The Business of FaZe Clan

Who is FaZe Clan? How do they make money? What will they do in the future?

If you’re around the same age as me, you probably know or have at least heard of FaZe Clan. Yes, the OG Call of Duty Trickshot guys. Well, they’ve grown up, and so has FaZe Clan. They’ve branched outwards and upwards and growth is good. I’m going in depth on them to find out who they are, what the business of FaZe is and what they plan on doing in the future.

Why am I doing a write up on FaZe? Why not another bigger esports organisation like EG, Cloud 9 or TSM? Because I find FaZe the most interesting. Not only through their differentiated business model compared to competitors. But also because I grew up alongside them. I’m 23 now and I still remember watching their sniping trickshot videos on MW2. So I feel a little invested in this. And I genuinely think it is one of the most interesting organisations around. Win-win situation!

So there’s a few questions I’m hoping to answer. Who are they? What do they do? What are they going to do? Let’s get into it.

FaZe from the Beginning

Around the end of May in 2010, FaZe was created by FaZe Resistance, FaZe Housecat, and FaZe Clipz. Effectively starting off as a YouTube channel of Call of Duty trickshot videos. They weren’t trying to be the best players. But rather recording unreal clips and putting on a show. They were trying to be cool. And they were.

Fast forward to today, and interestingly, all of the original founders of FaZe clan have had nothing to do with the clan for quite some time.

FaZe Resistance decided that he wasn’t treated well enough, and decided personal issues came first before Call of Duty. I won’t knock FaZe Resistance for leaving and looking for greener pastures. No one could have seen FaZe’s monumental growth later down the track. So no point kicking him while he’s down for missing out on that growth.

FaZe Clipz was only 14 and in the 9th grade when FaZe began. Later on, his Xbox suffered the dreaded red ring of death. As he was still pretty young, he wasn’t able to buy a new Xbox. Effectively left the clan.

FaZe Housecat (Timid) is pretty hard to find information on. Either way he’s not part of the clan and hasn’t been for a long time.

The FaZe as we know it now basically started when Temperrr joined in August, just a few months after the clan was created. Temperrr (Thomas Oliveira) grew up in Brazil with his single mom until he was 7 when he moved to the US. Fun fact: He chose the name Temperrr after looking in the dictionary [1].

Temperrr was also the one who came up with the famous FaZe logo. What is the logo you ask? Is a mirrored F? Nope. It’s just a backwards F for FaZe and a C for clan.

FaZe’s finger sign? Credit to Temperrr’s girlfriend.

Temperrr recruited good friend Richard (Ricky) Bengtson, now known as FaZe Banks. You could argue Banks is basically the face of the FaZe clan for a while now.

FaZe really took off when they moved into their first house, in New York (members no longer reside here). The house enabled all members to create content featuring each other, which was a hit with viewers. FaZe Temperrr’s thoughts [2] on the New York house: “Everyone made videos each day, every single day. We were creating content all together, helping everyone out. One of the best ways you can grow your brand online is to collaborate with people so you can share your ideas and share your viewers.”

It wasn’t all smooth sailing at the house though. FaZe Adapt mentioned that the first few months were incredibly rough. Not knowing if this would take off and work. He had just turned 18 and traded sunny california for New York. One day when the landlord and Gfuel representative were arguing out the front of the house, he said he was just hoping they would get kicked out.

FaZe Now

Who do they identify as?

At present day you could presumably call them an esports organisation, content creators and or influencers. CEO Lee Trink makes the comparison of part sports team like the Lakers, part consumer brand like Supreme and part cable network like MTV. All shoes seem to fit.

And they’re popular. Like really popular. Let’s look at FaZe’s main branded accounts and clan members followers.

FaZe Main Account Followers:

7.34 Million subscribers for YouTube with 864,107,083 total video views at time of writing.
7.9 million followers for Instagram
4.2 million followers on Twitter
~500,000 followers and likes for FaceBook.
Estimated $60K – $960K earnings from ads on YouTube videos per year [3]. My bet would be on the higher end of this range.

FaZe Clan Members Combined?

Over 75 million total followers on Instagram.
More than 45 million followers on Twitter.
Over 90 million subs on YouTube.
More than 210 million followers across all social platforms.
Over 12 BILLION views on YouTube.

I researched all these numbers myself! Comment below if you want to see the spreadsheet of my research or get in contact. Obviously this information will date pretty quickly. Along with the spreadsheet. I was looking for an excel plugin to pull live follower counts from URLs. But obviously I couldn’t figure it out. If anyone knows a better way to stay up to date with a list of follower counts, please get in touch!

Current Personnel

FaZe overall employs over 100 people in total from managers, accountants, lawyers, salespeople through to Human Resources [4]. FaZe’s current personnel is basically split in two halves.

Photo by **Philipp Keller** from **Pexels**

1. Esports

Before I start with esports, I think I should clarify some things in case. Gaming ≠ esports. Some people seem to lump them together but it couldn’t be further from the truth. Esports is a subset of gaming. On par with X games to skateboarding.

First half of personnel includes the traditional esports teams. These are spread across 6 different games with 6 different teams. Games represented: Fortnite, CS:GO, COD, PUBG, Rainbow Six & FIFA.

2. Content Creators

The other half of FaZe clan is made up of content creators who number about 35 in total [5]. These content creators focus efforts through YouTube, Twitch and other relevant social media platforms.

Creators focus on either gaming directly or gaming adjacent topics for content. Some do compete in esports tournaments too, but the focus is on content. The aim is to create content that relate to kids about gaming and other relevant interests. Within FaZe there is a strong focus on gaming as a lifestyle and entertainment. The individuals help FaZe with content generation, and being under the FaZe umbrella helps as it gives them a greater platform and the best resources to succeed. It’s a dynamic relationship that benefits all parties involved.

FaZe Houses

Short section done to the best of my knowledge. In total, 4 residences. To go along with the 2 mansions in Hollywood, there’s another gaming house in Calabasas. The Calabasas seems to be for focusing on competitive fortnite. Rounding out the houses is another gaming house. This one in Austin, Texas.

FaZe Owners & Investors (Table)

Who	Anything else?
Greg Selkoe	President / Owner
Lee Trink	CEO / Owner
Thomas Oliveira (FaZe Temperrr)	Owner / Content Creator
Yousef Abdelfattah (FaZe Apex)	Owner / Content Creator
Nordan Shat (FaZe Rain)	Owner / Content Creator
Richard (Ricky) Bengtson (FaZe Banks)	Owner / Content Creator
Offset	Investor / Rapper / ⅓ of Migos
Meyers Leonard	Investor / NBA Player / Summer Streamer
Ben Simmons	Investor / NBA Player

Note: these are only the ones I know about. I’m sure there’s plenty more. And some VC. But this was what I could gather.

Selkoe recently joined FaZe as President in December 2017. Prior to this he founded Karmaloop in 1998 (from his parents basement mind you [6]). Karmaloop is a multi-platform online retailer, community style and media company that specializes in streetwear ecommerce.

Selkoe’s background will be important to leverage off given FaZe’s aspirations of a successful merch and apparel line, in a similar vein to Supreme.

Trink grew up in New York and was previously President of EMI’s Capitol Music Group. While there he helped launch the careers of Katy Perry and Thirty Seconds to Mars. Trink’s background coordinating global marketing campaigns and working with high profile clients is critical in FaZe taking the next step to global, cultural superstardom. FaZe Clan hiring both Selkoe and Trink I believe is a sign that they are prepared to get serious and leverage their potential. As always, I try to think like an investor. So the fact that Trink is also a part-owner pleases me, as having skin in the game is beneficial for all parties.

FaZe Now Summary

With the growth of content side of the business, FaZe has been ramping up it’s amount of creators putting out material for fans.

At this stage, it’s basically one giant online content snowball gathering momentum that can’t be stopped. FaZe is riding the combined waves of both gaming and online content consumption growth. With no signs of either slowing down.

To properly show just how much power and influence FaZe has, here’s some statistics Trink said on The Verge podcast. When FaZe first signed Tfue, he had a combined 400,000 in social followers. One year later? 22 million. H1gh Sky 1’s first ever post on instagram was “I joined @fazeclan #FaZeUp”. He ended up with 1 million followers. In 2 and a half months.

FaZe’s strength lies in their ability to sign on content creators, then give them a platform to create themselves. They’re able to do this as they can give them so much attention through social media. Also to be noted, FaZe don’t pay their content creators. They give them the platform to perform and take a cut. There’s no need for minimum streaming hours or commitments either. What if members bring in their own brand deals? FaZe still get a cut [3]. It’s been discussed with the talent in FaZe and reasoning is, at least partially the reason behind how you’ll be able to get a deal is because you’re in FaZe clan. And rightly so, I won’t argue with that point at all.

If you take a step back, FaZe clan operate eerily familiar to a record label type business.

What are their goals?

Discover and sign talent.
Develop the talent into popularity & aim to ensure they have staying power.
Lastly, try to commercialise the talent in a way that doesn’t kill the entertainment that people have in following the talent.

It’s rather simple, but not simplistic! May not be complicated, but it is complex.

The Growth of Gaming

It’s important to talk about the growth of the gaming industry when talking about FaZe. But I’ll try to keep this relatively short. As I could talk about the growth of gaming for hours. So let’s put it simply and give some stats. The astronomical growth of gaming has been a huge help for FaZe and they’ve timed their run bloody well.

Jessica Rovello in a Polygon article stated “A decade ago, the industry generated $11 billion annually; in 2019, that number will be $150 billion, more than TV and movies combined.”

The growth into public pop culture has been increasing too. Dances from Fortnite have been shown on the world stage.

Why would Drake play with a gamer? I’d argue that one of the most culturally significant events in the growth of gaming, was the famous Drake and Ninja stream. Over 620,000 people tuned Ninja’s stream with Drake, Travis Scott and JuJu Smith-Schuster. The previous non-tournament streaming record? 388,000. It helped weaved gaming, fortnite and streaming into popular culture within one gaming session.

There’s no doubt FaZe already possesses a strong footprint within gaming culture. These types of events only seek to expand that footprint from gamer into regular culture. Think about what MTV was. It was a voice for a generation. They knew how to engage and interact with their audience, and often spoke for them. FaZe with their social reach is quite similar. They basically rule the young male market. Time will tell but I think FaZe will be seen similarly to MTV in the future.

Traditional Sports Stars vs Esports Stars

Let’s compare a sports star to esports / online content star. Specifically LeBron James to NateHill.

What it all comes down to is exposure to fans. For better or worse Nate Hill is almost always online. LeBron simply cannot keep up with the same amount of content for fans.

As an athlete, training and preparing for your sport takes up most of your spare time available. And when you get time off? You probably sure as hell don’t want to be making online content.

Nate’s aim of the game is producing content and keeping viewers engaged. He’s always generating content for fans. On average Nate will stream for around 4 hours per day, often going up and over 6 hour streams.

LeBron may play a nationally televised game at best 3 times per week, post a few tweets and Instagram stories. At 2 hours per televised game, and I’ll be generous and say 1 hour total of social media interactions per week. 7 hours per week from an athlete.

Nate Hill almost has the equivalent exposure within a day. Sure he would average multitudes less of each encounter than LeBron. But when the frequency is so much more, you catch up in the long run. Trink noted [7] that FaZe Rug gets in the vicinity of 3 million views of his content, each day! Even Meyers Leonard (of the Miami Heat) is an investor in FaZe Clan. He often streams in the summer and provides additional content creation for FaZe [8].

“Gamers are the new stars. Esports arenas are the new movie theatres. FaZe Clan is the largest pop gaming brand.”
Lee Trink

FaZe Clan members I think have a pass to use Jay-Z’s quote “I’m not a businessman, I’m a business, man.”

So How Does FaZe Make Money?

As any good business, through a multitude of ways. Currently FaZe has 4 main revenue streams [7].

1. Esports

Includes competition and tournament prize money. Example would be when FaZe Cizzorz won $1.345 million during the Fortnite World Cup Creative Finals. FaZe Clan get a percentage cut of winnings from contracted players (apparently in the realm of a 20% cut). Typically agents tend to take around a 10% cut. Whilst esports winnings is certainly good, Trink says [7] that revenue streams are currently split at about 25% each. For FaZe though, esports costs are also significant. Currently esports division is actually an expense [5]. This could be due to the large costs of their famous CS:GO team. But also a larger representation of esports profitability. Mark Cuban has previously lent his thoughts on the business of esports. “Is it growing? Yes, but domestically here in the United States it’s an awful business, owning an esports team.” and “Being in Asia, there’s money there. If you’re in Korea, there’s tons of money there, it’s real, If you’re in China, there’s money there. If you’re here, not so much.”.

2. Sponsorship & Brand Deals:

When FaZe moved into their first share house in Plainview, Long Island, it was paid for mostly through sponsorship from Gfuel [4]. That sponsorship of the house is what really got the ball rolling for FaZe with all the major players in the house. It started the vlogging, Twitter and the group type aspect that people love about the clan. Sponsorships include those like Burger King and Nissan. FaZe’s aim for sponsorship is to make branded content that respects the audience. Evident with the Burger King Video. The goal is to make content that stands on its own. There’s no need to force feed the brand message. Trink says “If you respect the audience, respect their culture and the way they want to be communicated with. They show up.” [7].

3. Merchandise and Apparel:

FaZe stocks a large range of its own clothing. Also sold are collaborations with other clothing brands with their branding. Collabs with other brands include Kappa, Champion, CLOT and more. Collabs are chosen as not only are they financially successful, but useful for brand building and leveraging from other brands. FaZe’s first collaboration with champion was a success to say the least. They kept it simple and were due to drop midnight with only 2 colours, black and red. There was a constant back and forth about “How much should we make?”. The merchandise team were suggesting 300, with talent guys pushing back saying they wanted 1000. So they thought, stuff it, do 1000. Sold out. In 2 minutes. Cue phone calls to champion to leave it open for as long as possible and figure it out. Total before closing it? $650,000. In 28 minutes. Another Champion collab with only 2 colours (navy blue and heather gray) made $2 million. In a day. Goes to show even FaZe is still adjusting to fans appetites [5].

4. Content and Publishing:

Saved the biggest revenue stream for last. As mentioned, revenues are currently split ~25% each. But the content aspect is the largest currently. Looking to the future Trink sees content increasing to around 50% of revenues [1].

Overall, consumption of FaZe’s content is in the range of around 500 million views a month [7]. Content includes YouTube Videos generating advertising revenue, Twitch streams and social media posts. Currently, this is made up mostly of shorter form content. Given FaZe has over 200 million social followers across platforms, this is a lucrative and competitive edge of theirs compared to peers.

Potential Future Revenue Streams?

Some of these options have been mentioned by FaZe and their management. Others are potential ideas or sources I think may fit FaZe’s plans.

1. Tours & Events:

Could encompass a lot of different ideas. Meet and greets with fans (although from previous events this could get out of hand). Hell could even somehow do guided tours around the FaZe mansion. The demand would be unreal. Kids already rock up to the mansion hoping to get in. Often these kids have their parents drop them off too. FaZe clan members are pretty much rockstars already. Why not act like one and capitalise on it?

2. Education:

Hear me out here. Why not create educational courses for aspiring pro gamers? One potentially negative aspect of YouTube content is that video views fall off a cliff after 24 hours. A paid educational platform (whilst still incorporating sponsorships) of videos would generate constant viewership. Also, once such content is created it’s mostly hands off, as students go through videos and content at their own pace, eg Udemy courses. Although this avenue may not totally fit in with FaZe’s goal image of having ‘cool’ type content. Maybe this would fit in a Masterclass type platform.

It would still give a ‘hands off’ and constant revenue stream.

3. Expanding into other Video Games Genres:

One part I find crazy about FaZe’s success is their reluctance towards Multiplayer Online Battle Arena (MOBA) games. To say MOBA games are huge is an understatement. Prize pool and audience wise they are the biggest. Within East Asia. League of Legends (The most popular MOBA) boasts around 115 million active monthly users. Seven out of the Top 10 prize pools are based on MOBA games. The player count and money in MOBA’s is frankly on another level. FaZe is currently focused on US markets, especially with FPS (first person shooters) games like Call of Duty, CS:GO, Fortnite and others. In 2017, Asia Pacific accounted for revenues of 51.2 billion USD, making them the largest gaming market. China alone has over 300 million female gamers! I bet it would be hard as hell to break into the MOBA genre. But it just might be worth it done right.

Number of eSports Games Players Worldwide Aug 2017 — **Source**: Statista

4. Premium Subscription Model:

Potentially lucrative avenue. Granting access to an exclusive community of FaZe fans, along with extra unseen content could entice (high) paying subscribers. Similar to how Patreon works or Twitch Prime, but with more of a community type feel to it. I’d imagine this option it would appeal to high engagement fans. The online Tip Jar culture isn’t as strange or foreign as it once was previously. Fans are more than willing to support their favourite creators to help them do what they love. Easy to implement. Ok to manage. Potentially great cash flow.

5. Other Countries:

FaZe has undoubtedly been successful within the US and around the world within English speaking countries. However there has been rumours of FaZe branching out to Thailand. Thailand represents around 600 million in annual gaming revenues, just behind Indonesia at 882 million for the largest gaming market in SEA. So no small market! But I don’t know 100% if the rumours are true or the exact reasons behind them. Trink says [5] that branching out and putting boots on the ground type deals globally are in the works. Locations? Asia (obviously), Europe and Latin America. I think branching out into Southeast Asia and non-english native countries would be a wise business move. What the hell do I know though, I’m 23.

6. Experimenting with Content:

Trink has hinted previously about the possibility of longer form content. Could we see a FaZe documentary? A movie? Even a TV series? More interestingly, where it would be released. Do they continue releasing on YouTube, where they can (mostly) control distribution? Or maybe it’s a netflix type situation comparable to F1’s Drive to Survive series on there. I like the idea of FaZe implementing some longer form content. As this may help bring in a different type of viewer. One that doesn’t subscribe to their shorter form videos. Would be interesting.

Risks to the Business

Damage to the Brand Image

Mistakes happen. That’s life. But FaZe relies on its brand. The cool kids of gaming is the image that has been built up by FaZe. The brand is strong enough that you can make mistakes. Obviously you want to avoid mistakes, but such is life. Read into past FaZe controversies and it’ll show that. Take the drama around the Tfue lawsuit for example. Lawsuits within the YouTube realm are pretty uncommon. Not uncommon in the NBA or NFL. But not common within the YouTube community. It was the perfect storm. And good for everyone except FaZe. It pitted the biggest esports organisation against one of the biggest streamers. All in a completely new type of drama. I’m sure these types of events will happen way more in the future. But this was the first of its kind.

So all the details of the controversy are out. How do you respond? This is where it becomes a balancing act. Banks and other talent have built their brand and audience about being transparent, upfront and brutally honest. Emotions are running high within the group. There’s a feeling of a need to defend the brand. You have the normal social media community blowing up. That’s normal. But then traditional media outlets get involved. This is new. All this is happening right as FaZe are trying to raise capital [5].

What is the strategically correct business move? In this rapid social media age, it’s hard to tell.

Ultimately it was a turning point for the company. They decided “fuck it”. Let’s go with total transparency with the fans. I mean, it’s how they got big in the first place. The relationship with the fans is probably worth more than the lawsuit anyway. But they’ll still aim to win the public over and the lawsuit. Because that’s how FaZe are. They’re competitors. They hate losing.

Mental Health

The mental health aspect of online communities and gaming has been frequently discussed. The high hour requirements and public scrutiny are often factors. FaZe Clan are no exception and members have stepped away from the online community previously. FaZe Banks, Rain and others have all stepped away at one point citing mental health reasons. With both having to be admitted to a mental hospital at one point or another. I applaud that they are able to step away to seek help when times are tough. Only coming back when they feel are ready and prepared to do so.

Going forward I would imagine a focus on mental health will be a key thought within FaZe’s organisation. Especially for younger stars that are thrust into online stardom like Ewok and H1ghSky1. I would guess instant fame could hold a fair amount of pressure and scrutiny behind it. Especially at such a young age it would be hard to juggle. I’m still making huge mistakes now myself but luckily I have the benefit of being largely anonymous.

FaZe Fitness I think could be a step towards improving mental health for FaZe members. But it seems to be it’s on separate business venture within FaZe. But if it is used to work with existing FaZe clan members, keeping proper fitness and diet would alleviate at least some of the stressors towards poor mental health. There’s the stereotype of gamers having poor exercise and eating habits. But I think FaZe is helping change that culture.

“We aren’t shy, antisocial quote unquote weird kids that are out of shape, don’t play sports, don’t mess with girls and don’t eat well.”
FaZe Banks

Longevity of Internet Stars

I’d argue the largest unknown factor of esports careers and internet stardom. At what age do you start to lose relevance? For esport players who require quick reflexes and laser sharp eyesight, when do younger peers start to catch up and overtake? Is it reasonable to assume you would be lucky for a 10 year career like most other sporting athletes? As an older streamer or influencer, as you age alongside your fans, does you content hold pace? Or do you become stale and outdated?

Alex Pinkevich (FaZe Adapt) has touched on this topic previously about pro esports players. “Any pro player can just sit around and game and make a decent living, but if you grow your brand, you can become huge and you might have a whole other career path ahead of you… And I think a lot of [pro players] who aren’t doing it — the streaming and YouTube — are going to regret it when they’re older.” [9]. If you’re a current pro player, why not leverage this while you can?

The whole point of FaZe Clan is to maximise you and your talents. Why not take advantage of their massive following and diversify your own brand and revenue streams? You may not need the massive following after you retire and follow other passions. But if you had the chance, I think it’s a decent safety net.

Gaming careers don’t have the luxury like popular musicians do. Elton John is able to perform his greatest hits from decades ago. FaZe Banks won’t make a living from performing his original trick shots. The bar is constantly being reraised. In this context, it’s understandable why burnout is so common. But also why longevity is a genuine concern for these stars.

Esports Changes and Changing Games

For better or worse, a single company is in control of an esports game. You might train for a year or more. Only for the company making the game to do a sweeping gameplay change. Epic has previously changed the meta going into large tournaments. How do you cope with that? How can you prepare?

What if the game you’re good at, isn’t popular anymore?

One of the reasons Fortnite blew up, and enjoyed so many new competitors who previously were unheard of, was because the gameplay and style was so new. Players of FPS games can transfer titles without too much hassle. Just look at someone like Shroud. Originally a pro CS:GO player, he also now focuses more on content. But his FPS skills are pure nuts.

So what about Fortnite players? I think it’ll be rather difficult to transfer all those building skills to another game. At least FaZe Clan has the background in content. You can see a version of this happening right now. FaZe Jarvis was banned from Fortnite for showing off an Aimbot. Now he’s making the switch to Call of Duty: Modern Warfare. So keep an eye out.

FaZe is in a pretty good position here because of the revenue generation from content. For pure Esports organisations? This may be more of a pressing problem. For FaZe? It’s probably an annoyance.

Future of FaZe

Growth

CEO Lee Trink sees the growth of gaming expanding into its own culture, similar to hip hop previously. Originally Hip Hop was purely considered a style of music. Now it encompasses street fashion and clothing, language, dance and more. Trink knows FaZe has a strong relationship with its audience and hence knows their wants. It is more about leveraging those wants now into commercial success, without diluting the brand behind it.

Going forward FaZe will continue signing young talent and creators, will there be another house? Even a whole apartment complex? Too many stars and not enough rooms is probably a good problem to have though.

Possible Exits

For FaZe and investors, what are the potential exit opportunities?

FaZe sits in a good position due to so many aspects of their business. Being esports, apparel, sponsorship and branding and content. It gives them a lot of different potential buyers. Could a media company be interested? Probably. What about an agency? Again, certainly a possibility.

My best guess is a company that owns multiple sports franchises. For example like Fenway Sports Group or a Kroenke Sports & Entertainment.

For a curve ball idea, what about a traditional sports team? Traditional sports have been gradually losing their market of young males. Why not purchase an organisation so popular with the demographic where they’re declining. Even just set up a deal where FaZe organises all their media content strategy for them? FaZe understands their market. Not only that but they know how to communicate with their market in the ways they want to be communicated with. It’s one thing to know your target market. But if you can’t communicate and connect with them, what’s the point?

Summary

To use a metaphor here, the gaming industry and internet content is one big wave that’s still gathering momentum. FaZe clan seem to be a more than capable big time surfer that can handle these waves and continue riding for a long time.

Only time will tell in the end, but I’m pretty positive on FaZe’s future in business.