Host, Ryan Alford, and Producer, Reiley Clark, sit down to discuss a few business, marketing, and pop culture highlights from the week.
Here's the link we talk about on this episode, https://youtu.be/SC5fqPdV-eE
Ryan Alford [00:00:00] Hey guys, what's up? Welcome to the latest edition of the Radcast, the Radical Marketing Podcast. Excited today is the second of many guests we're having over the next four to eight weeks in the eSports industry. It's been a fascinating discovery of really just the breath, scope and size of the industry and really excited to have today's guest, Charles Conroy, the vice president of gaming at the Switch trials. Really appreciate you coming on.
Charles Conroy [00:00:33] Thanks for having me, man. I'm excited to be here.
Ryan Alford [00:00:35] So let's dig right in, Charles. So V.P. of gaming at the Switch. A lot of past experience in the sports realms, I know, with teams and events and all of that. But maybe let's just start right down the line and give everybody that condensed version. Maybe I say that because we keep these the 30 to 40 minutes, I have anyone’s life story or business life story might be longer, but would love to just dig first in kind of your background in sports and just kind of into the general career path for you.
Charles Conroy [00:01:10] Absolutely, so I'll make it as condensed as possible. 16 years of my life, but yeah, then in 1999, as a player playing Counter strike, I found this game online with some buddies and we found out that they were live events to participate for cash in this thing. So what a little team together, my friends, we drove down to Dallas, Texas, and we played in our first international tournament. And this was about 2001 at this point. And when we were there, we realized people flipped all around the world to compete for what was, I think, 50 grand at the time, which was a huge deal. We absolutely annihilated. We didn't do well at all. No idea how good these guys were. But I saw a business there. So I ended up taking my team, going out and getting some corporate sponsorship from some endemic brands and putting together a really solid roster of some of the best guys in the country. We eventually became the number one team in North America, and went around the world representing the U.S. We played in the sports World Cup in France. We're on a TV show in Korea for two months where we actually lived in the player village and saw how massive this thing was getting. And at that point, I was putting my full force behind it. I was quite young at the time. I started the company when I was 16. Wow. So when I was 18, when I was doing all the traveling, I was also a freshman at SMU in Dallas. So I was trying to balance college and running this company. And then DirecTV came out with a TV show, which should be the first example of franchise leagues in North America. So they had eight teams fully funded by DirecTV in four different games. They had a big draft at the Playboy Mansion, which I went to when I was 19, a certainy of my life.
Ryan Alford [00:02:53] And they for every 19 year olds dream literally.
Charles Conroy [00:02:58] Yeah, it's crazy. And they're like, what are you here for? I'm a part of the video game team.
Ryan Alford [00:03:06] This is before school. Do you have your fake ID? And I didn't need it.
Charles Conroy [00:03:10] I didn't need a guardian. So that was pretty crazy, right. This new league had come out. Your team was given a six hundred thousand dollar a year budget. They paid for apartments for everyone in L.A. What's your per diem and your car? And these guys went from making five hundred bucks a month as players to thirty thousand a year for an eight week season. So we're living in L.A. for eight weeks filming this TV show. My team didn't do so well. Season one, we killed it. Season two came back and we're the strongest competitors in the league. But this is a real experience. So this was on TV around the world. They then expand internationally. They built the league a little too fast, too soon and burned through about forty five million dollars in two years. Wow. I don't have a season three. It was really over the top. They took EA Sports from, all right, we're going to pay five, 500 bucks a month. And it's a very nice thing to let go as hard as we can get. NFL producers, let's get NASCAR guys involved. And it was awesome. Just a little too early for that to shut down really abruptly. And it was sort of a dark time for U.S. sports because people felt NewsCorp and DirecTV couldn't do it. Forty five million dollars in two years. Maybe this thing was going to happen. It was going to go the way of professional bowling where people watch it, but it's about as big as it's going to get. And so it was an amazing thing to be a part of. But as fast as it rose a crash that quickly as well, it's at that point, a few of us regrouped, a very close friend of mine, Jason Lake, who sort of an iconic figure in sports now ran complexity gaming prior to this TV show. I was like, let's rebuild complexity. I at the time was twenty one finishing up at SMU. And I wanted to do this full time. We're doing this full time. We didn't have any cash. We had a great brand and we had a bunch of stars that were available to us that had just spent the last two years on international television. So we had talent, we had a brand, we had no funding whatsoever. So I went to CBS for the pitch deck Jason and I and another guy named Jason Bass, who ran a website called Goffer. I got comments from ESPN Dotcom about sports. We got together and we started this team. I literally walked too. Yes, with a pitch book, like a good book, going up to every booth I thought would be even interested in gaming. Creative Labs took a gamble on us right there at CBS and committed to being our title sponsor for the team for the year. They gave us enough money to launch the organization, relaunch it, I should say, and we were off to the races once we were back as really the only North American independent sports brand that had survived this massive shift in North America. We had a ton of support, both from fans and companies that wanted to hop in. So we built the thing back up pretty quickly, and ended up having a product line best-buy. Of complexity products, which is the coolest thing at the time I had ever worked on all of our partners would work with us to have our players test products and optimize them for gaming and then kind of tell the story of the team and the design process in the back of the box. And we got to share in all those products. So that's when we turn complexity into a real business. We're all doing it full time. And then after a lot of success in the space which came out and the viewership numbers for sports really became apparent to two brands out there and a ton of money once, which came out, a ton of outside money from sports teams started coming into sports and it happened fast. Man, we're talking nine months. All these teams went from ideas to 15, 20 million dollars in funding. So we're seeing everyone around us get funded. And we've been sort of concentrating on the fundamentals and not fundraising. And they need to to shift at that point as we were operating on like a three million dollar a year budget versus teams that had a 12 million dollar year budget and they were getting cash after being around for two months. We've been around since the three. This was 2015. And so we really needed to shift our focus and go after some of that. And once we did, we had a ton of offers for cash because complexity being overspread in North America appealed to a lot of brands. We ended up selling the company to the Dallas Cowboys, which was an insane process. There's a lot of parts of that process that are just insane, right? I mean, this is something we started. I was in a college dorm room, literally. Jason started it in his house and was nice enough to bring me in after the championship gaming series. But to now be sitting across from the Cowboys. I mean, it's crazy. Their vision for the team overall won out because they fully integrated the team in the Cowboys system. The Bears eat with the Cowboys for breakfast and lunch. They have the same mental health facilities that they have access to, all the physical training that goes into it. They built them a gorgeous facility, the game high performance center out there. BRISCOE at Star. So once the account was purchased, the team I was out and my partner, Jason Barth's was out on the lake who founded it, stayed on as CEO. And he's done a fantastic job with that brand. Still a very good friend of mine today. And they're absolutely complex, absolutely killing it. They have arguably the best team in the world right now. And they won the Madden Championship last year. And so they're doing great things for the Cowboys, though, which brings us to today. Hopefully this wasn't too long, it was perfect. And I was left gaming for about a year because I've been around since I was 16. I was now 30 at the time and I just needed a little break. Ended up opening a restaurant in New York, doing something completely different, had a blast, but really missed the industry. I, frankly, was one of the forefathers of. So I had a few offers to come back and a buddy of mine at the switch talked to me about what they did. And what the switch does is we're the world's largest transmission broadcaster. So we take live events and we put them on TV, including the Super Bowl, the Oscars, the Emmys, even the royal wedding. And beyond that, we produce events so we have more production in the cloud. We have remote production and actual physical facilities in Burbank and in America. Obviously, we'll call it world. Really not producing on site has become very popular. So we've been doing a ton of remote production for the PGA, for Conference USA in the traditional world. And we're the world leader in sports now and infrastructure and transmission. So almost every live sports event is using us in some way. It's been really exciting. I've been there for a year, building out for a year and a half now building up the sports vertical response has been phenomenal. And I'm glad we can bring what traditional sports has from a quality level to sports.
Ryan Alford [00:10:07] A lot to unpack there. You touched so many levels of it. I want to start like I could start a lot of places, but I want to start with that complexity part. You obviously had the experience early on as a gamer and all that, which is interesting, but unpack a little bit for someone, because I think it was hard for me, I get it now, having been somewhat of a gamer when I was younger and following it peripherally, being in an agency role where where we had some sponsorship deals and I worked on surprise and stuff, so I, I got it and get it at a holistic level. But for someone kind of listening to understand exactly what complexity was like, I know you said, well, we put teams together, we won tournaments, but as a brand, as an entity, what was and is complexity. What is the business model for someone kind of hearing what complexity is? Because I think sometimes those things kind of get thrown out there. But I think people I don't understand how do people make money in gaming and what exactly is this?
Charles Conroy [00:11:23] Yeah, I got you, man. So complex is a gaming organization. We call it a team. And underneath that banner of complexity gaming, there's players that play various titles. So you might have five, six, seven, eight games under one brand. So complexity is the overall entity. And it'd be like an entity owning a Major League Baseball team, an NBA team, an MLS team, and then putting it all under one brand. So let's say the Giants weren't just football. The Giants also had Giants baseball. The Giants also had giant soccer. And that's how gaming works. For the most part, there's very few brands that are competing in one title because gaming is fluid, the most popular game is changing. So while the NBA is the established, I'll call it ball and hoop play, if you have a hoop, it's basketball. Well, there's ten different types of shooting games or ten different types of moments, which are the games you see with the top being the little guys running around. And so there's multiple ball and hoop games in one category. So you might have multiple teams in the same type of game or a shooter like fortnight. Right. That's a shooter. But so it's counter strike, probably different games, totally different fan bases. So you have different teams all under one brand. And so that's what complexity is and that's what that is.
Ryan Alford [00:12:50] How does complexity make money?
Charles Conroy [00:12:53] So there's a lot of different ways to make money for any sports team. The most traditional way, which is corporate sponsorships, right. That's back in the day. That's how we did it. You got a sponsor that paid you.
Ryan Alford [00:13:05] So Mountain Dew comes along and sponsors complexity. I'm not saying that's definitely who you had a sponsor, but as an example, Mountain Dew knows that this is an affluent group, that of people that are into this and no different than sponsoring the NBA or facility or anything else. Mountain Dew comes along and goes, we're going to sponsor you for X dollars and X placements, brand placements, not just logo placements, but activations, if you will. And so that's the primary monetization trigger.
Charles Conroy [00:13:42] And you do a lot of cool brand activations. So these eyeballs are the hardest eyeballs to reach and they're also the most desirable. It's young people, everything's tall, young males. It's actually a lot of females that watch gaming. You're looking at fourteen to forty five higher disposable income than an NBA fan, higher disposable income than actually most sports fans. And they don't watch TV. They don't read traditional papers. So how do you get these guys? You get them on their eyeballs, on their eyeballs or on twitch. Their eyeballs are on who will integrations with their favorite team that they see on Twitter. Different product drops. You have to get to them organically and you have to be smarter about how you get to these guys. But once you do get to gaming, they've shown they're very willing to support brands that come in in support of the space. BMW, I think, has done an incredible job this past year, doing a huge rollout with five teams and they've painted some of the cars in the team colors. And they had the guys doing driving tricks and talking about why they like BMW. And some people are like, wow, BMW is a luxury brand. Why would they do that? Well, a lot of gamers can afford I mean, what's the starting BMW like 40 grand, 50 grand. It's not out of the reach for this market that's actually very much in line with these guys that are 22, 23. Actually probably work in a tech space make more cash than your average citizen. And they have a little bit more money to spend and they're willing to spend it. They're willing to put it into premium products if you target them the right way.
Ryan Alford [00:15:29] Is the word IT in the title for 80 percent of this demographic.
Charles Conroy [00:15:35] I mean, a lot of people would think that right. But EA Sports fans are just like any other sports fan, like they enjoy what they like to enjoy. They do everything under the sun. And I think that is a very common misconception out don't live in their mom's basement in our society that because,
Ryan Alford [00:15:54] I think that's what people think. It's so far from the truth. It's like totally.
Charles Conroy [00:16:01] And it's just like an NFL fans -- come in all shapes and sizes. This demographic is largely not been like that. If you look at these pro players, a lot of them look like you or some a little bit more like you. Jim'll be a little bit more than I do.
Ryan Alford [00:16:17] But hey, I gotta make up for all my other deficiencies somehow.
Charles Conroy [00:16:23] But yeah, I mean it's all across the board. But from a financial perspective, this demographic does have more income than your average sports fan and they've shown that they've been willing to spend.
Ryan Alford [00:16:37] So back to the complex examples of sponsorship. So it's less about putting teams together and obviously winning. The fund is in the winning, you putting the teams together. You want them to win. But is that less important than the influence of the team game influence, though? Is it kind of a chicken or the egg thing? Like you need to put together teams that win to get the influence. You get the influence when you have teams that win.
Charles Conroy [00:17:05] So there's also a ton of other ways to make money and run through those really quickly. Great steals. So teams are getting cut in on media for these tournaments and when three or four million people are currently watching, that can be real money. And I think the future of sports income for these teams are meteorites deals much like the NFL. So meteorites are becoming a huge topic. Product drops. So a lot of these brands now have interesting clothing lines that I just did a deal with Gucci to do a limited edition watch and stuff like that sells because it was limited. And again, these face Clamato product drops, they shut down parts of New York, literally streets because hundreds and hundreds of thousands of people, not hundreds of thousands, thousands of feet. Yeah. Have come out. And their fan base is rabid for new stuff. So there's a lot of ways to make money outside of just winning. And you for this kind of example, they really are a big brand out there. And they have a movie studio. They have one of the top channels on YouTube gaming. They have a content house. They make their money off producing really interesting content and winning's very much secondary to them. I could look right now like eight million Instagram fans. So they really engage through media and content creation and creating this lifestyle brand that's really cool and relatable in the space. And then winning is part of that. Obviously, they want to win. They compete in sports, but if they lose, they're not going to lose money. What other teams rely on the winning to get the viewers to get them sponsorships.
Ryan Alford [00:18:53] Got it. You build the brand big enough and interesting enough, it supersedes the winning. I mean, it's no different than other businesses. And a lot of ways,
Charles Conroy [00:19:04] There's a lot of teams I could name right now that are not winning, that are huge brands. Hey, I'm a Knicks fan. It's tough, man. It is. If you want to go to the garden, it's still two fifty for a ticket. And like me and the worst team in the league.
Ryan Alford [00:19:19] Then the brand is huge regardless of that one in 20 something years, right? Yeah, it's tough. But I know I tried to. I came across a New York fan living there and for all the teams and it was not the best of time periods for baseball was good.
Charles Conroy [00:19:38] But the Yankees will always be interesting, right?
Ryan Alford [00:19:42] Exactly. The meteorites. That's fascinating. Twitch kind of set this use of fire, I guess, in many ways. Correct. I know it's you got Facebook, the now defunct Facebook gaming, I guess, or soon to be called something else, if I'm saying that.
Charles Conroy [00:20:03] Are they so mixer the...
Ryan Alford [00:20:05] Mixer is shut down and becoming a Facebook game, right?
Charles Conroy [00:20:11] Yeah. They rolled it under Facebook's umbrella. Facebook's a huge player in the space. YouTube's made a huge play. So as an example, the overwatching call, the duty leaks, which are wizards run leagues. So they're the traditional franchise system they travel around the world having. These tournaments, people by markets, they own that market, they own all the resources within that market and they can solicit deals, et cetera, media rights deal with Twitch was reportedly worth forty five million dollars a year for the right to broadcast that league. Now, the people that pay a spot on this thing are between 20 to 40 million dollars, depending on which franchise you get, expansion, et cetera. So they, as part of that, get a piece of that deal right. Twitch did not renew that deal. And they went out to get the league, went out to get a reported one hundred and sixty million for a two year deal, two or three year deal, depending on who you talk to with YouTube. So, and it got the media rights to that league, which thig league the overwatching over. Yeah. These are much like you're seeing like the WWE moving over to Fox, right? Yeah. So just like that when NBC lost the NFL back in the 90s and it went over to Fox, that was a huge deal. So that is happening in gaming now.