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TSM President Leena Xu explains how to make $ 40 million in eSports


How does the eSports business actually work? Leena Xu is the most powerful woman in the eSports industry: As President, she is responsible for the operations of TSM, the most valuable eSports organization in the world, which according to FORBES is worth $ 410 million. PC WELT explains how you can earn a lot of money with eSports even during the Corona crisis with farsighted sales streams.

ESports is more and more reminiscent of Hollywood meets Silicon Valley: The teams stay in luxurious headquarters that look as if they were created by an Apple designer, and CEOs and presidents are often big stars within their organization. NadeShot is the Elon Musk from 100 Thieves, who has an opinion on everything and thus keeps the brand omnipresent. Leena is also a superstar in eSports. An incredibly exciting business woman who has closed big deals with her excellent network – including with Chipotle, one of the largest fast food brands in the US. But also with insurance giant GEICO, with which TSM secures partners who are used to completely different budgets than classic gaming companies. It is also exciting that Leena enjoys a lot more freedom than a woman at the C level of corporations: She particularly likes to present herself sexy in lingerie and in a bikini on her Instagram channel, after all, she lives in Los Angeles, where she almost every day Sun is shining.

TSM is the most valuable esports company in the world with a company valuation of over $ 400 million. The 27-year-old Leena Xu heads the operational business as President.

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TSM is the most valuable esports company in the world with a company valuation of over $ 400 million. The 27-year-old Leena Xu heads the operational business as President.

© Leena Xu

So she is definitely an influencer and model, while together with founder Andy “Reginald“ Dinh she leads this empire, which has reached a company value of over 400 million US dollars in just nine years. A very exciting strategy because it draws a lot of male fans into the TSM universe who may have only been interested in her personally before. Ultimately, it is similar to FaZe Clan, which also emerged from YouTube stars and today run their social media eSports empire from a 40 million US dollar villa. TSM will also move into its new headquarters in 2021 – a 2,300 square meter facility for 50 million US dollars. Her strong presence on Twitch can also lead to problems, for example when she accidentally revealed that no one wants to buy her player Dardoch.

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Often times, Leena not only closes marketing deals, but also acts as a testimonial for the TSM brand in sponsored videos.

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Often times, Leena not only closes marketing deals, but also acts as a testimonial for the TSM brand in sponsored videos.

© Leena Xu

There are two models to get started in eSports: “eSports first”, which means that you invest heavily in teams and athletes at the beginning, burn a lot of money in a short time and try to get out of the red zone through merchandise sales and marketing partnerships to get out. The second model is “content first”: You buy influencers, the top 100 on Twitch and Youtube, build a brand and a fan base through which fashion can be sold in much larger volumes. YouTube and Twitch are also so exciting because every single video can be marketed with integrations, product placements – as has been the norm on TV for decades. “It is important to have the right balance between regular sales flows, from marketing, from fashion, from streaming in combination with the scaling effects of the brand, by investing in eSports teams that win titles,” explains the manager. One of the reasons more and more seasoned CMOs are being brought into teams who come from big sports brands and know how to scale a company. Because one thing must not be forgotten: Team SoloMids CEO Andy is 28, Leena 27. It is a very young management that is responsible for eight-digit budgets and has to ensure a steady cash flow, because TSM’s players earn a lot of money: The new League- According to the latest information, of Legends star SwordArt will receive a base salary of six million US dollars for two years, or three million per year.

We are highly profitable as an organization because we work with a strategy that consists of permanent revenue streams, such as long-term marketing partnerships, sponsorships or product placements in streams and videos. But we also invest massively in young talent and commit them to eSports titles such as PUBG, Fortnite, Apex Legends, Rainbow Six Siege or Rocket League at an early stage. I guess many believe that you can only earn your money with the top 3, but that’s not the case. “

– Leena Xu, President TSM

As usual in eSports, Leena is very close to her fans: she regularly answers questions via Instagram story.

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As usual in eSports, Leena is very close to her fans: she regularly answers questions via Instagram story.

© Leena Xu

Yes, Hu “SwordArt” Shuo-Chieh is one of the best LoL players in the world, at least among the so-called “Free Agents”, ie players who are really available on the market. SwordArt also has an impressive résumé including with the Flash Wolves. He helped his team to the first places in the Spring & Summer Playoffs of the League Master Series 2017 and 2018. When he joined Suning, he finished first in the LPL 2020 Regional Final. Shortly thereafter, Suning finished second at this year’s World Cup, Worlds 2020, against Damwon Gaming. Without question it is a huge support for TSM’s squad, but 6 million want to be reintroduced first. Leena acts on several levels: On the one hand, she is primarily responsible at TSM for signing players, i.e. contract negotiations. As president, however, he also has to ensure that the investment is capitalized.

Food companies are used to investing 10.20.30 million in advertising

TSM is investing 50 million US dollars in its new headquarters, which with its 2,300 square meters offers enough space for YouTube TV studios, because the social media business is becoming increasingly important for eSports organizations.

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TSM is investing 50 million US dollars in its new headquarters, which with its 2,300 square meters offers enough space for YouTube TV studios, because the social media business is becoming increasingly important for eSports organizations.

© TSM

For eSports organizations, it is extremely important to win exchange-listed mega-corporations with billions in sales as partners, who are used to getting enough money into their hands. Leena’s job is to be in meetings with chief marketing officers who would otherwise buy 5 million for a 30-second spot during the Super Bowl. Companies like TSM are enormously interesting for these CMOs because they have the target group that you can no longer reach with traditional TV: the Gen Z. Gaming superstars are the gate keepers to customers of the near future and you can get royally rewarded for this. That’s why an Adidas buy a ninja. We don’t know what Chipotle pays for its multi-year deal, but it should be in the high seven or even eight digits – that will pay off for the fast food giant, because what distinguishes eSports teams is their proximity to their own community – the closer they are the easier it is to turn them into followers of another brand. Ultimately, that’s what corporations pay for.

As a manager in eSports, Leena already enjoys significantly more freedom than is usual in classic corporate structures, where board members rarely show themselves in sexy poses on Instagram.

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As a manager in eSports, Leena already enjoys significantly more freedom than is usual in classic corporate structures, where board members rarely show themselves in sexy poses on Instagram.

© @leena_xu

They’re not cool enough for the audience, but their partners are. Since eSports stars constantly stream on Twitch and talk to their community, they also convert very differently than a soccer player who rarely really speaks to his fans. If everything sounds good, what is the biggest challenge for executives in eSports? The salaries are too high. Anyone who spends three times the salary on their superstar in the next two years will have to earn this 4 million US dollar extra budget again first. Now, SwordArt may help get to the finals in the 2021 Worlds, maybe even win, but the winning team can take home a maximum of $ 550,000, at least if Riot keeps the prize pool the same.

In other words: A player will not reinvest his salary over two years, you can only try to use his popularity and sell fashion through him. Ultimately, that’s the classic sports business: Juve could afford Cristiano Ronaldo because he tripled their profits from jersey sales. By the way, one of the reasons why TSM is currently neglecting CS: GO: “I love CS, of course we would like to be there again. But the entry would cost around one and a half to two million purely for the setup, i.e. the staff who takes care of the organization. Plus the players’ salaries, which are very, very high. ”It is often a strategic decision because the salaries in other titles in particular are significantly lower with minimally lower income, which increases profits. CS: GO players in the US earn up to $ 400,000 a year base salary.

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The manager was recently voted one of the 30 most influential personalities in the entertainment world by the business magazine FORBES. PC WELT congratulates.

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The manager was recently voted one of the 30 most influential personalities in the entertainment world by the business magazine FORBES. PC WELT congratulates.

© FORBES

The biggest winners in this business are Activision and Riot Games, which charge between $ 20 million and $ 40 million for a franchise slot. Yes, the teams are then also involved in the media evaluation, but this is absurdly good business for the publishers, but it creates an overheated market. Classic way, eSports teams raise 30 million in Series A. But if the slot costs 20 million and player salaries rise that much, you have to collect 50.60.70 million VCs in Series B and thus your company valuation in the region Push around 700 to 800 million US dollars. With a 10x rule, i.e. the company valuation is ten times the turnover, the turnover must then almost double. One of the reasons why eSports organizations usually try not to let their team sizes grow too much: TSM only has 122 employees, but some that cost as much as 20 full-time positions. TSM’s CEO Reginald has already commented on the franchise business in our large portrait:

Franchising has only really professionalized the industry. It used to be every six months the

Clock

Deferred – You could invest millions and lose everything after those six months. League of Legends as a franchise allows us not to think in annual cycles, but in 5, 10, 20, 30 years. After all, we are all on the way to becoming the first eSports team worth a billion. “

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