How the layoffs at Upcomer show the challenges of public ownership in esports media

“Enthusiast Gaming always seeks to ensure that it is operating the business as efficiently and effectively as possible and that it is positioned strongly to execute on its growth strategy. Unfortunately, this sometimes includes making difficult decisions about staffing levels. Whenever they occur, these decisions are not taken lightly and we always work to ensure our employees are treated with respect,” said Enthusiast Chief Corporate Officer Eric Bernofsky in an emailed statement, provided in a direct email response after Digiday reached out to Enthusiast’s press contact.

Enthusiast Gaming did not respond to several questions for this story or offer anyone to talk to over the phone. Bernofsky said in his prepared statement that “privacy and confidentiality reasons” kept the company from answering questions about specific employees.

It all came to a head in March 2022, when it came time to balance the books of the publicly-traded company. Instead of building on the groundwork laid by Morrison and his staff, Enthusiastic executives seemingly decided to gut Upcomer, pivoting to a focus on video content. The decision made some esports media workers speculate about whether a pathway to profitability still exists for focused, endemic esports journalism. “Trying to swallow years of losses to build up a brand is great, in theory, but very rarely do boards and executives have the stomach for it when it comes to practice,” said Jason Chung, an assistant professor of sport management and executive director of esports at the University of New Haven.

Of Upcomer’s 26 full-time staff, 11 were laid off on March 10, including editors, writers, social media managers, podcast staff and Yanier “Niero” Gonzalez, the founder of Enthusiast-owned website Destructoid, who worked at the company since June 2017. (Editor’s note: Prior to joining Digiday, the author of this story wrote freelance articles for both the previous and current iterations of Upcomer.)

A handful of employees now populate Upcomer, including a skeleton crew of writers and editors. The bulk of Upcomer’s editorial content is now written by freelancers, and some of the retained writing staff quietly left the company over the past month. The website’s video department was largely unscathed by the layoffs, though some of Upcomer’s video creators now work across multiple Enthusiast Gaming properties, per a former staffer.

And while Upcomer’s video content had been doing well on platforms such as Snapchat, its viewership has suffered in the wake of the layoffs. YouTube viewership of Upcomer’s video content peaked at about 964,000 in December 2021 but subsided to 255,000 by the end of March 2022, according to data pulled from video analytics firm Tubular Labs.

Many of the former or current Upcomer staffers Digiday spoke to requested anonymity, either because they were current staffers and feared reprisals by their employer or had already been laid off and signed a non-disclosure agreement to receive severance pay. 

Some former staffers said they felt pressured to sign the NDAs quickly, without consulting a lawyer or advisor. The process was complicated, they said, once they were laid off and their access to their Upcomer email addresses and Slack accounts were cut off.  Those NDAs were part of a string of cruel actions Enthusiast Gaming took amid the brand’s reimagining, those employees said.

A promising trajectory

On the surface, before the layoffs, the brand was doing well: the publication steadily built readership since its launch in March 2021, rounding out its staff with hires such as European League of Legends insider Brieuc “LEC Wooloo” Seeger. (Seeger is still employed with the company.) Between March 2021 and March 2022, Upcomer’s readership increased by 509 percent, according to traffic data provided by media measurement firm Comscore, with much of that growth coming in the early months of 2022.

The website covered esports from a firm journalistic perspective, much like ESPN Esports — which had employed Upcomer’s two top editors — but boasted its fair share of irreverent thinkpieces and general gaming coverage.

Publicly, Enthusiast seemed to have an appetite for investing in the brand even a day before the layoffs, when the official company Twitter account retweeted editor-at-large Tyler Erzberger’s post claiming the site had just smashed a viewership record by reaching more than 1.1 million page views over the span of eight days.

In the first 8 days of the new @Upcomer website launch, we've surpassed 1.1 million pageviews, which once again sets a record not only for the network but as one of top at @WeAreEnthusiast as well

Thank you to the now millions of unique users who visit Upcomer every month! ✌ pic.twitter.com/Pn0qdJj86R

— The Esports Writer (@FionnOnFire) March 9, 2022

But there were cracks even in the early days of the relaunched site in mid-2021, suggesting the brand did not have the wholehearted support of Enthusiast Gaming’s upper management. 

In June 2021, executives laid off Enthusiast Gaming’s diversity and inclusion manager, Amanda Stevens, whom they had hired only four months prior, alongside the rest of the new staff at Upcomer. Stevens’ introductory memo, which trumpeted a warm message of inclusivity, was quietly removed from the site, only to be reinstated after staff members protested. There were no efforts to replace her role, with higher-ups claiming that her responsibilities would be taken over by a new executive hire. The role is not currently occupied, nor is there a public job posting available for the position.

Warning signs

There were other early warning signs in the relationship between Enthusiast Gaming and Upcomer. The two companies began as separate entities; the original Upcomer esports app launched in Los Angeles in 2018, while Enthusiast has been based in Toronto since its founding in 2014. Although Enthusiast acquired the Upcomer brand in 2020, former staffers said it was never entirely clear how the website would align with the rest of Enthusiast’s media properties.

What did become clear was that Upcomer was a pet project of Enthusiast Gaming founder Menashe Kestenbaum, who was serving as the company’s president when it acquired and relaunched the brand. So in early 2022, when Upcomer staff learned that Kestenbaum would be “stepping down” into a consultative role on the company’s board, they worried that the news would lead to a deprioritization of Upcomer. “Upcomer was his baby; we were under his umbrella,” said one staff member. “As soon as he was forced out, that was when they started moving the goalposts about how many views we had to hit.”

On March 31, Kestenbaum publicly acknowledged that he was no longer with the company, announcing that he was leaving the company to start his own venture capital firm, though he remains a major shareholder of Enthusiast. According to Kestenbaum’s tweeted announcement video, he realized he was more comfortable developing new businesses than helping larger companies scale up. He did not immediately respond to Digiday’s specific queries for this article.

In the video, Kestenbaum appeared to be somewhat taken off-guard by the need to announce his career shift: “I was going to time this up, as well, with having the announcement for my venture capital fund in gaming and tech, which isn’t ready, unfortunately,” he said. “So I’m going to have to kind of do a mini-reveal, kind of ruin the surprise a bit.”

https://twitter.com/RavMenace/status/1509569275102699529

“Menashe was the biggest champion about Upcomer — it was like his passion project,” said an anonymous former staffer. “So, to have someone like him not on the leadership team anymore at Enthusiast, and replaced with other, non-endemic [executives], said to me, OK, I can expect that this year is going to look a lot different from last year.”

Enthusiast execs — primarily vp of content Ryan Musselman and director of content Rob Jones, according to former Upcomer employees — started to pour on the pressure almost immediately, cranking up the website’s readership goals to what staffers saw as unreasonable figures, although it was already on track to become one of Enthusiast’s largest publications.

Page view expectations for the year, for example, went up to 75 million, a staffer said.

“We had hit like 7 million last year,” another anonymous staffer said, “so they went up 1,000 percent.”

Cruel and unusual

Despite the new goals, Upcomer staffers still felt their jobs were safe after Kestenbaum’s exit after several of them had informal conversations with Morrison, the editor-in-chief, in which he promised that they could count on staying employed for the immediate future. Morrison did not immediately return a request for comment.

Days before the layoffs, Enthusiast Gaming execs began to more deeply probe whether Upcomer’s business model could change, whether into video or if it could be brought more in line with Destructoid, another Enthusiast property that employs a handful of full-time editorial staff and otherwise relies on freelance content.

Staffers interpreted that the executives behind the video push were Musselman and Jones, who both cut their teeth at prominent gaming entertainment network Machinima in the early 2010s. One former Upcomer staffer told Digiday that Musselman, motivated by unrealistic expectations from his experience working in video, had been pushing for cost cuts in Upcomer’s written editorial department for months. (Premium video content in gaming and esports is far from a tried-and-true strategy; VENN, which billed itself as the future of high-production gaming video content, disintegrated last year, and it’s yet to be determined if the relaunched G4 network will succeed.)

Shocked by the executives’ queries and their implications, Morrison summoned Upcomer’s staff writers for an emergency meeting, informing them layoffs could be on the horizon. Morrison was on the verge of going on vacation, and though he anticipated bad news, he didn’t think Enthusiast would make its move until he returned, according to staffers.

Morrison was mistaken. At the end of the following day, the majority of Upcomer’s staff were invited to a meeting on March 10, titled “Upcomer Vertical.” The writing was on the wall. “If you looked at Sean’s calendar, you could see that there was another meeting right after that one, just Sean and a bunch of freelancers,” said a laid-off staffer. “The next day, I literally woke up like, ‘OK, I’m going to lose my job at this meeting.’”

The meeting opened with the announcement that those present would be laid off. Morrison, who tuned in for the call while on vacation, became irate, criticizing the timing of the news and interrupting the Enthusiast human resources workers making the announcement to tell the laid-off staff that they were still entitled to the bonuses written into their contracts. “After the meeting, we were talking on Slack,” said former Upcomer writer and social media manager Carolynn Soba. “Sean was like, ‘don’t worry, your bonuses are going to be paid out.’”

The majority of laid-off Upcomer employees were denied their promised annual bonus, a snub that some said felt like a slap to the face after their year of hard work. Most staffers were told that they would receive a $5,000 end-of-year bonus upon completing goals that had been verbally communicated, but not written into contracts. Though Morrison had promised that the bonuses would go through even before news of the layoffs was public, they hadn’t yet gone out before March 10.

“The wording for the bonus was ‘as long as the milestones are met’ — and we met the milestones at the end of the year,” Soba said. “They were like, ‘as far as we know, that bonus was discretionary.’ They were using that kind of terminology to say that they didn’t owe us anything.” 

The company also pressured laid-off staffers to sign an NDA to receive their severance pay, which ranged between one and three weeks’ worth of salary, according to three of the laid-off employees Digiday reached for this report.

“It goes to show how knife’s-edge they were, with regard to profitability and revenues, if they had to break promises to a bunch of very talented people and basically shut down a site that was becoming a pretty good resource for the community,” Chung said.

Upcomer’s decent salaries — by esports media standards at least — made this even more of a knife twister. With the exception of the top brass, writers’ and editors’ salaries floated between $50,000 and $75,000, far more than other prominent endemic publications, such as Dexerto, which offers writers a starting salary of $30,000 to $35,000.

The top paid weren’t spared either: Erzberger, the editor-at-large, was laid off by Enthusiast the day before the rest of the staff found out. As the face of the new publication, Erzberger’s salary was well within the six-figure range, according to several former Upcomer staff, making him a juicy target for Enthusiast executives looking to cut costs. “I was told by Tyler [Erzberger] that they ‘took him out back’ the night before,” a former staffer said, adding that Erzberger had purportedly received a larger severance package as well.

Most of the staffers Digiday reached for this article believed the decision to gut Upcomer was ultimately made by Enthusiast Chief Operating Officer Thamba Tharmalingam. Notably, Tharmalingam was on vacation during the layoffs — another source of frustration for Morrison, who called out the COO’s absence at the March 10 meeting.

Here we go again

There was a cruel irony to the Upcomer layoffs: for some of the staff members affected, it was the second time they’d been laid off by the same brand in less than three years.

The previous iteration of Upcomer was an esports score-tracking mobile app with an editorial vertical; when the app ran out of runway in mid-2019, its editorial staff was unceremoniously laid off by upper management under previous ownership. In a bid to bring back the spirit of the old Upcomer after Enthusiast acquired the brand, Morrison recruited a number of former staff members to return to the website for the March 2021 relaunch, only for them to be laid off in a similar manner just over a year later. 

“This iteration of Upcomer, in my opinion, was such a layup in a lot of ways,” said a former staffer.

Publicly owned

Morrison and Erzberger were not the only former ESPN Esports staff to be poached by Enthusiast Gaming to help breathe new life into the Upcomer brand. Former ESPN staff writer Jacob Wolf was approached by the company in late 2020. (This Digiday reporter, also a friend and former colleague of Wolf, was also approached about a potential job at Upcomer in early 2021.) “I remember that their strategy was very much ‘we want to recruit the biggest names in esports, the most relevant names in esports, and create this website,’” Wolf said. “The offer that they presented me very early on, without a lot of extra discussion, was $200,000 base salary, $50,000 in stock incentives and $50,000 in cash bonuses related to performance.”

Wolf eventually decided against accepting the offer, taking an investigative reporting job at Dot Esports instead before leaving Dot to focus on his own production company, Overcome. “The entire discussion just kept coming back to ‘we want to hire the biggest names, and we want to pay you this much,’” he recalled.

Enthusiast’s lack of a seemingly cohesive strategy for Upcomer is a reflection of the broader challenges it faces as a gaming and esports holding company that is, at the moment, one of the few publicly traded firms in the industry. Fundamentally, the holding model is a strong one for esports companies: as companies in the space increasingly look to attain high valuations and go public, having a wide range of tangible assets and products is certainly an advantage. But today’s highest-valued esports organizations are just now pivoting to this model after spending years building their brands through a focus on competitive gaming. Enthusiast has been following the holding company model from the beginning, so it lacks the same cohesive identity. 

“They’re trying to figure out where the next big thing is going to be — and when you have such disparate properties within your organization, the question of what exactly you are becomes a very valid question,” Chung said. “Are you a media conglomeration? Are you an esports organization? Is there a distinction between the two?”

Enthusiast’s plummeting stock price may have been the straw that broke Upcomer’s back. Like the broader market, Enthusiast Gaming stock has not fared well in 2022. $EGLX currently sits at $1.63 a share, down from $2.88 at the beginning of the year and a high of $8.54 in April 2021. With Kestenbaum out of the way and a slew of salaries on the chopping block, Upcomer provided a ripe target for Enthusiast executives looking to balance the books before their next earnings report. “EG’s quarterly report is coming up, or has already happened, and their stock is way down,” a staffer said. “And I think they were trying to shed as many costs as they could.”

The demise of Upcomer has left some esports journalists with a sense of doom about the state of the industry. If esports media properties want to succeed, they may have to explore alternative revenue streams, such as Dexerto’s brand consultancy — that is, if the companies that own them even give them enough time to grow organically.

In its statement, Enthusiast Gaming said the company overall was growing but gave no indication about what this meant for the Upcomer brand specifically.

“Menashe had a whole five-year plan,” Soba said, “and that kind of went to shit.”