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ESL CEO Ralf Reichert on WESA, addressing conflicts of interest and the Esports Hall Of Fame

ESL One New York 2017 dates
ESL One New York 2017 dates are Sept. 16-17 at the Barclays Center in Brooklyn, New York. The $250,000 Counter-Strike event will feature eight teams.

It has been an eventful year for the ESL, to say the least.

The esports giant produced seven major live events and conducted two more seasons of its online Counter-Strike league. It increased the prize pool for those leagues going into next year and helped found in May the World Esports Association, an organization formed in coordination with seven European teams that claims to bring integrity to the industry.

The ESL also found itself in the middle of criticism regarding a handful of scandals that were uncovered this year. To start, WESA’s launch was met almost universally with disdain and questions of conflicts of interest regarding the ESL’s involvement with the association. In May, it was revealed ESL CEO Ralf Reichert still owned shares in SK Gaming, which was in a contract dispute with the then-Luminosity Counter-Strike roster. (Reichert sold his shares and SK completed the transaction).

In August, reports from The Esports Observer and Richard Lewis revealed ESL board member Jens Hilgers had financial ties to Fnatic and G2, which is another conflict of interest. One of Hilgers’ companies is also an investor in The Esports Observer.

Slingshot’s Vince Nairn had the chance to sit down with Reichert at IEM Oakland for an extensive interview in which he looked back on the year, addressed WESA and the other conflicts of interest and touched on what’s next for the Esports Hall of Fame.

Vince Nairn: If you could, how would you sum up the entire year for ESL?

Photo courtesy of ESL
Photo courtesy of ESL

Ralf Reichert: I think it’s been an amazing year for us on many different fronts. We did more stadium events than the year before. I think we grew it by two. We did five last year, seven this year. Viewership has been increasing. General interest is increasing. The prize pools are increasing. So all the metrics KPI are growing, but I think we did a lot of other strategic things: Starting partnerships around integrity, around original content with Pilgrim, with Playstation, around being able to play grassroots tournaments directly on the console. So there’s a lot of infrastructure things we did this year, which hopefully will fuel the growth in the next couple of years. For us, as well, it’s always important because this thing is so global with esports, the audience is so global. Doing the first major event in Brazil for us was a big one. Going to Korea, which is still open, which is the last stop missing. Just for us, thinking about this audience and going where it lives is an important piece of the puzzle. We hope to grow that going forward.

VN: This is your first time at the Oracle, right?

RR: This is our first time here, yes. We had the same event last year in San Jose at the SAP Center.

VN: What do you think of the venue and how it lends itself to esports?

RR: I think it’s very intense in a way. So SAP, from an architectural perspective, is so high. This compresses the atmosphere and the emotions much better. So I think we’re very happy about the choice. It obviously is a bit of an older venue, so it’s not as slick as the SAP, but it feels like the community doesn’t really care too much about that. They’re enjoying the event more than in SAP due to the atmosphere, which is more intense.

VN: You guys have primarily done Counter-Strike events but have mixed in others, too. Specifically this year you added Street Fighter in New York and Overwatch at GamesCom. How do you go about figuring out what games to experiment with? And do you think you’ll do either of those two again?

RR: It’s about the potential we see. It’s mainly about the potential. So whenever you see a major tournament, we believe in the potential of the game. I think both of them (Street Fighter and Overwatch) went extremely well. Overwatch is one of the most hyped games right now. So certainly we’re going to do more tournaments around it. And Street Fighter, although it’s been around so long, it was for us always a little bit hard to touch — first, because the community is a very different one from the traditional esports games. The broadcasting piece is closer to original content, a little bit more toward storytelling about talents than a traditional team game. So it’s something we’re still learning. In both of them, we believe we’re gonna create much more content, and hopefully much larger tournaments.

VN: The IEM circuit for League of Legends is sort of in an odd place. The timing for this event is after worlds but before free agency really starts. There have been teams declining, and the KeSPA Cup format resulted in the seventh best Korean team coming here. Are there any changes to be made to enhance the League of Legends field at these events?

RR: We’re actually in constant communication with Riot around it. We have a solid plan for next year to improve that situation — nothing we can really announce right now — but I am very optimistic that there is a right place for IEM in the League of Legends ecosystem. I think we found it, and hopefully we’ll work it out. It has both things. It has a little more of a fun approach to it, but at the same time it’s meaningful and can have the right talent playing so that it’s an improved situation to today.

VN: One of the biggest things that happened this year was the formation of WESA. It was met almost immediately with vitriol and skepticism. Did you anticipate such a visceral reaction?

RR: We didn’t. The honest answer is for us, it’s always about creating value and having the teams and players participate in, let’s say the enhanced revenue streams that are coming up, is something that we’re doing with WESA. We plan with WESA. It’s a little bit like a Champions League model idea, and something we’re going to move forward (with). We under-estimated a little bit on maybe our perceived market status. We run so many tournaments. We run such a large share of the Counter-Strike ecosystem tournaments. So there’s a saying that with large power comes large responsibilities, and we didn’t really think in that metaphor, to some extent. We simply underestimated how much people care, in a way, or how afraid they obviously are that we’d do something that hurts the ecosystem — which is the exact opposite of what we’re trying to do. And hopefully it shows them what we’re doing.

VN: Yeah, it seemed like conflict of interest was the thing people had the most concerns about. Looking back at it now — and knowing you couldn’t change the way the leaked poster happened — would you do anything differently about the launch?

RR: The honest answer is that we wouldn’t do it much differently. I think we would have made the positioning much clear, much more focused. I think the Champions League analogy we’re using right now is something we should have probably communicated much clearer, and had a less broad approach to it. Very simple. Straight forward. I think we didn’t do a goob job, which happens if you just try to build things. It’s not that we take a playbook and repeat it. We’re part of building a new ecosystem here, so we try things. And if we fail, we apologize and try better.

VN: That term “conflict of interest” is one that has come up a handful of times this year regarding you and the ESL. There have been some reports: One was about ESForce perhaps holding a financial interest in, Na’Vi and SK Gaming. Another was about Jens Hilgers having financial ties to Fnatic and G2. How have you at the ESL addressed these conflicts of interest?

RR: I think there’s a couple of ways to look at it. First and foremost, a lot of our perception, and there are a lot of examples from traditional sports. Even in Germany, as an example, for the longest time, there was actually one company that owned two Bundesliga clubs. So most of the time it’s not a real life problem, but it’s a perception problem — which still is relevant, right? I don’t want to downplay it. So we’re working behind the scenes to make sure that the reality and the perception fit. Do we believe that long term, every team should be independent 100 percent? Yes. Sometimes there are status quo situations where it needs some time to resolve it. But there’s going to be actually a couple of announcements coming out tackling this discussion, and we feel comfortable that along the next one or two years, together with the parties — not against it — and I think that’s one thing ESL does a lot. We’re looking for solutions. We’re not looking to tell people what to do. Something that is being tackled a lot behind the scenes, but there’s going to be some public announcements going forward with that. That’s the good thing about esports, right? And about a very vocal part of the esports community. They have been identifying those things, which after all protects esports from itself going forward. I think that’s fine, and I think the real problem is smaller, but it still needs to be solved. So it’s going to be solved.

VN: And conflict of interest doesn’t necessarily mean any wrongdoing is happening, but…

RR: But it’s the potential of it, exactly. And that needs to be fixed in the long run to protect the sport.

VN: Over-saturation is this issue in Counter-Strike that has popped up a lot lately. You guys run an online league. ECS is new. ELEAGUE is new. There’s talk PEA in North America is going to run its own league. What is your stance on how many tournaments there are? And what can be done to both help tournament organizers continue to be successful without wearing down the players?

RR: It comes down a large extent to the players. If you look at the Dota ecosystem, for example. A couple of years ago, it was super over-saturated, and to some extent the players actually took a step back and played less tournaments. Our approach is to create as much value around what we’re doing and create the biggest tournaments, the biggest prize pools and all of these things to enable the players to make choices that they have to play less. To some extent, it will shake itself out. To some extent, the players need to take a stand and do some more decision making. On the other side, if we look at traditional sports models or if you look at the Korean model with KeSPA, being too rigid and too singular with it is a big risk to the market as well. So i feel it will shake itself out, and creating great content is what everyone wants. So we’re working on that. Unfortunately, on the tournament organizer’s side, it’s challenging to get this all under one hood. I think we did a decent job together this year, specifically with ELEAGUE, to align the schedules and to some extent as well with ECS.

VN: Yeah, how much of this comes down to tournament organizers being able to get on the same page? Which I know isn’t always the easiest thing in the world. But how much would that just aid the entire situation?

RR: I think there are two aspects to it. I think some of it is easy. Some of it can be solved with good will, and I just referred to some of these things. Other things, for instance, you book a venue like this one year before, there’s no going back. So some of it is just inherent planning challenges. So some of it is communication. Some of it is planning. And some of the planning challenges we’ll never be able to fix, so it’s always going to be there, but communication can minimize them.

VN: What is the status of the Esports Hall of Fame? It launched earlier this year but we haven’t heard much from it lately. Are there more planned inductions?

RR: I think we’re looking to create, let’s say to move it from a virtual product, which it is right now, to a physical product. We’re negotiating right now with a couple of venues and sports, traditional sports awards shows, to make this a physical product, kind of. To create a physical version of that. That was always the ultimate goal. It’s not done, but it’s on its way.

VN: You recently partnered with Yahoo for streaming. How did that come about and what are the things you have to be cognizant of when partnering with a media company?

RR: Esports content, live tournament content, is getting a lot of recognition everywhere. And Yahoo brings 700 million unique users a month to the table. The first couple tournaments we did with them were tremendously successful because of what they could do. They could activate an audience we wouldn’t have reached otherwise. I think they’re a great partner to extend the fandom and the viewership of esports beyond what it is now. And that has worked so far very well. We’re still in the very early days, so there’s still a lot of iterations and learnings we need to do on both sides. But partners like that who can bring additional people into esports and make them fans — and therefore make it a larger market for everyone — is something we’re super thrilled about going forward as well.

VN: One last question I forgot to mention earlier about WESA. After the initial launch and rollout, we didn’t hear much at all from WESA for a few months. Was that strategic, in terms of trying to have things ready to do before announcing what you’re doing?

RR: First, we learned from the announcement that we should be very precise in what we’re doing and very straight forward. The other piece as well was about finding a commissioner to run it. Because finding an independent commissioner as head of it who pushes it forward was an integral piece. It’s something we always communicated. Finding Ken Hershman, who was a big wig media executive in his former life, was quite an interesting journey to go through. And now that he’s started and is doing different things and learning the market, there’s going to be much more communication going forward and more things going to happen.

Cover photo by Patrick Strack/ESL,