It’s been two months since Riot Korea announced plans of long-term partnership (franchising) in the LCK. Currently, Riot Korea is engaged in active conversations with different teams in Korea, and is detailing out the franchising plans, and by mid-June, it looks that more details about franchising will be announced.
Many different organizations took interest in franchising in the LCK. From the current LCK teams, to esports teams under the traditional sports organizations, famous overseas FPS clans, esports consulting groups, and MCN enterprises, they all took interest in the franchising within the LCK.
Inven met up with a corporation that took interest in the LCK franchising. As an esports consulting group, not only does World Game Star (WGS) run various FPS esports teams in Overwatch, Fortnite, Apex Legends, Valorant and PUBG, they’re also engaged in various esports businesses.
How does a corporation view franchising within esports? Does a corporation find that it’s worth investing $10 million USD? We asked Judy Jung, the CEO of WGS, sit down for a conversation to find out the answers to these questions.
For the readers that are unfamiliar with World Game Star (WGS), can you introduce WGS to our readers?
We’re a brand with the vision of becoming the ‘Growing Partners in the esports industry’. Compared to the U.S. and China, the industrialization of Korean esports is incomplete, so we’re in talks with various global sports enterprises, local governments, and conglomerates. Furthermore, in order to ensure the growth of esports athletes in Korea, we’re also conversing with various sports groups about potential esports related business deals in the future.
We’re also operating pro teams as well. WGS Phoenix is an Overwatch team that won Overwatch Contenders Korea in Week 4 of Season 1. Apart from Overwatch, we also have a Fortnite, Apex Legend, Valorant, and a PUBG team that’s also performing very well.
Our partner, YSK Media & Partners, is a B2B company that’s in charge of consulting and marketing with Samsung Electronics and KT. They’re supporting and sponsoring various platforms and over 40 different startup companies, and we’re continuing to support passionate young people in Korea through various means.
As a profit-based company, how did you first become interested in esports?
Esports is a core content that the future generation, who are going to be the future leaders, enjoy. Through recommendations from our partners, we became very interested in the LCK franchising. In order for the esports industry to self-sustain, we’re working very hard with globally renowned partners to contribute to the growth of the industry.
From Overwatch, Fortnite, Apex Legends, to Valorant, WGS is operating many different esports teams. What made you decide to operate pro esports teams?
Since 1999, our partners have experience in esports, online, and branding business, back when they were with Samsung C&T Corporation and Samsung Electronics. Furthermore, through our relations with the Chairman of Tencent and Chinajoy, and our reports from Goldman Sachs, we’ve continued to examine the growth potential of the esports market.
In November, 2016, Blizzard announced the franchising of their Overwatch League. At the time, we consulted with various teams’ players and coaching staff participating in franchising. The New York Excelsiors, who didn’t understand the various know-hows related to esports at the time, is now an organization that proudly represents the league. We’ve also supported various players and coaches to enter the league, and our brand, ‘World Game Star’ proudly reflects such accomplishments.
The LCK’s franchising plans are becoming more concrete. How much possibility do you see in Riot’s plans to franchise the league?
We have experience in partnering up with Tencent, the biggest shareholders of Riot Games, so we’re aware of the scale in how big the franchising is going to be. Tencent is estimated to be worth over $500 Billion USD, and Riot Games has successfully evolved their game, League of Legends, to a global esports. Based on those two factors, it’s inevitable that the league will grow even further. Also, judging by the success of franchising within the LCS and the LPL, we expect the LCK will grow even bigger.
To participate in franchising, it’ll cost somewhere between an estimated amount of $81 million USD to $98 million USD. As a corporation, isn’t such a large amount of money burdening?
If we assume that the business through LCK franchising will continue to grow over 20 years, it’s a bit more than $400K USD per year. Considering how Tencent and Riot Games will be directly involved with the franchised partners, the amount doesn’t really seem that important. If it’ll serve as an opportunity for further growth in the future, while the amount may seem irrelevant, the cooperation with the partnered companies seems very important.
Most corporations take interest in franchising with the purpose of self-promotion and expansion of their companies. Do you have any detailed plans on how you’ll be continuing the business after franchising?
To put it in a nutshell, within the frames of Riot Games’ plans, we’re planning to discuss and negotiate on our partners and investors to expand in various ways, such as getting involved with copyrights. We’re also preparing various ways to walk together with the fans, such as building new esports arenas, team branding, online platform businesses, and merchandising.
We’re aware that you’re talking with Riot Games about franchising. How did the conversations go with them?
When it comes to content-related business, it’s important to have a horizontal relationship between the two parties. The person in charge of franchising was incredibly humble. With global businesses, asymmetry exists in information, so smooth communication and receiving the same information is important. Riot Games gave us valuable information that they’ve spent many hours and much effort on. In doing so, if we do end up working with Riot, we believe that they’ll be very trustworthy and reliable partners. As LCK took a very long time to expand, we hope to be able to offer a lot of help.
How do you hope the readers would think of WGS? As you participate in the franchising, what are some of the ideals that you have?
In the early days of WGS, we operated by offering the environment, where the players and the coaching staff can focus on nothing else but winning. As franchising in the LCK is implemented, WGS will continue to focus on getting great results, but also strategically fortify the communication between the fans, just like Cloud 9 and 100 Thieves. We’ll also be focusing on building an ecosystem within esports with our partners.
We also hope to offer various means of growth and nurture to the young people that dream of becoming professional esports athletes. We’re currently in talks with our partner companies to create an online/offline academy, a system that focuses on building character, and post-retirement plans for the players, such as overseas college education and a job well-suited for themselves.
“Planning, operating, and growing everyday with our fans” is our motto. In the future, just like the AEG group, we also hope to be involved with businesses related to real estate, shopping malls, and theme parks. After this coronavirus pandemic is over, our short term plans are to fortify the “esports proptech” in the U.S, China, Middle East, and Southeast Asia.
If you look at the Overwatch League, despite a lot of money involved in the franchising of the league, the popularity of the game is dying, and it looks like there are red flags all over. Are you worried about such a thing happening to League of Legends, thus feeling pressured about investing in franchising?
Personally, I’m not too worried. Just like the current coronavirus pandemic, there are always unknown variables in business. The consumer and the market are always looking for a new winner. After the pandemic passes, we’ll be keeping our close eye on the various needs and adapt accordingly. Furthermore, if such a game company with an IP becomes quickly aware of those red flags and act accordingly, we’ll put our faith in their actions and move with them.
Lastly, is there anything that you’d like to say to the readers?
I believe that there are two types of businesses, and that’s either symbolic or profit-based. It’s very hard for these two factors to move together. If you look at esports as a whole, while there is symbolism behind the business, the profitability side of things comes a little short. However, according to the data behind the LCK, it’s definitely possible, and if we have the chance to be a part of the franchising model in the LCK, we’ll be offering support in the business through specialized competency and our network. Also, we’ll make sure to respect the players and their parents’ wishes, and won’t shy away from supporting their personal futures as well.
Since our business is mostly focused in the U.S, China, and Southeast Asia, we haven’t really focused much in Korea. So far, WGS is more known as the FPS academy, rather than a corporation. We’re preparing various fan events and branded marketing that’s very interactive with the LCK fans, so please keep your eyes on us. Although we lack in so many ways, we’ll try our hardest to create a new fan culture.
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