A Perfect Pitch: Major League Gaming

While some may think Halo and World of Warcraft are just games for techies and kids, one entrepreneur has proven that a business built around serving the gaming industry can earn up to $20 million in revenue this year. As a 14-year-old arcade employee in Alexandria Bay, NY, Sundance DiGiovanni never dreamed he would one day help found NYC-based Major League Gaming (MLG), the leading media company for gamers nationwide.

By targeting a demographic largely overlooked by mainstream media—males in their early teens—DiGiovanni, 37, and his team were able to secure key partnerships, including sports mega-house ESPN, and close deals with Dr. Pepper, Old Spice, and Doritos. Today, MLG has changed the way gamers communicate, compete, and interact via the web.

Capitalizing on Connectivity

MLG, started in 2002, is a competitive gaming league and media company that hosts pro-circuit gaming competitions several times a year throughout the country, much like the Professional Golf Association. They also stream coverage of the competitions online. By providing this competitive structure and broadcasting events, MLG turned gaming into a spectator sport for thousands of viewers across the nation.

In the early 2000s, the availability of high-speed internet was changing how video games were played, and DiGiovanni took notice. “The consoles for gaming (e.g., Xbox 360 or Nintendo) became equipped with internet access, so I could be in New York City playing against somebody in San Diego, as well as someone in Canada or Texas at the same time, and all of them are on my own team,” DiGiovanni said. “I suddenly realized that the network of gamers was going to literally grow overnight.”

To capitalize on this trend, DiGiovanni and his partner, Michael Sepso, set up mlgpro.com to attract and build a community of gamers by allowing them to communicate with other gamers around the world, and watch live gaming competitions from their home computer. Based on the demographics of gamers, DiGiovanni and Sepso developed a business model similar to a merging of Major League Baseball and ESPN. MLG hosts a pro circuit and gaming competitions, then broadcasts these events on its own website. The company also provides content for amateur gamers, as well. MLG held their first competition in October of 2003 in the East Village with 140 people in attendance. Today, the events attract more than 12,000 attendees, with 440 players, and hundreds of thousands tuning in online.

Having a professional background in the commercial and film advertising industry as a youth brand strategist, with additional experience as a broadband consultant, DiGiovanni developed a business model that leveraged partnerships and sponsorships to help grow their big idea into a new league of competition. MLG charges users $10 to watch the competitions in high-definition (low-resolution coverage can be viewed free), and they also make money through ticket sales ($25 admission to competitions) at the events themselves, merchandise, and products.

Securing the Right Investors

Before looking for investors, DiGiovanni and Sepso made sure MLG’s model was well supported by seeking help from a group of advisors who had experience creating a company and in investing. “I think advisory boards for young companies are one of the most important things you could have in place,” he said. “We created a strong network of people both in the same situation we were in at that time, and also people who had been through it previously.”

After they were secure with the model and business plan, DiGiovanni and his team met with four possible investors, and the first (undisclosed) group of investors agreed to jump on the MLG bandwagon, investing $10 million in series A funding.