Featured case: FC Schalke 04 eSports:
Decision Making in a Changing Ecosystem

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The case

whoWho – the protagonists

Tim Reichert, Chief Gaming Officer at Schalke and Alexander Jobst, Managing Board member (Marketing).

What?

Schalke are a famous German football team who compete in the Bundesliga, Germany’s top division. They have won the competition seven times in their history.

Like many of Europe’s top clubs, Schalke have entered the growing eSports market, with interests in the League of Legends (LoL), FIFA and Pro Evolution Soccer titles.

Why?

Tim and Alexander faced two key decisions; whether to sell their LoL spot for the 2019 season to a venture capitalist, and if a FIFA youth academy was the best way to generate money from a relatively small market compared to other eSports titles.

GelsenkirchenWhen?

It was mid-March 2018 when Tim and Alexander met for a strategy meeting to discuss these fundamental decisions.

Where?

Schalke is based in the city of Gelsenkirchen, which is located in the densely populated state of North Rhine-Westphalia.

gamingKey quote

“Only a couple of years ago everyone was laughing at eSports. Now it is the next big thing and everyone wants to get involved.” – Alexander Jobst, Managing Board member (Marketing).

What next?

Important questions had to be answered by the interested venture capitalist firm such as would a full or partial takeover be preferable? How would they come up with the right price range for the LoL spot?

And in regards to the FIFA youth academy, how would it help produce local talent?

 
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FC Schalke 04 eSports: Decision Making in a Changing Ecosystem
Ref 318-0225-1
Teaching note
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The authors
author

Sascha Schmidt and Florian Holzmayer

Sascha and Florian discuss the growing eSports market and how the subject works well in cases.

Growing market

Sascha explained: “When we started our research for the case, the eSports market was growing strongly; market growth predictions were already exceeded. As such, several new games, teams, or sponsors came into play. A number of eSports initiatives in football could be observed, with Schalke 04 being one of the most prominent ones.

“In addition, the market was experiencing professionalisation activities on many levels. This dynamic environment made writing this case continuously interesting.”

The power of field research

He said: “Tim and Alexander’s insights were irreplaceable. Their first-hand insights on Schalke 04 eSports and the subsequent digital transformation throughout the entire football club provided the backbone for the case. Their thoughts on the eSports market and their future planning for Schalke 04’s eSports engagement enabled further depth and width in content that you can find in the case.”

Growing marketEver-changing market

Florian added: “Almost every day or week you can observe a new development within the eSports market that potentially further fosters its growth and development. Looking back, this was also challenging when writing the case, as we sometimes had to rework parts of the case that we had written just a couple of days or weeks before, so that the case mirrored these latest developments.

“Since the entire eSports market keeps evolving day-by-day, this is what makes the case and the subject unique, interesting and exciting.”

learning objectivesLearning objectives

Sascha commented: “We think that present day, topical issues provide many grounds for students to learn from. With our Schalke 04 eSports case specifically, we have three learning objectives in mind: First, students learn to examine an upcoming industry with double-digit growth numbers that is increasingly relevant for many established companies.

“Second, they study and evaluate the benefits and synergies, as well as the challenges and inefficiencies, of a diversification strategy, particularly the implications for progressing in digital transformation and internationalisation.

“Third, students learn to apply a problem-solving process through evaluating the benefits and drawbacks of potential solutions to key strategic challenges.”

About the authors

Sascha Schimdt is Professor, Chair and Head of The Center for Sports and Management at WHU – Otto Beisheim School of Management.
e Sascha.Schmidt@whu.edu
tw @ProfSLS

Florian Holzmayer is a PhD Candidate at WHU – Otto Beisheim School of Management.
e Florian.Holzmayer@whu.edu

 

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