Wall Street Journal Article, Featuring Fatal1ty

July 26, 2006

"Sponsors Help Videogame Stars Turn Professional" By Ellen Sheng

Jonathan Wendel travels the world to compete in tournaments, hawking his own line of branded products to his legions of star-struck fans.

His event: videogames.

The 25-year-old Mr. Wendel, also known as "Fatal1ty," is shaping himself into the Derek Jeter or Michael Jordan of the gaming world. When he isn't busy gaming, he is out promoting his gaming equipment. Next up, he hopes, are gigs for the makers of shoes, shirts and sodas.

To be sure, playing videogames for a living is still pretty new - Mr. Wendel is a pioneer. But the number of professionals is growing. In South Korea, they enjoy star status, and even insure their fingers.

Videogame hardware and software is a $29 billion business world-wide, according to DFC Intelligence, a San Diego-based interactive entertainment firm. NPD Group, a research firm based in Port Washington, N.Y., estimates annual U.S. sales at $11.9 billion.

"Gaming is the No. 1 recreational activity for probably 80% of youth of the world," said Sundance DiGiovanni, co-founder of Major League Gaming, a New York-based professional videogame league.

"What's happened is, you have a sport that has given rise to competition, and competition in itself is creating celebrity," said Tony Crisp of CRISP Brand Agency, a marketing firm that has been working on a Fatal1ty branded-product. And with so many ways for gamers to communicate-chat rooms, connected player groups and email-it’s happening fast. "What took skateboarding 20 to 30 years to finally cultivate their Tony Hawk is taking videogames 10 years," Mr. Crisp says.

When it comes to sponsorships, videogaming has a leg up on, say, surfing or skateboarding: a built-in base of corporate support. The games are created by and played on products made by such companies as Sony Corp., Microsoft Corp., Electronic Arts Inc., Intel Corp., Nvidia Corp. and Dell Inc., to name a few.

Gaming appeals to a group Mark Walden, marketing director at computer-peripherals maker Auravision Inc., calls the "ultimate consumer" demographic: 14-to-34 year-olds with money to burn. Auravision makes a Fatal1ty-branded keyboard and also serves as Fatal1ty's master licenser.

"These are all young people, male and female, who are not watching TV, not going to movie theaters...they all play videogames," he said.

For now, companies are sponsoring events and teams. But recent deals show that companies are willing to put up money to position themselves in the growing marketplace. Dell earlier this year bought Alienware, a maker of custom PCs for serious gamers.

Even companies in industries only tangentially related to gaming are showing interest. DirecTV Group Inc., the satellite TV provider, said it will air the Championship Gaming Invitational, which has supporters such as Microsoft, PepsiCo Inc.’s Mountain Dew, News Corp’s Fox Interactive Media and Best Buy Co. Boost Worldwide Inc.’s Boost Mobile signed a multiyear sponsorship deal with Major League Gaming, a league and sanctioning body, under which players will use Boost phones with Boost walkie talkies to chat with teammates during events.

Major League Gaming now represents some 150 players, such as 19-year-old Tom Taylor, also known as "TSquared," who was featured in Stuff Magazine's "Successful under 30s" list this year. He has a contract with Major League Gaming valued at least $250,000 over three years. That's on top of his tournament winnings.

Mr. Wendel is by far the most successful of the group, already making most of his money from his business relationships. Royalties from licensing agreements last year came to twice the $231,000 he pulled in from winning tournaments.

From gamer to entrepreneur seemed a logical step for Mr. Wendel. It started with mousepads. Four years ago, already famous in underground gaming culture, he bought several cases of extra-large neoprene mousepads-more than two feet square, which he dubbed the "Fat Pad." He sold them all within a day or two, and over the next five months sold $50,000 worth.

From there, "I saw an opportunity to start a lifestyle brand," he said. Mr. Wendel contacted companies and incorporated Fatal1ty Inc. in his home state of Missouri.

He not only lends his name to products, but influences how they’re made. For example, Creative Technology Ltd.’s Creative Labs Inc., a Singapore-based equipment maker, worked closely with Mr. Wendel on a gaming mouse. Everything from the shape to the placement of the buttons was designed "so aspiring professional gamers could try to emulate the gaming rig of the world's biggest gamer," said Phil O'Shaughnessy, a spokesman for Creative Labs.

Mr. Wendel now has four partnerships with computer-equipment makers and about a dozen products in the works-not all to do with gaming. He has a publishing deal in the works and his licenser, Mr. Walden, envisions a clothing line. Mr. Walden, who has decades of experience marketing the surfing brand Body Glove, oversaw that company's expansion from wetsuits into women's fashion and even electronic gear.

"I definitely see the Fatal1ty brand becoming more mainstream," Mr. Wendel said. But he isn't giving up his day job just yet. Last November Mr. Wendel won the Cyberathlete Professional League's World Tour Finals Championship, bagging $150,000 in prize money.