Esports organization G2 is at a crossroads. It faces key challenges — some small, some macro, some existential — and decisions that will be made over the coming months will shape the business fundamentally.
Esports itself, which looks increasingly like a bubble deflating, is confronting long-held fears about its economic viability, at least in its current state. But at G2 this uncertainty has another dimension, following the exit of founder and former CEO Carlos Rodriguez, who resigned following backlash over a video he appeared in with controversial influencer Andrew Tate last September.
Not that there are any signs of upheaval in the team’s performance. When Digiday arrived in Germany in February to tour the organization’s offices, it had just won three major honors in two weeks, in three different titles. But this sort of success doesn’t always equal financial security for esports teams. Competing in the biggest franchised leagues usually requires massive up-front costs, which aren’t easily recouped. And teams across the industry are collapsing as a result.
Most of this chaos, however, probably won’t touch G2. Middling orgs are feeling the brunt of the correction. There’s more breathing room at the top where new fans, ad dollars and the best players are more within reach.
In fact, in stark contrast to the rest of the industry, G2 even turned a profit in 2021, according to a financial report released in German — posting a 1.37 million euro EBITDA. G2 is surely one of only a handful of teams organizations to do this, and has supposedly built on that momentum since then.
“G2 has been profitable for the last two years,” Alban Dechelotte, who was promoted to replace Rodriguez as permanent G2 CEO in January after having joined the organization in 2021, told Digiday during an interview at G2’s new facility in eastern Berlin.
Dechelotte, who had stints at Riot Games, Havas and Coca-Cola before G2, said G2’s revenue is split among brand collaborations (60%), payment from game publishers (30%) and consumer products like team jerseys (10%). G2 also has deals with top brands like Red Bull, Mastercard and Adidas in just about every category, further shielding it from the cold.
That revenue model has so far enabled G2 to hold up to the headwinds bearing down on it, and on esports at large. However, Dechelotte isn’t one to leave much to chance. Since becoming permanent CEO in January, he’s wasted no time molding G2 into something more democratic internally.
“We try to take advantage of the diversity of leadership a bit more,” Dechelotte said. “It was very easy for us to rely on one person to make final calls on players and content, and sometimes product. But the first thing I did is empower people that are best qualified in the team to make a decision on their craft. … It’s not a one-man show.”
Nevertheless, the task ahead is an unenviable one for G2. However ignominious Rodriguez’s behavior is of late, his impact on esports can’t be denied. He made G2 what it is today: perhaps the most coveted esports org in the western world. For better or worse, Dechelotte is having to reconcile Rodriguez’s absence with G2’s standing as an org, as he plots a course forward for G2.
Notably, Rodriguez was still listed as managing director of G2 late last year, leading some to question whether he was still involved behind the scenes, despite the public resignation in September. Dechelotte assured Digiday that, despite a three-month-plus period between Rodriguez’s public resignation and his official one, he had no involvement in org decisions from the day he publicly resigned. He now has no special rights as G2’s founder, and is a minority shareholder.
“The level of interaction at the organization is minimum,” Dechelotte said.
The mission to course-correct the organization following the recent controversy starts, as it always has, with competition. G2 is still all-in on “Valorant” after being rejected a partnership slot in EMEA, which was almost certainly a result of the Rodriguez scandal. The org has signed a star-studded, North America-based roster, which is notable on two fronts: first, a successful season will mean G2 competes in the top tier of “Valorant” in 2024 and 2025, which will generate millions. Second, more activity in North America is indicative of G2’s global ambition.
“I would love [if] we are so global that it’s the norm for G2 to make jokes about EU fans and EU teams, as much as we do today for NA fans and NA teams,” Dechelotte said. “That will be, for me, a success, because it will prove that we managed to go beyond our origin and become a multi-local organization.”
But with such global ambition might come a loss of identity.
“G2 is still a strong brand. My question about them now is, ‘What is different about them?’” said Mark “Cashflo” Flood, former North American director of operations at Astralis. “It seemed like Carlos [Rodriguez] was that differentiator. So now what really separates them? … What are the specific reasons that someone should be a G2 fan and why should someone support them over Faze, 100 Thieves, et cetera?” said Flood.
Long-term, G2 wants to rely less on competitive success for the business to thrive given the aforementioned risks, moving closer to a direct-to-consumer model. Last year it started to work toward that goal when it launched the official G2 app, which has gamified features for fans to engage with the brand, its content and its pro matches. It is also designed to ease the purchase of G2 merchandise.
“The strategy for us is to diversify, but not the way people mean it,” Dechelotte said. “We want to be even less dependent on competitive performance. We are already quite unrelated to performance because we create some banger content that, we win or we lose, will be entertaining no matter what.”
As orgs go, few are as well-positioned to win as G2 — both on and off the server. While the last six months have been tumultuous, fresh blood in the CEO position, given what we now know about Rodriguez (and indeed about Dechelotte), might just be the best thing that could have happened for the business.
On the flip side, some are concerned that the org’s challenges will prove increasingly onerous over time.
“I’m not optimistic about the current esports team model at all right now,” said Jacob Wolf, founder and CEO of Overcome. “They own nothing other than a brand despite tech-level valuations. In the case of G2, though, I’m even more pessimistic. Carlos [Rodriguez] was the center of the brand and his public meltdown and ousting drove a lot of people away from being fans of the organization. So when you’re already on shaky ground, adding another layer of disruption makes it even more difficult.”