Remodeling Tournaments into a Profitable Business


#1

The only way I can see the FGC growing is turning it into a profitable business. As much as I love our grassroots informal tournaments, the only way we can sustain the tournament scene is by making more money. Money makes the world go round, money keeps the wheels turning, and from the several tournament organizers I’ve spoken too, they’ve all said that they either have a net loss from running their local tournaments (especially when they add their own pot bonuses), or break even. The fixed (venue expense, consoles, TV’s) and variable (electricity from consoles, TV’s, etc.) costs of running a tournament are too high for a $5 or $10 venue fee to cover. Although the contribution margin (Revenue minus the variable costs) might be in the positive, it’s really the fixed expenses that kills money, since taking into account only one station costs around $350 ($120 TV, $60 game, $200 console, give or take), and we have to count the rent of the venue, which for a whole weekend for a major must be immense. If we want tournaments to continue, we are going to have to accept that we have to pay more for these things to keep going.

Increasing pots is not the answer to attract more players. Although the prospect of winning $5,000 is very appealing, I’m sure at least half of the players who enter know that their chances of winning are not likely. So why do they come back? It’s because of the experience of going to a major, and that’s where I feel we should be focusing our attention. Just a specific sample: Final Round 2013 UMVC3 had 380 entrants. Out of those entrants, let’s say Top 32 are the people who actually had a more than decent chance of winning (not counting ChrisG entering the tournament). That means that players to whom the high pot prize can be possibility account for 8.5%, or rounding up 10% of the players in total, not counting the spectators who have a 0 chance of winning, thus meaning the prize pot has a negligent effect on their attendance. Yes, it is true that having multiple top player’s names on the trailers does attract more people to come, but is it enough to justify adding about $3000 to the prize? In other words, do you expect to gain $3000 worth of more money from the players who only decide to go because said top player decides to go? We have to set the pot bonus to a reasonable amount to where we aren’t offering more than what we can handle. What the exact number should be, that’s not for me to say, since I don’t have all the numbers, but tournament organizers need to evaluate this in a business perspective.

What the FGC needs is exposure. More people attending these majors mean that more money is being made, even if it means appealing more to the casual, lesser-skilled player, who make up a larger portion of fighting games.

Although preferable, it isn’t smart to maintain that mentality in a business perspective. Sports teams don’t handpick their audience; they offer attendance to anyone with money to pay. All we are offering to people and players of that caliber is the experience, while offering entry to the tournaments to see how they fare. More people = more revenue = more opportunities to expand = higher Net Profit Value we can demonstrate to other companies saying “Hey, we’re making money. Care to join?”

Another way to expose more people to the scene is by making tournaments not only for Fighting Games, but for multiple genres of games. As someone stated before, there are tons of people who have never heard of fighting game tournaments. Some people only have heard of EVO because Smash was included in it one year. If we could have players come to our majors who play sports genres, Call of Duty, or even people who spectate speed-runners (AGDQ), and they see/hear the crowd hype of someone making a comeback/pulling off a swag combo, they’ll have a firsthand experience of what the FGC is about. We don’t even have to buy the other games and incur further costs: just draw up a contract with the tournament organizers from the other genres, saying “How about we combine our tournaments together, we have a great venue lined up, both our scenes with gain extra exposure, and we can split the expenses,” and right there we can save money while bringing in more people

Another idea, and although this may seem a bit outlandish, is that someone needs to approach Microsoft. Right now, we are amidst the situation of PS3’s not running FG’s well, but most majors still run with it with the main reason being it is EVO’s standard. If we can clearly present this to Microsoft and say “Right now PS3’s are the standard of Fighting Games mainly because of the fact that EVO carries them. However, as of recent, the problem with PS3’s lagging under certain situations has become apparent in the FG scene, as well as the push to make XBOX the new tournament standard. If you sponsor EVO by giving/selling XBOX’s at a cheaper price, you can automatically make the XBOX the standard for fighting games across the country. This would result in not only XBOX sales increasing, but you also take away sales from your competitor since there is a lesser need to buy a less-quality product solely for the sake that our largest, international Tournament still carries them.”

I cannot contend this, since I am not an expert when it comes to how “poverty” games perform on separate systems. However, SF4 and Marvel still make up the majority, which are what companies are interested in, since they would be investing in the larger portion of the FGC. This suggestion isn’t implying that every single game HAS to be run on XBOX, nor is it arguing which console is better for which game, because I’m sure both consoles have their advantages and disadvantages. This is more so as a way to put our name, the FGC, out there. Maybe it could make the news on some website; or someone will write an article about it; or other potential sponsors will see this and view us with a more serious outlook rather than a bunch of people playing video games. Having our community associated with a big name like Microsoft is a good look to me.

With the issues of sponsors and eSports, I am kind of unsure about it. If I was a company and I did my research on the current state of the FGC, I wouldn’t want to be anywhere near this scene. As of now most of our sponsors have been limited to electronic equipment and energy drinks, because we share similar customer bases. As brought up (in sort of a joking manner) in Texas Showdown, imagine if Domino’s pizza were to become a sponsor. I’m sure most people would agree that they would make a load of money, since that’s mainly what our diet in a major is made up of, outside of Chinese and chicken wings. Just picture how easy this could be: Domino’s sponsors an event, we advertise the coupon code “FGC” that can be used on the phone and online that offers a discount on two large pizzas. Not only would the majority of people at the actual major itself would use this code, but even the stream monsters from around the US could show their support right at home by using this code to buy their pizza. Dominos could get an exact number of the result of this sponsorship by tracking not only how many people use this code, but where they use this code.

This is just an example, but we have to look at what kind of sponsors we want to attract (from a tournament perspective.) It is good that we have companies like AGE and RZR sponsoring players and offering discounts on electronic equipment: eSports have shown success in this manner. The reason I feel eSports are able to continuously advertise expensive PC Hardware is because even if a minor percentage of their fan base buys their product, it is still a significant number to justify the venture, since their fan base is so large. If you take that same percentage and apply it to the FGC, whose size is not as comparable, it might not.

I’m not saying that this is bad, but we have to look at what sponsorships could benefit EVERYONE, not just pad warriors or stick players who need to replace/upgrade their equipment once every few months. This benefits the players, but how about we offer something to the spectators, to the friends and girlfriends (sorry, that’s a negligible number … jk) who tag along with their buddy to see what the fuss is about. What I’m thinking is having a nearby local restaurant offer a discount for the after-tournament dinner, or have tour guides offer discounts of local tourist attractions. One personal anecdote of mine is traveling to Philly for Winter Brawl and not having a chance to see the Liberty Bell. I don’t need to point out the number of foreigners and out-of-towners who attend these majors, and how beneficial this can be for both sides, but what I am trying to say is that we need to broaden our view of what kind of experience we can offer as a whole.

However, in order to appeal to these larger companies, we not only have to show that organizing these tournaments is a successful business venture, but we need the right person to actually get Domino’s attention, not just a regular employee. Jebailey has shown success this way by getting NOS on board, but we need more big tournament organizers to get involved in this. We can’t be an attractive prospect to many sponsors if we can’t show that we are generating a profit from organizing these tournaments.

TL:DR To keep tournaments alive and getting more people to come, we need to be more business oriented.


#2

Welcome to SRK.

The FGC knows it needs sponsors. You’re not saying anything new. People aren’t just going to hand out free money.

Adding different games won’t guarantee exposure and may conflict with the schedule. Time and space are limited. People who go to one day tournaments might not bother or stay for the next day if it becomes a two day tournament. If it becomes a two day tournament, people would have to find a place to stay over night and that would factor into the cost of attending a tournament and you would see a significant decline in exposure instead of increase. Getting a venue for two days straight is also more difficult than for one day (from my experience at least). People who reserve the weekend might not be able to make it if the tournament continues into Monday due to work or other reasons. Also, trying to mix different communities forcefully might cause conflict, and no one wants to initiate that.

If you want to play the hero, why don’t you run a tournament that will have SF4, CoD, UMvC3, LoL, etc, while getting sponsors and make it hype.

Time is limited and you will be forced with the decision to drop a game from the line up before you announce it. Exposure isn’t that simple to attain, for example, drop SF4 and all the people that would come for SF4 won’t come.

And some more words of advice to you, I have seen dozens of venues that ran tournaments close down. The common cause was adding a venue fee. Even after they removed the fee, the usual crews didn’t return. You want to reduce the barrier to get more players, you want to reduce the costs, but reducing prices isn’t going to generate revenue.

You talk about profitable business, that means someone has to spend money. Sponsors aren’t just going to hand over their money unless you can convince them that you can generate revenue for them and most gamers aren’t exactly rich. Attendance comes from hype and hype usually comes from big money matches in this community and stuff like that isn’t exactly something someone would want their business associated with. If you kill the hype matches you will kill the exposure. If you add costs to venues or streams, you will reduce exposure. You can say if sponsors sponsor then you will have money, but that’s not how it works. First you need the money.


#3

I have already acknowledged that we can’t convince sponsors to jump on board without proving that we generate revenue. That’s why I suggested that we start small, dealing with local business around the around the area.Attendance comes from hype? That’s a bold statement to make, because I’m sure many other players go to tournaments for other reasons. As for hype “usually” coming from big money matches, I believe the last few Majors have past without big on-stage money matches.

Also, where are you referring to when you say “If you add costs to venue and streams”, because I don’t remember suggesting any of that.

Time and space are limited, that is what having contracts will solve, since both sides will come to an agreement to terms, and the one who breaks those terms will clearly be shown as having fault. It’s a learning experience and carries risk, but risks will have to be undertaken in order for a business to grow. As for the whole 2-day tournaments thing, I was referring to majors that already take up an entire weekend, since they already deal with multiple days, with a large portion of the attendants already having a hotel booked for the weekend. Having the tournament carry on to Monday is a bad idea that no one is implementing.

I am not trying to be the hero, I have attested that I do not have or know all the facts. These are merely suggestions that can be adopted by organizers. Also, if the situation were to ever occur that I would have to drop a game, no one in their right mind would pick SF4.

Yes, adding a venue fee has discouraged players from attending local tournaments, but have they been thoroughly informed why? We are a tight-knit community that knows Fighting Games have been struggling to grow as of recent, and if given the explanation that all the extra money will go directly into growing the scene, I don’t see why most players won’t pay extra if it means that the tournament will survive.

Of course reducing prices (I assume you are referring to cost prices) won’t generate revenue. The reason for that is too reduce the break-even barrier, so that we only have to make a lesser X-amount of revenue.


#4

Instead of just sitting on your ass writing in the forums, how about putting your money where your mouth us and doing stuff yourself.


#5

Why does SRK hate discussion so much?


#6

Because talk is cheap and we can go on and on about stuff here, but until someone actually does something, nothing will happen.


#7

Didn’t I read this thread already?

Anyways, today I was thinking about the opposite of this: a fighting-game-player’s co-op. I haven’t tried to figure out the numbers, but say everyone pays membership dues of $100 at the beginning of the year. This gives the organization a known budget to work with and gives members a sense of buy-in so they’re less likely to just stop showing up. Members would then have reduced (for a major) or waived (for weeklies) venue fees. Any profits would be re-invested, or if they exceed a certain level (which would have to be set up in by-laws) a dividend could be paid to the members.

And if not enough people buy in at the beginning of the cycle you return everyone’s money and roll the whole thing up.


#8

Not a good excuse. This is a good topic where a lot of people can chime in and hopefully with info taken from discussion something can happen. That’s the purpose of discussion.


#9

And has that honestly happened in FGD as of late?


#10

I think the majors should share all of their equipment (copies of games, monitors, consoles etc). I say majors, because I assume the people running the major tournaments generally know/trust each other. This may not be the case though. This will get rid of a big cost factor though. At the very least, all the majors that are relatively close to each other should be sharing equipment. Who knows, maybe they already do this, I dont really know how theyre ran.

Also, I think the majors need to take a vested interest in growing local communities near their place of business. For example, its in NCR’s best interest to know that theres a local scene of dedicated players in the expanded area, same with ECT. So maybe when NCR/ECT streams, they should be pointing out where local casuals/tournaments are being held within like a 50-100 mile radius. Just an idea, im sure theres more ideas that can be thought of. a lot of people goto majors and dont goto local gatherings, if you can get those people to goto local gatherings and get hooked, they may bring friends, which means, more people who may goto majors. We have to bank on the idea that getting involved in the FGC can be addicting, we have to have people experience us as we really are, instead of watering ourselves down. Bringing in Call of Duty or whatever may just end up killing the FGC, what if the tournaments realize its more profitable to run those casual games?

And finally, we really need Capcom’s/Dev support. The next gen consoles will have social media built in, they sure as hell better have twitch.tv tournament streams built into SF5 etc. When I load up SF5, it should tell me when the next tournament is, and it should show me the trailer/let me watch the stream etc. Its essentially free advertisements for them.


#11

That’s fine and dandy if it ever lead to anything. People like to talk about change, improvements, etc but never want to be the first guy to enact any of it.


#12

Because the last 38492400 topics based on this suggestion totally changed things. Honestly, what this guy says is basically common sense. If you’re a TO and hosted a last a few local successful tournaments around the area, you already know the jest of things. Problem is, to actually go about hosting a tournament and wondering how to get people to your event should be the concern and start from there. However, depending on where you live determines how to approach this.

Seems like you need a grip on reality onto how it really work with these things. You should possibly host a tournament a two yourself and see what it’s like.


#13

Because they don’t know how to communicate like adults.


#14

Peeps, keep it on topic. If there are moderation questions, PM me or another mod.

I feel like “making tournaments into a profitable business” would have left out most of the awesome players these days who started out as paupers. At many of the tournaments I went to or run, the $3 or $5 entry fee meant something to some of these kids. If you’re not the arcade/internet café/barcade itself, I don’t think running a tournament for profit is really an awesome nor plausible idea. Setting up a profitable streamcast seems interesting, but there you’ll have survival of the fittest.


#15

I’m always confused by topics like this. 1st off, what is the overall goal, and by that, I mean what do people in vision a profitable tourney looking like?

I mean, do folks want these FG tourneys to resemble the DotA and FPS tournaments? If that’s the case, you’re gonna need a lot more than SRK members giving away more money to support “The Scene”. I’m just gonna leave it at that cuz going any further would just have me telling people honest shit they don’t wanna hear.


#16

I like this particular rule that @DaRabidDuckie introduced to me recently.


#17

http://pizza.gg/

Guess eSports made use of this idea first.


#18

great, now I can feel good for

  1. not supporting all those homos
  2. not buying shitty pizza

#19

clicked on eg fighting games expecting their new JWonggg pizza, and i was disappointed


#20

man, this is the FGC.

we make our own pizzas.