your name, company and city).

Answer to Our Last Trivia Question
Story of Seasons: A Wonderful Life, a remake of popular farming simulator Harvest Moon: A Wonderful Life, released in Japan on Jan. 26. When did the original game release, and on what console? Answer: September 2003 in Japan and March 2004 in the U.S. on the GameCube Kudos: David Westberg | SAG•AFTRA Federal Credit Union, Burbank, California; Tom Moore | Kalt Productions, Los Angeles

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