A RE­ALLY BIG SCORE

Forbes - - Contents // - BY MATT PEREZ

Andy Dinh made his bones as the Derek Jeter of es­ports. Now the 26-year-old gam­ing leg­end owns one of the world’s most suc­cess­ful teams. But can he con­tinue to dom­i­nate as bil­lion­aire moguls en­ter the arena?

Andy Dinh made his bones as the Derek Jeter of es­ports. Now the 26-year-old gam­ing leg­end owns one of the world’s most suc­cess­ful teams. But can he con­tinue to dom­i­nate as bil­lion­aire moguls en­ter the arena?

Thou­sands of scream­ing fans packed the stands and oor space at Bos­ton’s TD Gar­den in Septem­ber 2017—to watch a video game cham­pi­onship. At Cen­ter Court was an el­e­vated stage with ten com­put­ers run­ning the com­pet­i­tive game League of Leg­ends. Four mas­sive screens were mounted above to dis­play the ac­tion. When con­fetti nally rained down on the crowd, the three­p­eat­ing champs jumped around be­tween smoke ma­chines as a fa­mil­iar chant broke out—“T-S-M! T-S-M! T-s-m!”—much like Alabama fans cheer “S-E-C! S-E-C! S-E-C!” in Tuscaloosa.

Tsm—short for Team Solo­mid—is one of the most rec­og­niz­able brands in es­ports, and its vic­tory in Bos­ton built on its suc­cess as the win­ningest North Amer­i­can team in League of Leg­ends, com­pet­i­tive gam­ing’s top ti­tle. But its founder, CEO and owner, Andy Dinh, who emerged from the sidelines to hug his play­ers on­stage, had only one thought a er the team’s sixth cham­pi­onship: What’s next?

“I want TSM to be a house­hold brand; I want us to be the Dal­las Cow­boys and the Yan­kees,” says the per­pet­u­ally ki­netic 26-year-old, who was fea­tured on Forbes’ 30 Un­der 30 list in 2017. “It’s not enough for me just to be suc­cess­ful in North Amer­ica.”

Es­port com­pa­nies like TSM eld com­pet­i­tive teams in video games that are as fun to watch— whether live in a sta­dium or on­line on a gamestream­ing ser­vice like Ama­zon’s Twitch—as they are to play. e ba­sic premise of League of Leg­ends has two teams of ve at op­po­site ends of an in­tri­cate map try­ing to de­stroy each other’s bases. rough­out a match, typ­i­cally 30 to 40 min­utes, play­ers kill mon­sters (and, of course, op­pos­ing play­ers) to earn gold and “ex­pe­ri­ence” to buy new up­grades and be­come stronger than their op­po­nent.

Bil­lion­aire own­ers of pro­fes­sional sports teams such as Robert Kra (of the New Eng­land Pa­tri­ots) and Jerry Jones (Dal­las Cow­boys) are among the most signi cant new own­ers in es­ports. Be­cause they own (or op­er­ate) venues where es­ports com­pe­ti­tions can be held, these moguls have a front-row seat to the in­dus­try’s ex­plo­sive growth, and they are spend­ing mil­lions in hopes of build­ing fran­chises as big as TSM.

World­wide, the es­ports in­dus­try is pro­jected to reap nearly $1 bil­lion in rev­enue this year and is build­ing an ever-grow­ing global view­er­ship. at’s noth­ing com­pared with NFL foot­ball ($13.2 bil­lion in 2016), but it is ri­val­ing sec­ond-tier sports like Ma­jor League Soccer ($644 mil­lion in 2016). ESPN has been broad­cast­ing es­ports for sev­eral years, and last year’s League of Leg­ends World Cham­pi­onship nal had an on­line view­er­ship of 57.6 mil­lion—about half of last year’s Su­per Bowl TV au­di­ence. Ma­jor brands are also spend­ing mil­lions to get in front of this young and ra­bid male au­di­ence. Video gam­ing might even be an Olympic sport some­day soon. League of Leg­ends has al­ready taken the rst step, ap­pear­ing as a demon­stra­tion event at the 2018 Asian Games.

e con­cept of rev­enue shar­ing, par­tic­u­larly of broad­cast in­come, among teams—com­mon in tra­di­tional sports leagues—is still in its in­fancy in es­ports, so spon­sor­ships dom­i­nate the space. e Am­s­ter­dam-based mar­ket re­searcher New­zoo es­ti­mates that 40% of over­all rev­enue this year will come from spon­sor­ship deals. Some brands part­ner with the league and tour­na­ment or­ga­niz­ers, while oth­ers in­vest on the team side. TSM fea­tures Ge­ico and Gil­lette on its jersey, cre­ates “Team Soda Mid” com­mer­cials with Dr Pepper and uses Log­itech key­boards and mice dur­ing com­pe­ti­tions.

e paucity of re­li­able ROI met­rics have led

ad­ver­tis­ers to look at so­cial me­dia and stream­ing to help make de­ci­sions about where to spend. TSM and its play­ers have 60 mil­lion fol­low­ers across var­i­ous so­cial net­works. Forbes es­ti­mates that TSM had rev­enue of $21 mil­lion for 2017, on the high end for an es­ports com­pany.

De­spite all this suc­cess, Dinh ad­mits TSM could bet­ter take ad­van­tage of new op­por­tu­ni­ties in the rapidly evolv­ing mar­ket. e next big op­por­tu­nity may be the 2017 video game Fort­nite, a bil­lion-dol­lar sen­sa­tion that 125 mil­lion play around the world, in­clud­ing celebri­ties such as Drake and Chance the Rapper as well as pro gamers who stream their matches on­line to tens of thou­sands of view­ers ev­ery day.

Fort­nite is like a mix of e Hunger Games, Minecra and Lord of the Flies: 100 play­ers drop down on an is­land and bat­tle it out un­til only one player or team is le stand­ing.

One su­per­star gamer, 19-year-old Ali “Myth” Kab­bani, was signed by TSM early this year as the team’s Fort­nite stud. e sign­ing soon led to a $1.5 mil­lion in­vest­ment by TSM: e team now leases a 4,300-square-foot house for its ros­ter of four to live, prac­tice and stream for hours a day. e seven- gure bet is al­ready pay­ing o . Kab­bani has be­come the sec­ond-big­gest star on Twitch, with 4.1 mil­lion fol­low­ers, driv­ing new fans to the TSM brand. at ever-grow­ing au­di­ence helped bring about a new spon­sor­ship from Chipo­tle, which sees TSM as a means to in­ter­sect with pop cul­ture.

ough it’s un­de­ni­ably a block­buster game, there are still ques­tions about Fort­nite’s po­ten­tial as an es­port. And while the game’s cre­ator, Epic Games, is o er­ing $100 mil­lion for prize pools across a year of tour­na­ments, it’s un­clear how these com­pe­ti­tions will be struc­tured or even broad­cast. But TSM and Dinh are used to leaps of faith.

From a work­ing-class fam­ily of nine in Camp­bell, Cal­i­for­nia, Dinh was a peren­nial C stu­dent in high school but found his calling a er dis­cov­er­ing the edgling League of Leg­ends in 2008, when he was 16. Play­ing un­der the name Regi­nald, he soon be­came the top-ranked player in the world and started his own team in 2009. He and his brother Dan de­cided to cre­ate com­mu­nity web­sites and au­thor guides for the game. Long be­fore ESPN and Ama­zon thought to broad­cast League of Leg­ends com­pe­ti­tions, Dinh was host­ing and stream­ing them.

Soon a er, Dinh dropped out of col­lege and bor­rowed $5,000 from his mother to in­vest in his vi­sion. His gam­ing-guide site, solo­mid.net— named a er his po­si­tion in League of Leg­ends— at­tracted mil­lions of vis­i­tors, which meant Dinh was pock­et­ing around $60,000 a month. In 2013, Dinh re­tired as a player at 21 to fo­cus on his busi­ness, which still in­cludes gam­ing sites.

Five years later, he re­mains hun­gry, tak­ing ag­gres­sive new steps in the in­dus­try he helped pi­o­neer. In July he re­ceived $37 mil­lion in Se­ries A fund­ing from a group of in­vestors that in­cluded the A-list venture cap­i­tal rm Besse­mer Ven­tures Part­ners, the Hall of Fame NFL quar­ter­back Steve Young and the three-time NBA cham­pion Steph Curry. “It only made sense to go with the best of the best,” says Curry, who plans to use his ca­chet to help TSM reach even more young men. With the new cap­i­tal, Dinh plans to dou­ble sta to 100 and use up to $15 mil­lion to build a 25,000-square-foot train­ing fa­cil­ity and op­er­a­tional head­quar­ters in Los An­ge­les next year. e new head­quar­ters will gen­er­ate rev­enue through spon­sor­ships and fan events and serve as a base where play­ers can train, in uencers can cre­ate con­tent and TSM can de­velop as a house­hold name for a new gen­er­a­tion—and much of this is well un­der way.

At TSM’S Fort­nite game house, Myth Kab­bani re­calls watch­ing TSM play when he was in mid­dle school and realizing es­ports was a re­al­is­tic ca­reer goal. When the or­ga­ni­za­tion reached out to talk about a part­ner­ship, he says, his heart started to beat out of his chest: “Join­ing TSM is less like join­ing an or­ga­ni­za­tion and more like ght­ing crime with your fa­vorite su­per­hero.”

Tro­phy life: TSM founder AndyDinh with the 2017 League of Leg­ends North Amer­i­can cham­pi­onship hard­ware. He used to give $20-an-hour gam­ing lessons to Steve Arhancet, now CO-CEO of ri­val Team Liq­uid.

HOW TO PLAY ITBY JOHN DO­BOSZFounded in 1979, Ac­tivi­sion Bl­iz­zard orig­i­nally sold games on car­tridges for the Atari 2600. To­day it’s the name be­hind block­buster fran­chises like Call of Duty, World of War­craft, Over­watch and Candy Crush. Rev­enue has grown 17.9% a year for the past decade, and it’s ex­pected to grow 4.7% to $7.49 bil­lion this year. Wall Street looks for earn­ings to surge 15.3% to $2.63 per share. It’s no yield gusher, but since 2010 Ac­tivi­sion has paid an­nual div­i­dends, and the pay­out has grown 127% over the past eight years to $0.34 per share last March. The av­er­age price tar­get among an­a­lysts for Ac­tivi­sion is $80.John Do­bosz is ed­i­tor of Forbes Div­i­dend In­vestor and Forbes Pre­mium In­come Re­port.

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