Jack Etienne had reinvented himself. He’d gone from an eager photocopier salesman with an obsessive evening-and-weekends video game habit to the chief executive officer at a professional video-game-playing company that generates millions of dollars a year in sponsorships. In 2017, he committed more than $30 million in investment funds buying a spot in two of the world’s top esports leagues, where pro video gamers compete in front of huge audiences. Now those Silicon Valley investors expect him to turn his team, Cloud9, into a global entertainment business. So, this April, searching for clues as to how he might do that, Etienne flew to New Orleans to experience WrestleMania 34.
He watched the wrestling, but he also wanted to see how the executives guided advertisers through this strange world. One afternoon, Etienne took his seat at the WWE’s Business Partner Summit. There, a wrestler named Elias strummed a guitar and performed an ode to brands. In fewer than two minutes, Elias name-checked KFC, Snickers, YouTube, Snapchat, Mattel, Old Spice, NBC, Sony and China’s PPTV. It was a sales master class. Etienne saw that the WWE knew how to hold advertisers’ hands, inculcating them in the appeal of their crazy characters under the guise of a business update. The WWE had figured out how to turn fake wrestling into a business worth $6.1 billion.
Like the WWE did with professional wrestling decades ago, Etienne is fighting to convince major companies that his oddball fan base has just as much money to spend as other sports lovers. If the WWE could persuade rich guys that young men watching other men perform dramatized violence was a good investment, so could Etienne.
There are early signs of Cloud9’s promise. Last year, Etienne convinced the WWE, along with some of the technology world’s top investors, that video game competitions were worth their money. Peter Thiel’s venture capital firm, Founders Fund, and Craft Ventures wrote him the biggest checks, with more funds coming in from former Facebook Inc. executive Chamath Palihapitiya and Reddit Inc. co-founder Alexis Ohanian. Altogether they poured $28 million into Cloud9, the team Etienne founded in 2013 by buying a group of League of Legends players out of their contracts for less than $20,000.
Cloud9, C9 for short, is the most popular esports team in North America, according to Nielsen Esports, a market research group. The team, based in Santa Monica, California, has hundreds of wins playing more than a dozen video games. Cloud9 has a roster of more than 70 players, many of them living in team-owned dormitory-style housing, earning anywhere from a few thousand dollars a week to hundreds of thousands a year playing video games professionally.
Can Etienne be the first person to turn his team into a $1 billion business? “There is no founder like Jack in all of esports,” said Brian Singerman, who led Founders Fund’s investment in Cloud9. “He’s the type of person people like to work for and play for. And he just works like crazy and loves what he does.”
But there are many hurdles ahead for Etienne. For one, there’s the money: He spent millions to buy his way into a select group of teams that can compete in the top gaming tournaments, and there’s no guarantee it’ll recoup that cost. Cloud9 and other teams are working together with game developers to secure lucrative distribution rights for online streaming and television. Cloud9 is also working to land valuable marketing deals. There’s also the pressing challenge of making esports easier to watch so people besides hardcore gamers can understand what’s going on. In addition to all that, Etienne couldn’t stop worrying about Sneaky.
People have been playing video games competitively since the invention of the arcade in the early 1970s. In the late 1990s, the strategy game StarCraft and the shooter Counter-Strike were mainstays at neighborhood LAN (local area network) parties. Friends lugged their desktop computers over to whoever’s parents had the nicest house and battled it out in the early morning hours. As the internet sped up, video games moved online. In 2004, the science-fiction shooting game Halo 2 and the fantasy game World of Warcraft revolutionized what it looked like to play video games online with friends. In those halcyon days, people who took their games seriously trekked to small tournaments to compete for bragging rights and token prize money.
Today, the best players in the world play 14 hours a day and can make decent to spectacular money. Sneaky, a moppy-haired gamer whose real name is Zachary Scuderi, is one of them. He’s among Etienne’s star players. Cloud9 pays him well above $100,000 a year, though it won’t say exactly how much, and he makes many tens of thousands on his own from people paying to watch his stream on Twitch, Amazon.com Inc.’s video game streaming network. Sneaky has earned more than 85 million views on Twitch by making gaming look easy, but Etienne was starting to worry that his star had lost his focus.