G2 Esports CEO Reveals Industry’s Most Important Factors For Financial Success

Games G2 Esports CEO Reveals Industry’s Most Important Factors For Financial Success Matt Gardner Senior Contributor Opinions expressed by Forbes Contributors are their own. A British writer covering indie and retro gaming, esports, and more. New! Follow this author to improve your content experience.

Got it! Jun 23, 2022, 06:00am EDT | Share to Facebook Share to Twitter Share to Linkedin G2 Esports CEO Carlos Rodriguez believes his team has what it takes to become the biggest in the . . .

[+] world. G2 Esports The G2 Esports juggernaut shows no signs of slowing down. Combining success on and off the playing field, G2 has doubled in value since 2020 to $340 million , making it the sixth-most valuable team worldwide–and the biggest outside of Los Angeles.

Based in Berlin, G2 has had its American expansion on the cards for a long time , and it’s now poised to open its next office in New York City. The organization’s enigmatic and outspoken CEO and founder, Carlos Rodriguez, sees it as a natural progression to grow his brand even further–at a time when he believes that rivals are burning cash, or simply making the wrong investments. In an exclusive email interview, lightly edited for clarity and length, Rodriguez explains how he sees the esports economy developing–and why he’s adamant that G2’s strategy will see the team top the table in the coming years.

Entertaining can be more profitable than winning For Rodriguez, the secret to the company’s recent success and rapid growth isn’t because of trophies, even if they play their part. “We play to our strengths, which are two-fold,” he says. “[F]irst is storytelling [and] entertaining people, and second is winning.

” He says that any esports team cannot rely on winning all the time, even though he’s keen to clarify that G2 has “won the most over the last four years on average across tier-one esports titles. ” Indeed, according to Rodriguez, G2 has grown 85% year-on-year on this basis alone. MORE FOR YOU ‘Demon Slayer’ Season 2 Finally Has An Actual 2021 Release Date Netflix’s ‘Squid Game’ Season 2 Not A Sure Thing, Says Director ‘Genshin Impact’ Still Refuses To Increase Anniversary Rewards, Despite Fan Outcry However, he believes the real key to G2 Esports’ success is its brand-heavy in-house strategy.

He continues: “We monetize very differently from how our competitors [do]–they often just monetize their individual creators, which has a very low margin and it’s neither scalable nor sustainable. ” Rodriguez explains that for the most part, G2 makes money through its own content, and creates new intellectual property it owns in perpetuity. This, he says, makes G2 a significantly different business which is more appealing to blue-chip brands, and “why [G2] has the most impressive line-up of partners.

” As it stands, G2’s long list of sponsors includes big hitters like Mastercard, Adidas , BMW, Red Bull, and Philips. “Sponsorship deals are a big element for how our business is sustainable,” he continues. “We are able to create far more value for partners than the money they pay us, which ultimately means they are prone to renew–this is something we take pride in, and goes to show our ability to add value to them over the years.

” Rodriguez thinks G2 Esports is possibly the top team in terms of selling in-game merchandise, believing the organization’s logo and colors in particular are very popular. “[O]ur fans will buy anything that you put in a game that has the G2 logo or name on it, which is amazing,” he says. This, on top of its league revenue share from some of the largest tournaments on the planet, makes up a major portion of its income.

Yet one team has grown even more than G2 since 2020–though Rodriguez believes his team’s approach is a better guarantee for long-term success. Outgrown but never outgunned In the last two years, as per Forbes’ 2022 esports round-up, G2 was only outgrown by 100 Thieves. Boasting 142% growth and a $460 million value, 100T only sits behind TSM ($540 million) as the second-most valuable esports business today.

However, Rodriguez wonders if its “significantly different” strategy will guarantee the same gains in another two years. “Their biggest revenue stream is physical consumer products, which they’re quite good at. [E]very time 100 Thieves releases something, there’s a ton of hype around it,” he says, though adds that a lot of its revenue is directly or indirectly related to individual content creators, which can “own most of the leverage in that relationship”–something he personally believes is not sustainable in the long run.

Rodriguez posits that businesses with such strategies may have a problem maintaining long-term brand partnerships with blue-chip brands, too. “Such creator-heavy businesses make brands find less incentives to partner up with them. It’s not a business that relies on its own strength to tell stories, build winning teams, and ultimately be in control of its own success.

” Nonetheless, Rodriguez thinks 100 Thieves has done a great job at positioning itself as “the LA team,” tapping into a huge base of west-coast gamers and fighting for market share from FaZe Clan. Yet unlike this and many other contemporaries, G2 isn’t targeting the LA market–not yet. Carlos Rodriguez, founder and CEO of G2 Esports.

G2 Esports A New York state of mind Los Angeles may be a hub of esports activity, but G2 is transfixed on the biggest city in North America–and it’s only the beginning of a grander strategy, because Rodriguez doesn’t believe in geographical connections to a team–only allegiances to a brand. “We understand the importance of a physical presence: events; activations with the fans; viewing parties; opportunities for people to show up physically for experiences; community building; [and] tournaments,” he says. “We’re going to make sure that happens, starting in New York.

We have other cities in the U. S. that we intend to be heavily represented in too.

“We’re going to continue doing what we’re doing, telling stories, continuing to build new IP that entertains people, and winning. That’s how we’ll not only remain number one, but we’ll separate ourselves from the rest of the pack. ” To triumph in such a competitive market, Rodriguez has identified a number of esports management trends that he seeks to avoid–and recommends investors dig deeper to identify them, should they hope to invest in any competitive gaming organization.

The red flags for Rodriguez Rodriguez believes many esports teams fail after going public, and raising capital through this measure may not be the best approach in certain circumstances. He says there are two major reasons for esports teams to go to market: firstly, for founders to make additional money from their business, which “would explain the majority of examples out there;” secondly, to raise large amounts of capital that can be used to acquire other companies in the space, and hit projected revenues. “The problem I see is that, as of today, there aren’t many companies out there I would deem as good acquisition opportunities, and thus a lot of that raised capital would be unused, or used ineffectively,” Rodriguez says.

“Ultimately, if I’d be in ‘company acquisition’ mode, I’d very seriously consider going public. Maybe in the future. Definitely not right now.

” While there are a lot of other reasons to go public, he firmly believes most public esports companies have chosen to do so for the wrong ones. “There was a point when I considered making G2 go public, but I realized that I wouldn’t know how to spend the $180 million over three years,” he says. “How do you spend that type of money? Unless you’re buying gaming properties, then I don’t think there’s anything worthwhile to spend it on at this very moment in time.

” Rodriguez highlights personal red flags for potential investors and sponsors in esports. First and foremost, he emphasizes a need for them to look for affiliation: an emotional connection with premium brands that you anticipate will lift trophies and command a large audience is key. “You must keep in mind that your logo will be very present in those key moments that people will remember,” he asserts.

“When G2 lifts the Worlds trophy, people will remember that moment forever. An emotional connection with the brands we work with goes the longest way in building lifelong relationships between the fan and the brand, the person and the product, and the person and the service. ” Secondly, it’s about those businesses who actually showcase their connections to supportive brands, adding: “We’re proud of all of our partners, their products and services, and continue to educate our fans of what they do.

“We also make sure they understand that we wouldn’t be able to do what we do without the financial support of our sponsors. We want the brands to improve the quality, appeal, and relevance of our content just like we have seen in some of the most decorated IPs out there. ” The real key to success in esports If teams are going to succeed in esports, Rodriguez is blunt with his advice: “Everything is a bad investment if you’re not building a brand.

” If esports teams treat themselves like traditional sports teams, he says, they’re going to fail, because these established organizations don’t need to do the same brand-building exercises. “[Traditional sports teams] expect local people to show up for their events, and they do,” he continues. “This isn’t how esports works.

“As long as you can make English-speaking content that speaks to the audience playing or watching video games, people from all around the world will want to watch it and, in turn, be fans of yours. There are more North American fans rooting for us in the League of Legends MSI World Championship than for the North American team right now, because nationality comes second to brand power. ” G2 lifting the League of Legends European Championship in Rotterdam, The Netherlands.

G2 Esports Rodriguez explains that G2 uses its media team to tell brand stories, and players are massive investments; leveraging its players in isolation makes it “almost impossible to make the business profitable,” but its in-house content supports all parts of the business. “So many teams have been unable to make a profit, and that’s not a massive surprise to me,” he says. “[S]ome teams have lost tens of millions of dollars.

That’s what I’ve invested since the inception of G2. I have no idea what [our rivals are] doing–maybe lots of parties? To celebrate what, exactly?” Although he’s well-known for trash-talking the competition with his tongue firmly in his cheek, Rodriguez remains respectful to the major players in esports. 100 Thieves, he says, has a firm grip on modern culture, encompassing gaming, hype, street, and fashion.

He adds that Team Liquid has a “very ambitious ownership group that will not let them fail,” and “they’ll continue to spend insane amounts of money if necessary to make the company relevant. ” Rodriguez reserves perhaps his biggest praise for FaZe. “[It] has the biggest share in gaming at the moment,” he believes.

“They’re too big to fail. I don’t think they’re going to explode in the next year, but those guys are definitely going to be there for a long time. ” And yet, true to form, Rodriguez firmly believes G2’s strategy will see it overcome the competition on every level.

“If I’m being honest, I think we’re also getting to a point where we are too big to fail. We have too much reputational advantage–too much credibility built throughout the years at a business level and at a fan level. This stands at a publisher level as well–if you create a new game, you need G2.

” Ultimately, Rodriguez thinks G2 Esports is in the best position to win the race for multiple reasons. He concludes: “If you are starting in esports, there’s a very high chance you will gravitate towards becoming a G2 fan. If you are a brand that would like to sponsor the top team in the world, there’s a very high chance everybody is going to point to G2.

“We were the new kids before, but now we’re structured internally to scale the quality of every employee, at every level, through the roof. “It’s straight-up incomparable to anything out there. The culture of our organization is totally unmatched.

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