Masaya Endo (FENNEL)

The esports scene now boasts worldwide popularity. Masaya Endo, who runs the esports company FENNEL in Japan, talks about the background to the launch of FENNEL, the differences between the esports scene in Japan and the rest of the world, and offers advice on how to start a business.

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Please introduce yourself and your company.

I am 35 years old and originally played baseball until high school, so actually I wasn’t playing videogames all the time. I played Super Nintendo (SNES) and NINTENDO64 from time to time, just like everyone else. But I rather liked playing sports.
I went on to university, but I dropped out halfway through. At that time, I wanted to start a business, and I was thinking about what kind of business would work out. When a company owner I knew advised me to start from sales, I thought that real estate might be good and jumped on getting a job in real estate sales at the age of 20. From there, I worked hard for 10 years without playing videogames and started my own business when I was 30 years old.
First, I established a real estate company. A year later, a friend invited me to play videogames. I had worked for 10 years without touching videogames, so I was amazed how much the videogames had changed during those 10 years without my knowledge and got hooked. That's how it all started.
I felt that the real estate business was an established market and not a growing industry, so I really wanted a career in a growing industry.
I was thinking of combining the real estate and IT or creating the real estate version of Fintech, but I happened to get hooked on videogames. And when I looked into the esports market, I thought it was an interesting market and that I could do it free of any barriers to entry, so I decided to try a sports team.
That's when I approached Maxim Hotta, who was a top player and influencer at the time, and he is now co-president of the company.

Did you know Mr. Hotta in person?

No, not at all. I happened to watch Hotta streaming a videogame I liked, and he mentioned that he wanted to try his hand at the business. So, I contacted him through DM, and that's how this company FENNEL was started.

It has been 5 years since you started your own business. How have the markets and trends changed? 

Especially as soon as we created FENNEL, the pandemic started. And while we lost offline events, the number of people playing videogames increased at a huge rate. Those who watch videogame live streamings were on the rise, and videogame titles became popular.
The esports market is currently growing, and esports alone is said to be worth about 50 billion yen in 4 to 5 years, but in Japan it is not that big as a market. However, esports has a high affinity with the entertainment market and the apparel business that we are engaged in. So, if we take that into account, I believe that the market will be worth 1 or 2 trillion yen in about 5 years. Also, there is a high affinity with the Metaverse and NFT, so I think it will become a largely growing industry if such markets are also involved.

I see. How do you think the distance between young people and videogames has changed compared to the past?

In the past, most videogames were played alone and silently. Nowadays, playing videogames with someone online has become the mainstream instead of playing alone. And I think videogames have become closer and used as a communication tool.
I also think that partly due to the pandemic, playing outside after school has changed to playing online with friends to a great extent.

It is true that Covid-19 has had a big influence. For example, schools for esports have been established in Japan. How do you think this will affect the future of Japanese esports scene?

I think this is a very good trend for the esports scene.
If we can establish a system where students from elementary school to high school can learn about videogames, I think it will increase their understanding of videogames and create strong players in Japan who can be level with top players from overseas.

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Are there any differences between the Japanese videogame market and overseas?

The scale of the overseas market is one digit bigger. The international population that plays videogames is much larger. Those who have been playing videogames in Japan have been playing mainly on consoles like SNES and PlayStation, whereas most esports titles overseas are on PC. In that sense, Japan has been a little behind in the esports scene.
However, the population of PC gamer is growing rapidly in Japan, partly due to the pandemic this time. Japanese people are very dexterous with their hands, and I am sure that this is a strength of the industry that will grow in the future.

Are there any other strengths of Japan compared to other countries?

For example, the power of solidarity. It is similar to real-life soccer matches.
Each country has its own style of play. For example, in the U.S. and South America, they tend to play more physically than tactically. Each country has its own characteristics.
I think Japan's strength lies in coordination, data analysis, dexterity, and tactics.

How many companies like yours are there in Japan? 

I think there are probably about 20 of them that are as same scale as we are.
There is no qualification for esports, so people can call themselves esports teams on their own. If you add them all together, there are about 100 teams.

Are there any cases of international esports players or teams working in Japan?

Yes, there are. Japan has a strong culture of fans paying money to their favorites to show their love and support, so there are an increasing number of international teams and players who want to win over Japanese fans. Big oversea esports organizations have established teams in Japan. They are a good example to show that the Japanese market is attracting so much attention right now. Some of them have established Japanese subsidiaries through business tie-ups with Japanese general trading companies.

How do you find good players?　And how do you make offers to them?

At the time when we started business, our co-president, Hotta, was both a top player and an influencer, so there were players who wanted to join the team he was forming. And we scouted out good players who were not in professional teams by watching tournaments.
Nowadays, we are creating something like a youth team for each title, and we are working on a system that talented young players can be promoted from those teams to the pros.
In addition to that, the game is now divided by rank, and you can only be matched with people of the same level. I pay attention to those who are not professional but playing on the very high ranks.

Do you negotiate with players who catch your eye?

Yes, we do. And you need to think about the transfer fee, too. Therefore, developing the brand love is very important. In the past, the image of Japanese gamers was "Akihabara" and "otaku," but nowadays many companies are creating a "cool," "cute," and "fashionable" image.
In Japan, the number of independent teams like ours is decreasing, because large companies are acquiring them. So, in order to distinguish ourselves from the large companies, we are trying to create a team that makes people want to join "FENNEL" by not only utilizing our capital strength but also by promoting our team in a way that the large companies cannot. 

What direction do you plan to take FENNEL in the future?

We think it is important to collaborate with music and culture, and we are currently preparing to start a music business. I would also like to collaborate with dancers, skateboarders, snowboarders, and surfers.

Do you have any advice for people who want to start their own businesses?

I may sound presumptuous to say this, but I think it is important to become a professional in one thing. The Japanese society tends to appreciate people who score above average on all tests. But if you want to start a business, I think it will be overwhelmingly advantageous for the business if you excel in something.

How do you spend your days off?

On my days off, I sometimes go golfing. But basically, I spend time with my family. I also play videogames with my son.

Fennel Inc. : https://fennel-esports.com/