How Pittsburgh is trying to tap into the growing esports scene
Sophia’s Plaza in Hazelwood isn’t what comes to mind as the next big thing in Pittsburgh’s sports and digital entertainment.
The former Carnegie Library branch looks like a laundromat and beer distributor from the outside. Take the elevator to the second floor, though, and you’ll stumble into Leonyx’s Lounge, where hordes of teenagers and 20-somethings swarm a space equipped with dozens of screens, computers and TVs, and watch teams of people in gaming competitions like “Super Smash Bros. Melee” and “Hearthstone.” Entry fee is $1 and there are cash prizes.
It’s a little success story, but esports veterans James O’Connor and Rob Lee have much bigger ambitions. They have been feverishly hurrying to launch their hometown’s first global esports franchise: the Pittsburgh Knights. After almost a year of preparation, the duo revealed their project to the public at the Knights’ official launch party Dec. 1.
“Pittsburgh is behind in the national picture for esports, which is lucky for what we’re doing,” O’Connor said.
They envision packed stadiums of Pittsburgh fans cheering the Knights the same way they would the Steelers, Penguins and Pirates.
Professional video game competitions — better known as esports — are a booming global phenomenon. Yet despite Pittsburgh’s status as an emerging hotbed for technology and innovation, the city has yet to tap into the market.
So far, there’s no traditional city-based league established across all esports platforms to resemble leagues such as the NFL and NBA. But the more teams that form, the closer that possibility becomes.
“Starcraft” eventually became a staple of the Major League Gaming Pro Circuit, which also featured first-person shooters such as “Halo” and fighting games such as “Super Smash Bros.” In 2006 and 2007, MLG televised its “Halo 2” pro circuit events on USA Network, but the experiment failed after two seasons.
Although esports disappeared from network television for almost a decade, the scene exploded in 2011 with the advent of Twitch, a digital live streaming service which Amazon purchased for $970 million in 2014. Then, esports returned to the tube in 2016 with TBS’ “ELEAGUE,” a professional esports league featuring tournament play between top teams.
Thanks to Twitch, more and more people aren’t just playing the game — they’re watching others play.
For example, the 2014 “League of Legends” World Championship drew 27 million unique viewers to its online stream. That number rose to 36 million in 2015 and 43 million in 2016, and early reports estimate roughly 60 million viewers tuned into the recently completed 2017 event.
According to projections by gaming-centric global marketing research firm Newzoo, the esports industry at large is expected to gross $696 million in revenue in 2017 from a combination of media rights, advertising, sponsorships, merchandise, tickets and game publisher fees. That represents an increase of more than $200 million from last year’s total, and Newzoo projects the figure to skyrocket to almost $1.5 billion by 2020.
“It’s a very lucrative business,” said Tim Derdenger, associate professor of marketing and strategy at Carnegie Mellon University. “The millennials and Gen Z’s have really gotten into playing video games. They’re a breed of their own, and it’s expanding. People have actually gotten into watching people play video games, so there’s now a market for a league and to actually have fans.”
The 2016 “League of Legends” World Championship featured a $5 million prize pool, with 40 percent of the pot going to the winning team — not too bad compared to the $1,000 payout to the winners of MLG’s first-ever “Halo” event in 2004.
Player salaries aren’t generally divulged like they are in traditional sports, but premier franchises such as Team Liquid — which O’Connor helped coach to their highest ranking ever in “Counter-Strike,” a first-person shooter game — are reported to pay their players between $100,000 and $200,000 annually.
Having spent more than a decade as one of the world’s most accomplished “Counter-Strike” players and coaches — with a tour of duty as a U.S. Marine during Operation Iraqi Freedom in between — O’Connor, 36, has seen the growth of the esports industry firsthand.
After his playing and coaching career ended, the West Mifflin native moved to the management side of things and partnered with Lee to help launch the Knights — a project Lee has been plotting and designing internally for years.
Lee, a 24-year-old Hazelwood native, graduated from Full Sail University in Orlando, Fla., at 19 and moved to Los Angeles to immerse himself in the world of esports. He spent three years as the general manager and creative director of world-class teams in “League of Legends,” “Counter-Strike” and “Halo,” and he serves as both the face of the Knights’ brand and the brains behind it.
“We had come from similar backgrounds where we kind of got screwed over in terms of the shares of our pies of our previous teams, and we could relate on that,” Lee said. “So we partnered, and we balanced each other out.”
Both recognized the opportunity for city-based franchising happening in the esports scene, highlighted most recently by Dallas Cowboys owner Jerry Jones and real estate investor John Goff purchasing CompLexity Gaming — one of the premier franchises in esports — from Jason Lake, one of O’Connor’s closest friends in the industry.
Other city-based franchises include the Detroit Renegades, which O’Connor helped launch with Utah Jazz forward Jonas Jerebko, as well as the 12 cities competing in the brand-new “Overwatch League” for a reported $20 million franchise fee.
As of right now, the Knights are active in two titles: “Super Smash Bros. Melee” and “Playerunknown’s Battlegrounds” — and they’re already making waves in both.
The “PUBG” team is based in Europe, and while there’s no official league yet, the Knights are on top of the open circuit. Meanwhile, the Knights’ lone “Smash” player lives in Pittsburgh — and just so happens to be the best “Smash” player in the city and one of the best in the country, ranked No. 40 in the world by the podcast “Melee It On Me” in 2016.
An electrical engineer by day, 28-year-old Stephen Abate lives just up the road from the Knights’ headquarters. He showed up to Leonyx’s Lounge for a tournament earlier in the year oblivious to Lee and O’Connor’s operation. Once they realized who he was, they immediately signed him to be the Knights’ first “Smash” player.
Abate has already competed three times under the Knights banner, with two first-place finishes to his credit.
“The Knights just appeared a mile from my house,” Abate said. “It’s been turning into a really good opportunity to get back into it and focus on the wins.”
With University of Pittsburgh students competing in the “Pitt League of Legends Grand Finals” on the main screen at the December launch party, Abate fired up “Super Smash Bros. Melee” on one of the side TVs to do some training. He spent more than two hours honing his skills against fans and spectators, preparing for his third competition with the Knights in Ohio the next day.
The practice paid off. Abate took home the title.
“I feel like I’m on a real upward slope, like I’m getting a lot better more quickly now that I’m practicing with the Knights and getting more serious,” Abate said.
Top teams in esports have almost always had financial backing from venture capitalists, allowing them to pay their players higher salaries and provide more advanced training facilities and amenities.
No matter where such partnerships take them, Lee and O’Connor plan to keep using the space at Leonyx’s Lounge to grow esports in Pittsburgh through projects with schools and youth groups.
“I imagine us having a strong partnership with the Carnegie Libraries, where the kids come and they get essentially buzzed up and recruited and excited by esports and the competition and stay engaged,” O’Connor said. “Doing organic, honest growth, where we do programs for kids, where we use gaming as a conduit to help tech in Pittsburgh, to engage a lot of the kids in tech.”
O’Connor and Lee said they’re already amid serious negotiations with several companies in the Pittsburgh area, but they’re keeping their options open until they find the perfect fit.
“They have to be a good person, they have to have reach and experience, and they have to obviously have enough money to make sense that they want to do it,” O’Connor said. “And they have to have the vision. They have to believe in it. Because if they don’t, then they’re not going to enjoy it, because they’re not going to have fun.”
Securing the financial backing for the future isn’t the issue — it’s making sure whoever takes on the investment realizes O’Connor and Lee have the expertise to handle the business and let them do it their way.
“Given the role Pittsburgh has wanted to play in being an emerging leader in esports, having a hometown team is a game changer,” said City Councilman Dan Gilman, who takes over as Mayor Bill Peduto’s chief of staff in January. “It’s one thing to be on the sidelines asking to play — it’s another to be in the game. And I think this franchise helps us to be in the game.”