Bad Hombre – you are voicing really articulately the concerns and sentiment of the camp that does not want to touch on the monetization question at all. This is indeed the challenge, and my pushback is that even though it’s hard to conceptualize given the unique challenges esports face versus traditional sports, we as gamers have an incentive to want this to be monetizable.
We don’t want this to happen: http://www.espn.com/esports/story/_/id/17821061/south-korea-kespa-discontinues-starcraft-proleague-14-years
So yes esports started with the mission you just outlined of community-building and feedback back to the core gaming business, but channeling my inner Riot I would ask how do we create and deliver value in esports that Riot gamers want to spend money on (a la how they spend money buying skins for champs)?
I’m excited that you’re excited Francisco! I couldn’t believe it either. And that’s why I chose this topic.
On your questions:
1) You’re completely right that esports is much more established in Japan and Korea, particularly with Blizzard’s Starcraft. We see this now play out with Korean teams just dominating in the League of Legends worlds championships every season thus far. The reason I chose Riot Games is because they are the forefront of bringing esports mainstream to the western world and further entrenching it in Asia. In fact, Korea’s eSports Association just announced the end of the world’s longest running esports League (StarCraft) partly because League of Legends has been eating into their viewership. The structure of the league is global and the top teams from each region compete in the world championships, so there are a lot of North American teams, a few LatAm teams, and a lot of European teams. In fact, U.S. colleges are sponsoring varsity teams.
2) The players get paid a salary by the teams that own them for that season. There is then prize money for the winning teams.
3) On monetization, yes the traditional sports models are where Riot is looking for ideas. Sponsorships are happening at the team level, and I imagine that there’s a way to have it at the Riot level to make the operations of these events sustainable.
Thanks for your comment Ben! On your concerns:
1) Yes I agree that Riot would not want the costs to be passed to the viewers, so the negotiation would have to be very civil so that Twitch doesn’t charge the end users. I think the leverage Riot can have is providing Twitch with exclusive access to the games because viewers can currently watch on YouTube, Azubu, etc. Moreover, Twitch actually has ads already and offers a premium subscription for people who don’t want to pay.
2) I agree with any disruption to the viewer’s experience through advertisements. I think there is room for this though because players need to take breaks between games anyway and Riot can filter for the types of advertisements video game players would actually want to see (e.g., gaming equipment)
3) This last question you ask is key and what most people at Riot even ask. The mission is to make LoL a sport that lasts for generations, so there’s conviction that it’ll sustain Riot for at least another decade. That said, Riot is actively working on other games, but it is important to note that not every great video game is fitting for esports (e.g., role-playing games aren’t competitive so it won’t be in the running to be an esport). However, the dream would be to eventually get to an Olympics of video games.
And I’m also interested to see how this will play out 🙂
Sharp Boy – I am so warmed by your reaction. I think it’s so inspiring how this can become an actual career now.
On your monetization ideas, Riot is definitely looking to traditional sports models. Your idea is totally valid. My sense is that Riot would have a hard time stomaching it because the perception by players would be too risky. The other reason is that the teams themselves tend not to be high margin. In fact, currently Riot will give teams a stipend to exist.
And yes the video is awesome. Riot’s working on leveling up their video animation skills.
What a fun post! This reminds me of the conversation we just had in TOM about the threat of technology replacing jobs. This is a great example of how technology can supplement/enable rather than replace human capabilities. The data can facilitate customer experience and while it collects data on preferences, Disney artists/designers can be informed on the types of novel experiences (and magic) they can create for customers.
On the point of making interactive experiences, I’m sure that Disney will move toward this as virtual reality and augmented reality technology become more advanced. This is a cool thing they’ve done with coloring books: http://www.theverge.com/2015/10/5/9453703/disney-research-augmented-reality-coloring-books
Disney has tried VR in the past but closed it down when novelty wore off. However, I think that combining the live tactile experience enhanced by VR may be more promising: http://www.theverge.com/2016/7/1/12058614/vr-theme-parks-disney-six-flags-the-void-ghostbusters-virtual-reality
This is super interesting and recent events have shown how critical these types of services is (the PornHub example reminded me of the scandal with Ashley Madison’s users being leaked). McKinsey has started providing consulting services around cybersecurity. Riot Games has a whole internal team dedicated to this as well (with the analogy of Star Wars being used since the skills required to hack can be used for good versus evil). As HBS students we see the required use of Duo Mobile to protect our information, which is reflective of the trend of companies requiring their employees to use this app as well to protect proprietary information.
I’m surprised that the big savvy tech companies you listed are using HackerOne. Wouldn’t they have their own internal teams? This brings up my concern with the long-term competitive advantage of HackerOne if eventually every company should establish expertise on cybersecurity. Or is this a skill that should be outsourced?
This is fascinating! It also sounds like so much fun to try out. I agree with your point about the need to differentiate through products given that other stores can implement the same technology. I do think there is an advantage to being first and establishing a loyal customer base with the data it has accumulated. I think stores can establish brand loyalty not just through their products but through loyalty programs and, especially with clothes, what the brand says about the consumer. Perhaps they can track patterns of what matters most to their target consumers (e.g., sustainability, cost, staying up to date with the latest trends, etc.) and use that information to get ahead.
This also reminds me of the augmented reality apps that are working on making the shopping experience a lot more convenient: http://www.forbes.com/sites/currentaccounts/2016/01/28/virtual-reality-coming-soon-to-a-clothing-store-near-you/#453b681c10ed
Once this hits mainstream, I imagine that stores will need not only product differentiation but also hire expertise on how to curate the content of what is shown in these apps about how the consumer will experience the clothes in different settings.
Thanks for sharing! As you pointed out, this business will require very smart operational planning, but I completely see the value it brings customers and retailers. The move to partnering with Food Network for recipes makes me think about how they can reduce variability in customer orders by providing recommendations. As they play around with the impact these suggestions have on customer orders, they can get smarter about how to predict demand for certain products and from where.
Another thought I’m curious about is whether there’s a specific customer demographic that will want this, or do you see this as a mass market service? The most obvious target demographic would be busy working professionals who don’t have time to go to the supermarket after work, but are there people who enjoy the process of picking their own groceries? For example, I imagine that higher end restaurants try to maintain a competitive advantage by sourcing the best ingredients possible.
Thanks for sharing! This technology reminds me of the advances in stem cell research as well where they’re trying to recreate organs based on a person’s own cells to lower the risk of the patient’s body rejecting the organ (https://www.bostonglobe.com/business/2013/11/18/stem-cells-from-patient-may-stop-immune-system-from-attacking-transplanted-organs/HjhSGLT1bNTnO2XBsjjIZN/story.html)
On the ear in particular, your post also reminds me of the mouse that was used to grow human ears: http://www.dailymail.co.uk/news/article-3414756/Scientists-grown-human-EAR-rat-say-able-use-humans-five-years.html
I imagine that the most beneficial application for these ears in reconstructive surgery are for people who are born with microtia. The options have thus far been taking rib cartilage from the patient to reconstruct an ear or to use a styrofoam-like material (http://www.drjohnreinisch.com/microtia-treatment).
What if they just invest in teleportation instead 😛
In all seriousness, thanks for summarizing what airline companies have been doing. What I’m curious about is what their incentives will be to do this given the significant level of investment as well as risk (safety given the business of airlines to carry people)? The scale of R&D spend Embraer has used is certainly impressive. How have they been allowed by their leadership/stakeholders to do this given the hit to their profitability?
By the way, I love the opening riddle referencing dragons – reminds me of how the dragon in The Hobbit asks riddles.
I like that you touch on two ways that pharma companies can make a difference: 1) reactive and 2) proactive. The reactive part is core to their business of generating drugs to treat or protect patients. In this case, your suggestion of vaccines is a reactive solution to the climate change challenge.
The proactive efforts for these companies to mitigate climate change will be harder to implement. I would consider this in two ways. The first is what you mentioned about energy-saving real estate. This is something they can share best practices with other industries. The more interesting way is what you touched on about using their scientific capabilities to develop solutions relevant to the intersection of biology and environment. Are there certain products pharma companies can develop that are in the realm of something they can sell (and thus align with their profitability goals) that are also used to “treat” the environment the way pharma companies currently treat patients?
This is a great illustration of the need to think about solutions in a holistic manner. How did the LUS decide that this was the most effective new way to resolve the inequality the previous pricing method? What is the economic impact on these utility companies for each pricing scheme and what is the tension between doing what’s right for society as a whole versus their profitability?
I’m not an avid skier (though I really enjoy it the three times I’ve been), so a question I have for you is how important is it to regular ski goers that the snow is natural? If the answer is that the entertainment value of the activity itself is more important, then I view this as an opportunity for Mont Sutton to have more control over making sure the experience for their consumers is consistent and fun. In other words, when your business is dependent on the uncertainty with weather, then sometimes skiers will not have as much fun when the snow is slushy or too icy. However, if the ski resort can ensure a consistent snow pattern with their machines, everyone can be guaranteed to have a great experience.
The question would then be how much of an environmental impact do these snow machines have? Is there a way to reduce it? Otherwise, your suggestion to move to alternative forms of entertainment may have to happen, but I imagine that ditching the industry is not going to keep them competitive.
Agree with your points Priya. This especially reminds me of the IKEA case where H&M as a leading, global retailer has the buying power to influence the supplier practices.
My concerns are echoed by the two comments above, which reiterate the point you make about fast fashion being antithetical to helping the environment given that the affordability increases waste. I think the starting benchmark should be H&M compared to other fast fashion companies first because if they’re not doing it then a perhaps less environmentally-conscious company is. The question is whether H&M or other fast fashion companies can innovate to find a way to make this practice sustainable (e.g., having consumers send back in clothing that can be recycled in some way), or if suppliers can move toward synthetic fabrics that have less of an adverse impact on climate change.