Team Liquid & Gamers8 – Money vs. Values
Money or morals/values? We discuss the recent move by the esports (professional video gaming) organization Team Liquid.
Hey there!
On Friday, Team Liquid released a 4-min video with founder and co-owner Victor Goossens. In the video, he talks about Liquid's stance on the team's participation at Riyadh Masters – Gamers8 – in Saudi Arabia. Saudi Arabia's values, which do not align with more western values, put Esports organizations such as Team Liquid in a position where they face a moral vs. money decision. Here is what they did, and how to interpret it from a business point of view.
On Friday, Team Liquid released a 4-min video with founder and co-owner Victor Goossens. In the video, he talks about Liquid's stance on the team's participation at Riyadh Masters – Gamers8 – in Saudi Arabia. Saudi Arabia's values, which do not align with more western values, put Esports organizations such as Team Liquid in a position where they face a moral vs. money decision. Here is what they did, and how to interpret it from a business point of view.
🚩 Team Liquid's Three Problems
Last Thursday – July 6th – Gamers8 (one of the biggest esports events of the year) kicked off in Riyadh, Saudi Arabia. Over the span of six weeks, people get to watch and players get to compete in 12 different Esports titles. With a combined prize pool of $33.5 million, the event seeks to establish itself as one of the major hubs for the future of Esports.
At the same time, Saudi Arabia's values and actions, especially regarding topics such as human rights, women's rights, and LGBTQ+ rights, are not in line with the values that are usually held in the Western world. Liquid has been outspoken and an advocate for those rights and values.
"We feel as strongly and are as convinced about all these things [values] today as we've always been. And that, of course, makes it very tricky for us to participate in these events."
Goossens also explains that more events like Gamers8 are to come in the future, with more money flowing in from the region. He said:
"[...] this really is a shift in the Esports ecosystem. These are not one-offs."
Besides the different values and the change in the ecosystem, the company's purpose represents the biggest issue for Liquid. As a company, their number one purpose is to make money. Everything else comes second.
💰 Esports Events – Ways to make Money
As an Esports organization, you always want to participate in Esports events because there are multiple ways to make money from them. Exposure on streams is a vital source of revenue. When people watch your teams compete, they become interested in them. This effect is even stronger when viewers repeatedly see your logo – the more exposure, the better. The more they see it, the more they like it and what it represents. (If you're interested, look up the Mere-Exposure Effect.)
Exposure leads to social media engagement (people consuming your content, following you, and sharing your content), sales (people buying your merchandise and products you advertise), sponsorships (companies paying you to have their logo seen by people watching/following your players and teams), and more. Another direct way of making money from Esports events is by having your teams win prize money. Most organizations receive a share of their players' and teams' prize money winnings.
📉 Negative Effects of not Participating at Gamers8
If Liquid were not to participate at Gamers8, they would lose all the exposure and a significant amount of money. When it comes to events of this size, we're talking potentially millions of dollars in missed revenue (both short-term and long-term) for Liquid. Having fewer eyes on your organization means having fewer eyes on your products and services, as well as your sponsors. Besides these, there are numerous other negative effects for the business that could arise, such as giving your competition an advantage or facing challenges in talent acquisition, as Goossens explains:
"When Team Liquid is trying to make a roster change and attract new talent to the organization, this talent would want to play in the biggest events on the planet, and if Team Liquid's answer is: 'We don't play at these events,' it would be a real challenge for us to either maintain top talent or attract top talent to Team Liquid."
🤑 "We will stand by our values."... but go with the Money anyway.
In the video, Goossens states:
"[...] we stand for our values. We will stand by our values, and we will continue to express those values, whether it is during these events or related to our participation. We have no issues or qualms calling out the human rights issues in the region."
This statement aims to emphasize their values and their commitment to them. With all that he explained beforehand (the shift in the ecosystem, the problems that not participating at Gamers8 would bring), this acts as a moral cushion for their decision that is about to come next.
"In the end, we are making these decisions for the health of our company. That's definitely true."
🪶 Another soft Cushion
To finish off the video, Goossens once again explains Liquid's values (diversity, authenticity, etc.) and how they will always adhere to and express them. He also provides examples of instances where Liquid took actions to support communities or individuals, such as providing a safe place for players and families from Ukraine or picking up a women's Valorant team to improve diversity and inclusion within the industry.
He concludes the video by saying that they will be donating a portion of their prize pool to a charity that helps with issues in the region.
🧑💼 Noble values & a Businessman's Actions
Although what Liquid did and does is very noble, most of it can be viewed from a business standpoint and, from that perspective, makes sense financially. Supporting inclusion, diversity, human rights, and so on is something inherent within the gaming industry and its people (customers, in this sense). Therefore, it makes sense to express those values. Sharing values with your target group makes them feel closer to you and more likely to stay or become your customers.
Valorant is a popular game, so there is money to be made there. Additionally, more and more women are playing video games, and a good portion of them might enjoy competing or at least watching women compete. Hence, signing a women-only team makes sense financially as it includes a new potential portion of the gaming community.
Third, donating a portion of the prize pool ($100,000) to charities is awesome. This is also a smart business move. Not only does it compensate in people's minds that Liquid is participating at Gamers8 – and therefore acts as a defense against outrage and counterarguments – but it also represents a small fraction of what Liquid is making directly or indirectly from participating at the event. Another factor is that donations are usually tax-deductible. I would not be surprised if Liquid takes advantage of this and uses the donations as tax write-offs. This would ultimately reduce their "costs" even further.
💡 Liquid taking the initiative and pointing out the issues and internal conflicts they face by participating at Gamers8 may be a smart marketing move. Its purpose is to prevent or at least minimize outrage from the community. As we have seen with Twitch, outrage can threaten a company.
Liquid seems to share the values they claim to stand for and will continue to express. However, from the perspective of a businessman, it makes sense to participate at Gamers8, considering the potentially millions of dollars at stake for Team Liquid.
When it comes to decisions between money and morals, making money is a company's ultimate purpose, and
"[...] companies are more interested in looking rather than being good." - (Prof. Jonathan Haidt)
Have an amazing week ahead. Best,
Christian 🙃
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