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Monday Morning Marth: May 1

Edwin Budding
Published May 1, 2023

It’s a weird time to be a fan of Smash. The deaths of Beyond the Summit, Panda, and Smash World Tour have effectively created a massive power vacuum in the scene – none larger than the one around events. With the recent announcement of Shine 2023 being the last iteration of the series, it’s natural to wonder if the tournament ecosystem as we know it no longer exists.

Today, I’m going to offer my perspective on the shifting landscape surrounding Smash events. After that, I’ll give some context to broader esports trends and explain the increased role we’ve seen of influencers, as well as how that’s manifested in Smash. At the end of the column, I’ll share some stray personal thoughts I have pertaining to the future of the community.

Events Are Broke

In any industry based around streamed competition, there’s three major sources of revenue: ticket sales, sponsorships, and the broadcast itself. Smash tournaments are overwhelmingly disadvantaged in all three areas. Chances are you’ll be familiar with many of them, so I’m going to do my best to give them a little more meat.

Smash’s equivalent of ticket sales is venue fees and bracket fees. A small portion of these go to the prize pot, but a larger portion goes toward paying rent toward the venue, be it a convention center, a hotel, a water park, or even a dingy restaurant. For locals and regionals, venue fees are not too bad. They are usually covered by attendees. In a worst scenario where attendance rates are low, they’re managed by leaders with full-time jobs and the ability to cover for any gaps. For majors, however, this amount of money can quickly spiral out of control. That’s how you end up with people attending WWE events, holding signs asking major tournament organizers where their prize money went.

 

How about sponsorships? To put it simply, streaming your event is a way to gain eyes. The more eyes you get, the bigger your audience is. The bigger your audience, the more you can sell the presence of that audience to someone looking to sell a product. The more people you have trying to sell a product on your stream, the easier it is to tell other people looking to sell a product that your stream is the place to do it. Panda’s old owner, Dr. Alan Bunney claimed he had around $2 million dollars in sponsorships under the Panda Cup. I technically cannot verify this, as Bunney and I are not on good terms, and everyone else involved in Panda Cup is likely NDA’d until Judgment Day. I can’t even put a number on the 2022 Papa Johns deal, which, from my knowledge, was the best multi-tourney deal in the history of Smash. For now though, let’s take Dr. Alan’s claim at face value. It provides a ballpark estimate for what a financially successful sponsorship looks like for multiple tournaments.

Funnily enough, this example is a strong transition into the other typical source of revenue for competitive events: the broadcast. Just to use a brief example, the NBA makes a large portion of money through television channels purchasing the rights to stream the playoffs. Unfortunately, Smash does not have the rights to stream Smash IP. Nintendo does. When an event grows large enough in prominence, you can bet that it’s in danger of being reached out to by Nintendo. Sometimes, Nintendo takes the actively hostile approach of shutting the tournament down. Other times, it’s done through providing an offer that an event cannot refuse. What does that mean? It’s hard to say because this information isn’t public. The best we can do is speculate or make an educated guess, which is what I am about to do right now.

I have never directly worked with Nintendo, but having talked with many who have, I can state that any deal between a Smash event and Nintendo has a lopsided power dynamic. My sense is that tournaments which partner with Nintendo typically have to sign a bunch of non-disclosure agreements (or one). Theoretically, this would include non-disparagement clauses, self-abdications from financial claims to large portions of revenue, agreeing to not use in-game modifications, and basically giving up everything short of their firstborn child. In exchange, Nintendo will graciously not sue them into the Stone Age – and, in fairness to the company, “supporting the community” in a way that the public probably will never know. By the way, any process of working with Nintendo will be painfully slow because of its sheer size, top-down decision making structure, and bureaucracy. Smash events don’t typically have the time or resources to deal with the heavy red tape that comes with Nintendo, so it’s not a surprise that many of them try not to work with Nintendo.

In total, a few things are happening with Smash events. First, ticket sales are, at best, paying half the venue’s bills. Second, sponsorships can be lucrative, but they’re usually not, and even when they are, it’s typically connected to broadcast rights, which tournaments don’t even have. On a related note, this is a large portion of why the downfall of Beyond the Summit was so devastating – it actually gave the Smash scene the closest thing it had to a proper broadcaster-content provider relationship. I haven’t even mentioned obvious symptoms of hard times for Smash, like TO burnout or the fact that events themselves are overwhelmingly reliant on volunteer and underpaid work. When you’re aware of these basic parts of running a major, it will be no surprise that a universally beloved event like Shine, one which I routinely dub the best major of every year, is no longer running after 2023.

This Goes Beyond Smash

I am, by no means, an expert on esports or economics. However, by virtue of writing about Melee every week, I have to be somewhat aware of what’s going on outside of Smash and understand how it impacts our small corner of the world. I also have a responsibility to share this with my readers – at least in a way that’s a little more detailed than saying the word “capitalism” and assuming that’s adequate. So to paint a deliberately broad picture, the global economy hasn’t hit rock bottom, but it hasn’t been great. Because of a rough period of inflation, American interest rates are high to try to curb some of its worse effects. Unfortunately, higher interest rates also scare off people from pursuing loans or investing. In esports, a combination of failed investments over the last decade, high interest rates, and the industry-wide failure to consistently monetize have led to industry-wide layoffs and organizational cuts.

Remember the paradigm I mentioned in the previous section? A similar story can also be found in the rest of “established” esports. This industry, like our little recreation of it in Smash, suffers from disappointing ticket sales, highly volatile sponsorships, developers not seeing eye-to-eye with competitive scenes, and a burned out workforce of exploited 20-somethings. At least Smash has two decades of precedent for grassroots organization. You could theoretically find sectors of the scene that are running just fine without following ‘national’ guidance. Meanwhile, in many developer-run esports, or at least ones that are effectively centralized around one organization, a single problem can spread like wildfire. I must also briefly and gently open the can of worms that is the sequel incentive. Never forget that the best way for a developer to continue making money from a game is to create a sequel or continuously update their game. These two things don’t fit neatly into building a stable competitive ecosystem around one game.

Another factor I want to mention here: the unhealthy reliance esports has on partnerships for revenue. Every industry, to some degree, has to be built on the capturing of a large enough audience that you can sell to a sponsor, but the extent to which esports lives and dies by its partnerships is crippling. From personal experience, I can also say it breeds a culture where constructive feedback is discouraged, yes-manning is heavily incentivized, over-promising is standard, and working people for as little as you can pay them is the norm.

These things are obviously bad on their own, no matter what. However, it’s especially frustrating when these supposed necessary evils don’t even work for the people closest to the ground. Imagine there is a company, one which was considered a premier competitive gaming organization. After years of involvement in one of the world’s largest esports, people working here decide to throw some of their weight into supporting Smash. It does so for about eight years, even expanding its reach into other fighting games and running online tournaments during the pandemic. At one point, it signs not one, but two top Smash players. Then, out of nowhere, this team suddenly announces that it’s been sold to another company – in a process that most certainly took many years and was completely hidden from the rest of the organization. As a result of that sale, everybody loses their jobs. Sound familiar?

The Rise of Influencerism

In a recent episode of Waiting for Game, Wheat asked me to pick which option I thought was more sustainable for esports: ‘professional’ organization-dominated teams or influencer-based teams. I was stumped and went with the former. But in hindsight, this seems outright wrong. Pokimane owns the largest fighting game tournament series in the world. There’s no reason to take Moist Esports less seriously than other so-called “legit” esports organizations. No amount of Cr1tiKaL or Ludwig releasing videos of themselves burning money detracts from their legitimacy as esports owners.

Bringing this back to Smash events, however, take a guess at what the most watched live Melee set of all-time is. It’s not from Smash Summit, it’s not from Genesis, and it’s not even from Evo – it’s from the Mogul Chessboxing Championship. Granted, it did lose Ludwig a lot of money, as did the Ludwig Smash Invitational, but nobody could deny that they succeeded in gaining viewers. Same for the Scuffed World Tour. Someone like Ludwig is operating at a scale in which immediate return on investment is less important than boosting brand value, retaining a loyal audience, and playing the long game while also being flexible.

To be clear about something, I don’t think that the scene should expect Ludwig to take it over and become its dictator. Ludwig is free to spend his time and effort doing whatever he wants. However, given how much he cares about Smash, it is not unreasonable to guess that he has a couple more tricks up his sleeve. His involvement in the community is beneficial to both parties. It’s also worth noting the power of his own brand; what it gives sponsors. Ludwig is in a unique position of being able to partner with companies that know that the product he’s delivering isn’t just Nintendo IP – it’s himself. They may be more willing to throw money into his events, even Smash ones, if only because they have a shield.

Generally speaking, the scene has had examples of tournaments based around key individuals, albeit at a drastically smaller scale than Ludwig. Events like Mango Juice, Don’t Go Down There Jeff, Good Shit German, and Nice Shot Hugo were prime staples of the West Coast during the Brawl era. We partially moved away from this as Smash became more established, but not entirely. I still fondly look back at The Roast of Hugo Gonzalez and thought Mango’s Birthday Bash was one of the best events of 2019. Clearly the idea of a tournament’s pitch centering itself around a charismatic individual is nothing new. It’s just been taken to a new level in the age of influencers, with one very prominent example. Hell, another recent example is our newly christened Chief Smash Officer Hungrybox.

One thing I’ve written about before is the latest trend of top players using their stream channels to boost events. This makes sense for all parties involved. Tournaments benefit from using the larger audience they can find in an influencer, and influencers benefit from having content on their stream that keeps viewers engaged and can minimize subscriber losses from when they aren’t personally streaming. They might even benefit from it if the tournaments they stream are beneficial enough. But this isn’t necessarily a perfect model. Any relationship between a broadcast channel and an event varies. Some channels may ask for payment and treat their stream assets as something to “lease” out to organizers. Others, as I mentioned with Beyond the Summit, will pay the event for the rights to stream it, in exchange to sharing sponsor revenue with the tournament. These issues could, hypothetically, come into play if the negotiations are between a top player and a major. To demonstrate this, I’m going to paint a picture for you straight out of the Melee apocalypse.

Imagine that in the year of our lord, 2023, dear friend of the column Robin Harn decides to stream The Big House on Hungrybox’s channel. Actually, no. He’s going further than that. In exchange for gaining access to Hungrybox’s 400,000+ followers, Juggleguy is rebranding The Big House 11 to “Coinbox IRL.”  It turns out, in our nightmare world, Hungrybox has spent all $100,000 of his Chief Smash Officer checks on the rights to stream Coinbox IRL. The event has a bigger prize pot than usual, content played in between sets is all video essays related to Hungrybox, and for some reason, competitors are playing on PAL. Even if Juggleguy doesn’t like some of the changes, he and Hungrybox will have to quickly resolve them or put them off when Fresh Cut is in the room. Chances are, Hungrybox will be dominating the conversation there because it’s his audience which he has to sell to them. So Juggleguy’s fate with Fresh Cut is partially contingent on if Hungrybox can hide the fact that Coinbox IRL is using stealth Slippi, Hungrybox’s fate with Fresh Cut is contingent on how Juggleguy positions the legacy of The Big House, and Fresh Cut knows that if there is any significant risk of drawing Nintendo’s attention, it needs to get out of there.

Do I think any of this will happen? On the last episode of Waiting for Game, I asked long-time TO contra, and he scoffed at the idea. I’m inclined to agree with him. Besides, the example above was intentionally extreme to prove a point. But it is nonetheless illustrative of conflicts and issues that can arise with fully leaning into influencers. At the same time, do we have another way out?

Is There No Alternative?

I always thought it was a pity that Smash the Record ended up not becoming a more established part of the scene. I suspect that the presence of Evo and Summits as premier events somewhat minimized the need for a central fundraising event, but Smash The Record brought the Smash community amazing press. In addition to viral moments, it contributed to a long legacy of raising significant amounts of money for worthy causes. Had they not been financial wrecks for the people leading them, Smash The Record would have been an amazing asset for the community.

I wonder if it’s possible for a few major series to combine forces and consolidate themselves under a nonprofit organization. It would definitely suffer from smaller degree obstacles that circuits deal with (competitive incentives and different goals from event organizers), but I can’t help but question if it could also provide legal cover in case of a Nintendo lawsuit. Would Nintendo really come after an event for using Slippi, UCF or Frozen Stadium if that same event was raising $50,000 for cancer research? Is it possible for Genesis, The Big House, Super Smash Con, and Mogul Moves to partner with an organization that raises $250,000 every year for the Trevor Project? Can we replicate the AGDQ model in Smash?

Another idea is that every “whale” of the community combines forces to launch – please don’t throw up – a venture capital firm dedicated to funding Genesis and The Big House; as in the entirety of their operations together. In exchange, the event organizers and staff would abdicate the entirety of revenue share from sponsorships to the investors. This, more than Melee It On Me and even little old Melee Stats, would be the actual Smash Illuminati, one which would have totally no chance of getting a good return on investment in the next five years, but they could theoretically make “enough” money back to where this venture capital firm is just trying to limit the losses of a benevolent group of investors while growing its own social brand within the community.

In all honesty, I think both these options are doomed to fail. However, what I described with the second option isn’t that far off from how professional sports organizations are treating esports. Look at the efforts of Golden Guardians or FlyQuest. I am heavily skeptical of the fact that either of the two’s benefactors – the Golden State Warriors and the Milwaukee Bucks – are particularly deluded into thinking they’re making money directly off Smash. At the same time, their esports arms are beloved within the community and for damn good reasons – they support some of the scene’s most beloved players and have invested money into its tournament ecosystem. They don’t have to deliver an immediate profit for their Smash involvement to benefit their brand. It’s possible that other sports companies will catch on. Or maybe these two will continue to invest in Smash.

I wish I had a more cogent way to tie this all together, let alone fully jump into the grey area behind cryptocurrency’s increased presence in Smash. What I do know, however, is these volatile times have led to a community landscape where many lines of involvement and expectations are now blurred. Whatever happens, I only hope that the scene maintains its love for the game and continues to push onward.

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