Interview With Matt Bromberg, CEO of Major League Gaming

mlglogo This past weekend, thousands of gamers descended upon the Anaheim Convention Center to spectate and compete in one of the biggest video game competitions of the year, put on by Major League Gaming. Over two hundred teams of four individuals competed for the Halo 3 Championship where prize money totaled almost $60,000; while an additional $60,000 was up for grabs for titles such as Gears of War 2, World of Warcraft, Call of Duty, and EA Sports Madden NFL. An estimated 700,000 people viewed the live stream over the course of the weekend.

I had the opportunity to speak with the CEO of Major League Gaming, Matt Bromberg, about MLG’s continued growth through this recession and their plans for the upcoming years.

In this interview, Matt spoke about many of the misconceptions of the gaming business, including companies continued persistence of trying to bring video gaming to broadcast television; instead of focusing almost entirely on internet streaming.

Additionally, Mr. Bromberg spoke on the possibilities of creating an MLG-branded video game as well as the possible integration of mobile gaming to their circuit of console games.

A transcript of the interview is embedded below.

David Diaz: We’re here at MLG Anaheim with Matt Bromberg, CEO of Major League Gaming. Thanks Matt for taking the time to speak with us.

Matt Bromberg: Thank you for having me David.

DD: My first question for you, is now that we’re down in Anaheim, do you have a rough estimate of how many people are here today and how many will show up this weekend?

MB: Yeah, we typically do about 5,000 people a day, so that’s 15,000 over the course of a weekend.

DD: And that was for Anaheim?

MB: That’s what we typically get, I haven’t gotten the full numbers for this event, but it’s usually around that number. And our broadcast audience is typically between 600 and 700,000 men, under thirty. Who generally speaking watch the broadcast for about an average of 72 minutes each.

DD: And that’s for a day, or the entire weekend?

MB: Over the weekend of programming. So it’s interesting, if you start to think about how big is that. And you look at prime-time audience in that demo, 12 to 30 or 34, for the major cable networks. What you find is that’s between 3 and 7 or 8 times the Nielsens rating in that demo. So directionally it’s getting pretty big.

DD: When I came down here I noticed a lot of sponsors including Dr. Pepper and Old Spice. What is MLG’s main source of revenue? Is it these events, or is it through sponsorships?

MB: It’s 75% sponsorships, and about 25% licensing and direct to consumer.

DD: Do the events themselves make money or are they mainly put on to increase your user base?

MB: They’re mostly a break-even proposition. It’s as you know, because you’ve been here, it’s a big undertaking, it’s a big production. It’s six tractor trailers, and we drive them around the country, so it’s a big deal. But the live event is not really what sponsors are buying. They’re buying integration into our digital media and into the online competitions. And so eighty percent of what they’re paying for, eighty percent plus, is integration into that digital world. Then they come here to have the direct contact with the consumer, which they love. But I think it’s a big misconception about our business is that it’s about the live events, because they’re so big and attractive, but it’s not really what the business is about.

DD: Is MLG profitable at this point?

MB: It is.

DD: How much money have you taken in to date?

MB: We have raised about $42.5M.

DD: Can you take us through the growth of MLG, from when you started to where you are now?

MB: We raised our first round of money in very early of 2006. We we doing live competitions for three hundred people, and we had three-thousand people watching the live streams and i think we had 25,000 monthly uniques on our websites. Now we have 11 million folks every month on the websites, and we talked about the size of the broadcast and the live event audience. It’s been a real explosion. We had one sponsor at that time, and now we have closer to fifteen. It’s been exciting for us to really break through into the mainstream media world, really by almost any measure. It’s not just the number of sponsors, it’s the quality: Doritos, Proctor and Gamble, Dr. Pepper, Bic, Ball Park, really top tier marketers.

DD: And what about ESPN? Are they a sponsor or a partner?

MB: They are a partner, they are our coverage partner. They cover the events, they interview our pros. In fact, we do a weekly chat with our pros on ESPN, and they told us recently that–we had some player shifts a while back–and Walshy did a chat there, and they had more questions submitted for him by users than they’ve ever had for any pro athlete they’ve ever done. I don’t know that it’s because Walshy has more fans than say Lebron [James], but it’s because the audience is so pure and focused in that place–our audience is 100% online–and that’s part of the value proposition from a business perspective is there’s an intensity and purity of our audience and a directness of being able to connect to them. It’s pretty unique out there, and it helps us to sell those partnerships.

DD: When MLG first started, the gaming market was up for grabs–it was a pretty crowded niche–what did you do that either other companies didn’t do, or didn’t do well enough?

MB: We had a lot of competitors, and we drove them all out of business, kind of one by one. And I think that there were a couple of big misconceptions. The first one was that competitive video gaming would be about television primarily. That was a big mistake that a lot of people made. We’ve done television in our day, but we always knew that this was really an online activity. Focusing on television killed a lot of people. The other thing that I think we got that other folks didn’t get, is that in order to succeed in this market, you also have to own the online competition. It’s not enough to have live events, it’s not enough to make content. Because every other day of the year when people aren’t here, you want to be the place where people come to compete. Growing that part of our business was a major differentiator for us. And the third thing was a lot of folks came in from a very top-down corporate perspective, and sort of said “hey, we’re a big company, this is the way it goes.” And what they didn’t recognize is that this is an activity that people are already engaging in. We didn’t create it. What we did was shape it, codify it, package it, and build it up. We came in trying to sort of celebrate and appreciate what people were already doing and what they were already into and add to it; not roll in and change the whole thing because it suited our partners or it suited our sponsors, or anything like that.

DD: I know that a few months ago you acquired a company and raised a new round of funding a while ago…

MB: That’s correct, we acquired Agora a couple months ago, and closed a round of funding at the end of last year.

DD: And there were speculations that the money was for the acquisition of Agora…

MB: There was actually some incorrect reporting about it. The funding is now almost a year ago. And we did the Agora deal only very recently. But because the Agora deal was largely a stock deal, I think there was some reporting about…I think people thought we had sold some stock to buy the company, which we hadn’t. Last fall we had been having some M&A conversations. Some folks had been interested in buying the business and we decided we wanted to double-down and reinvest and continue as an independent entity–and continue to run the company. That’s when we raised the money.

DD: What was that money used for?

MB: We did use it partially for acquisitions. But really, for us, just continuing to invest in the platform. We’ll do many more broadcasts. We we also announced a big deal with Electronic Arts whereby we’re doing all their online and offline competitions for the EA Sports titles, which you saw in the back corner [at the event]. It’s a big new addition. We announced a big deal with Doritos, whereby next year we’re going to do four skills combines across the country. Like the NFL combine where you evaluate amateur players for promotion to the Pro Circuit. We are very heavily reinvesting in our technology around the online tournament business. So we’re using it for all those things.

DD: I noticed that there were no games for the Wii. Is there a reason for that?

MB: There are no games for the Wii, this is true.

DD: Is there just not enough interest out there for the games?

MB: Historically we used to do Smash Brothers. Then the new Smash Brothers that came out was sort of disappointing from a competitive perspective. The competitive community didn’t really embrace it. And so I think for us it’s always a balance of finding titles that have enough of a following that we can sort of sprinkle our pixie dust on it and help it grow. And I haven’t yet seen that title [from the Wii].

DD: Do you see MLG ever sponsoring a video game and helping with aspects of the production process? Is that something that’s in your…

MB: Ya. You know, it’s interesting, when I arrived that was actually a big part of the original business plan that the founders had created. Y’know, hey, lets build a video game. There should be an MLG video game. And I always believed it was an incredible idea, but it was an idea that was too early.

DD: Okay.

MB: And now we actually are actively talking to several publishers about potentially creating an MLG game. Because if you think about… part of the growth of our business is that the world has kind of come in our direction a little bit. Four years ago we said that the whole video game business is going to be about multiplayer. And multiplayer by definition is about competition. There’s gonna be a big media property here and this is what we’re gonna do. People thought at the time that it was interesting, but what’s happened, of course, over the last several years is that multiplayer is becoming a bigger and bigger part of the video game business. And the idea that you’re making a boxed retail product for a single player, which is the historical model for the video game business, is completely out the window. And so if you start to think about what we do, which is, we create rule sets for competitions, you think, well, hey, if I can build a video game without any of the single player aspects to it, just a pure tournament title, and we could bring some of the intellectual property around what you need to do for a game like that to make it great, and we have an installed audience to buy it.

DD: Okay.

MB: Yeah, so we’ve thought a lot about it.

DD: Great. And so, what is your take on the explosive growth in mobile gaming? You see all these iPhone games that are coming out…

MB: Yeah!

DD: Do you see MLG trying to tap that market?

MB: What’s interesting about gaming and competitive gaming is that the consumer behavior is the same across segments. I don’t care if you’re a 40-year-old woman playing Scrabble Online or Word Womp, Puzzle Games, Bejeweled, or, you’re an 18 year-old guy playing Halo – You approach it differently, but the basic idea is: You’re playing a game because you want to keep track, and you want to know where you stand, and you want to get better. And that is a common thread, through iPhone games, through cell phone games, through casual PC games, through more hard core, it’s all the same. So I think for us it’s just a question of building… Our brand is very associated with young men, and that purity is part of why the business works. So, yeah, I think we’ll get there one day, but we want to be really careful for the brand to kind of give us permission to do that over time. So it’ll probably be a little while.

DD: Gotcha. And then, the typical ending question, where do you see MLG in 5 years, 10 years?

MB: The beauty, I think, of our company, is that we understand what the model is. It’s major live events, big broadcast, big media, online competitions. And I think that model is going to continue. What’s really exciting for us this year is that we’ll be re-launching our online properties. And the greater data integration and some of the deals we’ve done with the publishers that enable data directly from the game–you have your results updating your MLG profile automatically–those kinds of things are going to unlock a new area of growth in that part of the business. But by and large the model is pretty straightforward, and we’re just gonna keep pushing.

DD: Well, judging by everyone who’s in attendance, it looks like this is another very successful tournament.

MB: Yeah, I think so. We’ve been lucky to be able to grow really really quickly through the downturn. We’re twice as big this year as we were the year before and we’ll be twice as big next year. So especially in this economy we feel pretty fortunate.

DD: Thanks for taking the time to talk to me.

MB: You bet!