The Finnish e-sports organization ENCE has had to make painful decisions in recent days.
On Friday, ENCE announced that the two-time StarCraft 2 world champion Jonah “Serral” Military leaves under the wings of a Finnish organization. On Monday evening, the news continued after ENCE announced that they were giving up their PUBG team.
CEO of ENCE Mika Kuusisto admits that starting in 2016, giving up Sotala, who has worn the organization’s shirt, is getting better. In ENCE’s shirt, Sotala rose to the brightest peak of StarCraft 2 and became one of the best competitive players in the world. At the same time, the image of the porn star player is strongly linked to the organization.
However, Kuusisto states that ENCE must focus on games around which the organization can build a functioning business.
– StarCraft 2 is not interesting enough for us to see at the moment that it could be monetized. At the same time, of course, we also have a place to look in the mirror, because we haven’t managed to sell Joona and the game in such a way that it would have brought enough investment to the organization. The peak years have come down significantly in that game as well, Kuusisto estimates.
Sotala continues his career in the American BASILISK organization.
The future of the PUBG team was discussed as recently as last week
In addition to Starcraft 2, the PUBG game team has been part of ENCE’s repertoire for years. Represented the team from the beginning Saku “SPRAY” Sajakoski had time to play in the ENCE shirt since spring 2019, i.e. for almost four years.
ENCE’s PUBG team was still going through the rebuilding process at the turn of the year. Sajakoski and The same “SkaV” Danger remained under the organization’s wings at the time, while ENCE announced the coach Jari “SENTEX” Sammalniemi, Jonah “NOOKIE” Nervous and What “What” Malkamäki contracts expire.
Kuusisto says that ENCE’s goal was to build an internationally successful lineup around Sajakoski and Vaarala. However, the plans fell through when the game developer PUBG Corporation, which almost single-handedly dominates the e-sports side of the game, pulled the rug out from under ENCE’s wishes.
This year’s PUBG Tournament Calendar is built on international tournaments. Eight partner teams will receive a direct invitation to the tournaments, which the game developer has chosen on the basis of, among other things, previous success and the teams’ fan base. Others have to weed out. ENCE was not blessed with a place among the partner teams.
– We have had a long partnership with PUBG and we had an active dialogue with them as recently as last week. The tournament calendar changed radically from last year, and we didn’t see the possibility of continuing to participate in the game, says Kuusisto.
The CEO of ENCE admits that the changes made by the game developer have also made building the future difficult. Planning the team’s activities and future partnerships is difficult when the Tournament Calendar is only published a couple of months before the start of the season.
– I remember well when Saku and Jari visited the office for the first time four years ago. The team then played in Berlin and had success, but the scene of the game has changed really radically since those days. The partnership opportunities (with the game developer) and the overall interest of the game are no longer at the level they were before, Kuusisto estimates.
With the departure of StarCraft 2 and PUBG from the game selection, ENCE’s player base will become significantly smaller. The organization still has the CS:GO team made up of European players, the Finnish CS:GO academy team and the winner of the world championship in the NHL video game series Eric “No” Tammenpää.
Revenues come from partnerships
Since ENCE operates largely with the company’s own capital and has not involved outside capital investors, the Finns are forced to build a sustainable business. This also means making difficult decisions if necessary.
In practice, e-sports organizations do not earn much from competitive gaming themselves. The prize money often goes to the players themselves almost without repayment, and the players have to be paid a salary in addition to it.
The organization generates revenue from everything outside of gaming: sponsorship contracts, player trades and content production. In recent years, various partnerships with game publishers and tournament organizers have emerged alongside these as an essential part.
ENCE’s crown jewel, the world’s best CS:GO team, is a good example of a successful e-sports business. ENCE managed to claim a spot on the partner list of the biggest CS:GO tournament organizer, ESL, among the first. It opened for the organization not only a sure path to the game’s major tournaments, but also the door to dividends from tournament and league revenues.
It is easier to build a business around the game, because ENCE is guaranteed to participate in the toughest tournaments.
We are looking for new openings
Although ENCE’s focus is currently on its core expertise, i.e. Counter-Strike, the organization is still having discussions in several directions about new game openings. At the same time, the criteria for new teams has been tightened.
– We want to be involved in games around which continuity can be built. Mere success is not enough, as a credible e-sports ecosystem created by the game developer is also needed. Of course, we aim for international success, but we can’t do charity either, Kuusisto sums up the Finns’ approach.
As an example of such a new opening, Kuusisto highlights the German Rennsport. An e-sports series with a prize pool of half a million dollars has already been launched for the yet-to-be-released driving simulator game together with the tournament organizer ESL.
Organizations are offered partner positions in the league and ENCE also had discussions with the game’s publisher, but lost out to bigger international competitors. However, expansion to, for example, Rennsport is not excluded if the ecosystem that is just being built proves to be functional.
However, the most important thing is that a business can be built around the game.
– If you want to build international competitiveness, it requires investments. We are happy to earn them back as well.