Team Liquid has evolved from a grassroots organization playing StarCraft in 2000 into one of the most accomplished esports organizations in the world, with dual HQs in the U.S. and the Netherlands.According to Esports Charts, Team Liquid ranks as the No. 1-earning team of all time in esports, having raked in over $48 million in prize money.
The team also has deep pockets.Team Liquid a decade ago sold controlling interest to the aXiomatic Gaming holding company, an investment group that includes Disney, Michael Jordan, Magic Johnson, Lightning owner Jeff Vinik, Warriors co-owner Peter Guber and Wizards/Capitals owner Ted Leonsis. Those names opened doors that were once closed to esports -- or doors that esports orgs didn’t know existed. Since that deal, Team Liquid has been able to capitalize on many different B2C activations.
With Disney aboard, Team Liquid gets access to popular intellectual property, such as an extensive offering of Marvel-branded products. They also offer wearables in a collaboration with Naruto and other Japanese lifestyle brands such as "Tokidoki."
"The sale of direct consumer goods and products, and even licensing agreements ... that generate revenue for us and allows us to reinvest that revenue back into creating fandom and strengthening the tether that we have between the brand and fans,” Team Liquid co-CEO and co-owner Steve Arhancet told SBJ.
Eye on the prize
Arhancet spoke about his squad's business philosophy and tactics. He points to a cycle for success that focuses on:
- Becoming competitive in part by adopting the best practices from other winning sports organizations
- Parlaying that success into unique B2C sales opportunities
- Reinvesting that money to make your teams even more competitive
Team Liquid has also taken key lessons from stick-and-ball sports. “We have a commitment to innovating and pushing the space to follow some things that have already been developed in traditional sports that we can use in esports to help increase the probability of winning,” Arhancet said.
For example, Team Liquid and Arhancet have shifted from traditional esports methods, such as having all players live at the same house and practice for 16 hours a day. Now, there's a more modern approach influenced by pro sports training practices.
“We were one of the first esports organization to build and move away from gaming houses to resolve a multitude of issues with regard to player development and performance,” said Arhancet. “We've been, I think, the first and perhaps only organization to invest into proprietary software in partnership with SAP, and I believe we were also one of the first ... to focus on the sports psychology aspect of things.”
That strategy has contributed, in no small part, to competitive success. “We make it more likely to make it into playoffs and semifinals in the finals,” said Arhancet. “And that maintains the relevancy of the organization, and then through that competitive success, we create more value for the company in terms of revenue with partners and sponsors.”
A little bit of industrial psychology
There is another cycle Arhancet finds crucial -- the Gartner Hype Cycle, which depicts the maturity, adoption and social application of specific tech. He maintains there is a misconception that esports and gaming are not growing. In reality, esports is simply on the other side of the cycle and now poised for growth. The dotcom, crypto and now AI sectors have gone, or are going through, similar cycles.
“Like all of these hype cycles, there is a resurgence, and what happens in that period is that there's a lot of merger and consolidation,” said Arhancet. “There is a thinking about where revenue comes from. A tightening on costs, less capital being deployed for long term growth, less clear line of sight and that's kind of where we're at right now.”
Team Liquid and Arhancet are ready to capitalize on that.
“Organizations like Team Liquid are poised for incremental growth, with one major assumption -- that the number of gamers continues to grow," he said. "If all of the audience is still there ... then we're in an opportunistic spot to gain more market share and acquire potentially depreciated assets.”
