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April 4, 2018

Brendan Donohue

Adam Silver

Strauss Zelnick

THE MODERATOR: Good afternoon, everyone. Thank you for being here for the NBA 2K League Draft press conference. We have a panel of esteemed guests here today. Starting on the left, Take-Two Interactive chairman and CEO, Strauss Zelnick; in the middle, our NBA 2K Managing Director, Brendan Donahue; and on my right is the Commissioner of the NBA, Adam Silver. We'll start with some opening comments from the panel and then be glad to take your questions.

ADAM SILVER: I'll go first. Thank you very much, Tim, and we really appreciate all of you coming out today for this announcement and the draft, as well. Let me just set the scene. It was only a little over a year ago that Strauss and I announced the formation of this league, this partnership between the NBA and Take-Two Interactive, and I'm going to shortly turn the focus over to Brendan Donahue, who is our managing director, because it's quite incredible what he and his team have accomplished over, just a little over a year-long period, where today the draft is taking place, and shortly we'll be beginning the operation of this league.

From the NBA's standpoint, this is our fourth league. Of course we have the NBA, the WNBA and the [NBA] G League, and now this is the fourth league in our family, and that's exactly as we're treating it: one more professional league. And I think what's so exciting today in particular is that we'll be welcoming a new generation of athletes, of NBA players, into this fourth league, and I think that -- always that sense of renewal, that sense of the birthing of the whole process is what makes us particularly excited, and I think Brendan was talking about having dinner with roughly 70 or so of the draftees who will be here today, and it's a similar process that we go through with the NBA or the WNBA for that matter.

It's a function of enormous job creation, optimism, hope for all of these people who are going to be entering the world as professional athletes, and I think from the league standpoint, we know we have a lot to learn. You know, I'm going to hand it over to Strauss Zelnick, but I'll just say that he and his team have been fantastic partners. I think from an NBA standpoint, there's no way we would have been up and running in a year but for the fact that Strauss, with the entrepreneurial spirit he brings to this enterprise, was constantly pushing Brendan and me to say, let's make this happen, here's the opportunity.

Things aren't going to be perfect in the beginning, but we've just got to get out there. We've got to begin operating, and we'll learn as we'll go. I think that's why we're particularly excited about having Strauss and Take-Two Interactive as our partner.

Lastly, just a few additional thank yous, first of all, to the NBA Board of Governors, which endorsed this concept and is supporting it with both feet in. There are a few owners in particular I'd like to mention. Wes Edens, who's the governor of the Milwaukee Bucks, was an early adopter several years ago. He began telling me about his son's fascination with video games and the amount of time that he and his son were playing these games and how high the stakes were and how complex they were. We were already in the business, but I think until I began having those conversations with Wes, I didn't personally really understand the world of professional gaming. And then roughly three years ago, right here at Madison Square Garden, one August evening, I attended a League of Legends competition, and that was incredibly eye-opening for me to see the enthusiasm from a packed house of gamers cheering for things up on a screen that I couldn't understand, which is one reason why I thought, let's work with the NBA format because at least it all makes sense to me. Even if I'm not a great gamer myself, at least I can follow what's on the screen.

In addition, Ted Leonsis, the governor of the Washington Wizards, was also someone who was an early adopter and was pushing hard at the league office to move quickly in this space. There are many other owners I could mention. Certainly Peter Guber, Joe Lacob out at the Golden State Warriors, who were early adopters in terms of making investments in other leagues and other teams, and from the NBA standpoint, we've been encouraging of our owners and teams making forays into other games, as well. This is not an exclusive opportunity for them in terms of their operating in the e gaming world. We thought, in fact, it's a learning opportunity for all of us to learn from their participation in other enterprises.

So that's been very effective, as well.

You know, lastly, to the team at the NBA, I would just say that -- well, Brendan has his team there, and there have been -- this has been an effort from our entire organization. I think that -- I think people who spend most of their time working on the NBA or the WNBA or the G League have gotten a real thrill learning about this community and operating right alongside Brendan and his team. So that's all been really exciting for us.

With that, again, I just want to thank all of you for being here. We'll answer questions after we've all had a chance to talk, but with that, I'm going to hand it over to Strauss Zelnick, chairman of Take-Two Interactive.

STRAUSS ZELNICK: Thanks, Adam, and thanks, Brendan. We're incredibly grateful to the Board of Governors and team owners for making this a reality today. This is actually a dream come true, to take this phenomenal experience, NBA 2K, and actually with the support, the backing and the incredible engagement of the NBA, to be able to launch the first professional competitive gaming league based on a professional sport, and we just couldn't be more excited.

We've had a long-term partnership with the NBA. Adam and I have been partners now for 10 years and friends for more years than I care to say before that, and together we've built this incredible worldwide engagement that represents -- we've sold more than 78 million units of our games. A little promotion for our game. Happy to sell more today, by the way. And we've had millions of people watch the Road to The Finals, Road to All-Star, which gives you a sense of how much excitement is around competitive gaming.

There are 200 million people around the world who consider themselves avid viewers of competitive gaming, and another 200 million people who are viewers occasionally, and this is just the very beginning. So we're incredibly excited to be here at the very beginning with all of you.

I too just have to take a minute just to say what an amazing job the Commissioner does running his business and what an extraordinary pleasure it's been to build a business in association with the NBA. It's really an example of a win-win opportunity, and most importantly, what I think together we've been able to do is engage and entertain many millions of people around the world. That's our job, and that really -- we're just so grateful for that. And it's the very beginning.

Brendan, thank you. Brendan Donahue is actually the definition of a class act, and we are so lucky to have you represent this new opportunity and represent the sport of basketball and represent this entire interactive entertainment business, and when I say it's the very beginning, look, everyone knows competitive gaming is in its nascent stages, and the projections about where it's going were incredibly rosy and optimistic.

Our approach, though, is to just dig down, put our noses to the grindstone, make it happen. We have a great season coming up with 17 teams participating, and it starts here with the first professional players in the sport of NBA 2K competitive gaming. So with that, Brendan?

BRENDAN DONOHUE: Thank you, Strauss. I think it's important to start out by thanking both Strauss and Adam, because quite honestly, their vision and leadership got us here today. Secondly, I want to thank all of you for being here. This is exciting. Your interested in the 2K League makes me excited, so happy to talk to you more about it in the next few minutes.

And the third group I want to make sure we thank is our 17 teams because they are incredibly engaged with the 2K League esports community, so that's all very exciting. But that all brings us to today.

This is an historic day for the NBA 2K League, and I think it's important to start with the players themselves. Adam mentioned spending time with them last night. I think you're going to find their energy and excitement is contagious. But I think it's important to take a step back when we think about the players, because 14 months ago, 14 short months ago, there was no path to becoming an esports professional for them. They were playing and becoming the best players in the world out of the love of the game and because of their love of competition. And so today, it's exciting because we're going to reward them for that genuine passion and dedication to the game.

And so I'm excited to kind of see today through their eyes. I think it'll be a fun day for all of us to see. So that's on the player front.

And on the league front, I really kind of want to walk through how we got here today. So first of all, it's 2K. So 2K, both the game and obviously the partnership, so 2K, for both of you who don't know, it's the best-selling sports game in North America, the highest rated sports game in North America, which is a testament to Strauss and his team. The second group that's important is the 2K community themselves. So to put it in perspective, to have 1.6 million players playing on a daily basis shows a level of engagement.

So we had the challenge of trying to create a path to pro for all of those players, and so in January we asked the community to commit -- if they wanted to commit to playing in the league to win 50 games in January, and to put it in perspective, we had great data on previous engagement, and we expected 10,000 and maybe hoped for 12,000 players to actually qualify for February. 72,000 players qualified, which just shows the excitement the community has about both the game as well as the league itself.

And so we're excited about that, and then I think that 72,000 number also really crystallizes how amazing our 102 players are, the fact that they went from 72,000 and survived to become one of the 102 players who are going to be qualified, who are going to be -- in roughly an hour, they're going to be drafted by one of our 17 teams. They're going to meet their five teammates, and they're going to, next week, go into market, to one of the 17 markets to training camp, and all of that will lead to May. So May, when the season kicks off, and then certainly as the season moves on into our championship in August.

So 72,000 to 102, which is pretty extraordinary when you think about it. It's a testament to how talented these individuals are.

Q. Adam, you mentioned this to be similar in your mind to the G League and the WNBA. Those were both long-term almost decades-long developments to get to a point of viability. Is the same -- should we consider the same dynamic here, or is there more of a pressure to show returns right away with the 2K League?
ADAM SILVER: It's a good question. I don't think there's any more of a short-term pressure to show returns. I think both Strauss and I went into this with a long-term vision of what this league could become. I mean, they're -- every business has different measurements, so we have a sense from the community of what success early on would look like, so it doesn't mean I'm letting -- we're letting Brendan off the hook in terms of showing some short-term success.

But we view this in the same way as those other leagues as something that we're going to develop over a very long time, and we're building this as a league that's going to be around forever.

Q. Commissioner Silver, you talked a little bit about you not really being familiar with the actual game, and that's kind of not your landscape --
ADAM SILVER: I said I wasn't good at it. I'm familiar with it.

Q. Okay, I'm curious, today is actually NBA Jam -- 25 years ago today NBA Jam was released, and for me I know NBA Jam was like what Pac-Man was for my mother. For you, where do you remember your early gaming process starting? Was it Nintendo, Atari? What was it?
ADAM SILVER: So 25 years ago with the release of NBA Jam, of course this is my 26th year at the NBA, so I was working at the league at the time, and in my early days working at NBA Entertainment, I was involved with that game, as well, so that's a historic milestone, I think, for all of the people in the NBA family.

I think my early gaming was -- do you remember a game called Asteroids? You know, that was sort of -- a little bit of basic Pong, too, and Pac-Man. I think as an undergrad in college, I spent a fair amount of time playing those games, and for the younger people here, those were standalone games that you lined up for and you put your quarters on the game to get in line in order to play.

But yeah, I was an enthusiast at the time. I think I never scored high enough where I got my initials up sort of in the top category, but I spent a fair amount of time playing those games.

And to this day, I mean, one of the things that -- in terms of our NBA 2K game, I'm a big fan of the iPhone edition, and that's one I play, as I said. And I think what's unique about our games, too, it's an even larger experience than just the game. I think one of the things that Take-Two has brought to the table in 2K is sort of what was very new at the time was the musical connection, too, using top-flight artists as part of our games. So I think even for people who may not be console gamers or be on a PC in front of a large monitor, it's fun when you have a little bit of time, inevitably we all do when you're holding your phone, and it's obviously not just iPhone but Android, as well, also one of the top sellers is our NBA 2K game, and I enjoy the music on it and the players, and it's also -- just I think like for young people who follow our league, it has the complete rosters of all our teams, and sometimes you just want a little bit of information about a player, and that's sometimes the quickest way to get it.

Q. esports has grown on the backs of the battle games, League of Legends, which sells out arenas and stuff, and the 2K game, it's easier to follow, as you say, but what gives you confidence that with so much great basketball out there, a more casual fan will want to watch video games, video game basketball?
ADAM SILVER: Again, it's a great question. I'd say I have the confidence, one, based on the audience that's already emerged from people watching video games, and to me, again, I take no credit for the fact that we're here because I could have never predicted any of this, and I think this is -- when earlier days in our relationship with YouTube, them showing us sort of their data on the amount of traffic that was based on not watching even live video games but video gamers who were consuming hundreds of millions of hours of content on YouTube, was fascinating to us, certainly Twitch through Amazon is a relationship we now have. As I think you know, we've even put a package of G League games on Twitch. They're somebody who we're deep in discussions with concerning the streaming of these games, as well.

And plus I -- so I know there are a large community of gamers who like watching other gamers, and I think it does analogize to we know that the greatest proclivity for being a fan of the NBA is based on the fact that you play basketball, and I think for anybody who plays basketball at any level, you can relate to our players, even if you can't possibly dream of ever doing what they're doing. It has a unique meaning to you, I think no different than a weekend golfer, who then watches Jordan Spieth and says, wow, look what he's doing. At least I can imagine I know what it's like to get up and hit a 7-iron; look what he's doing out there.

I think there's that sense, and then I think on top of that, we bring a community to the table, and I think that's one of the benefits of using the NBA platform in that we know we have a social media community estimated at 1.4 billion on a global basis who are consumed with the NBA, and I think that they're fascinated with everything around this game and what we're hoping to do here with an entirely new set of athletes, these 102 gamers who are going to be drafted today that we in the same -- using the same model we have with the NBA and WNBA and increasingly in the G League, develop them as unique personalities with their own following.

Q. In terms of you guys have all talked about this is kind of a long-term project that you're starting, that being said, what is success in this first season? Is there a metric to gauge by or something that we could point to six months from now and say, hey, this lived up to what the expectations of the league is or not?
ADAM SILVER: I'm going to let the guy whose job is on the line answer that question.

BRENDAN DONOHUE: I'll somewhat answer the last question, too, which is when we have dipped our toe in the pool in terms of the competitive gaming space, for example, last year we actually hosted a tournament, kind of the Road to All-Star, which was -- we had 500,000 competitors, 100,000 teams. We did air The Finals at All-Star in New Orleans, and we did have 1.6 million viewers of that. So I think it's certainly not blind optimism. When we have done this, we have had success, and now just think of now add on the NBA getting behind it, 2K getting behind it, our 17 teams all getting behind it. It gives us a lot of confidence.

ADAM SILVER: And the second part of his question, how we're going to determine if you're doing a good job.

BRENDAN DONOHUE: Right. I would say we are most focused on viewership. That, to me, is viewership and making this a global league I think are our two biggest priorities.

Q. Commissioner Silver, what does it mean to you personally to be able to give new younger generation of kids an opportunity to realize and pursue a new dream?
ADAM SILVER: It means an enormous amount to me. As we were talking about earlier, I think when not just -- we're creating a lot of jobs, and it's not just the actual participants, but I can tell you from the League Office and Take-Two, all the additional things they've done and all the ancillary businesses that come from it is really exciting, but again, one of the things I think I've always loved about this business, and especially as I get older each year that I'm here is I'm increasingly dealing with young people, and that's -- I think even I'm sure for the media in this room, it's one of the most exciting things about being involved with leagues. It's that young people who are fulfilling their dreams, young people who are dealing in some cases with disappointment, some young people who are dealing with all kinds of life issues, things that we've increasingly tried to focus on in the league, and I think that what, though, changes a bit here with the NBA 2K game is that we're opening up this opportunity to a much larger pool of players, just by definition, because in the NBA you have to have certain physical prowess to compete or in the WNBA you have to have certain physical prowess. It's a different kind of skill here.

But in terms in terms of the gaming community, this is something where virtually anyone can set out to try to achieve at the highest level, and I think one of the things we always talk about in terms of our values, especially when we're talking about young people, is the benefits that come from hard work and resilience and discipline and dedication and teamwork, which is a part of this game, as well.

So that's particularly exciting to me. I'll tell you one thing just to put it on the table that's been a disappointment for all of us so far is that there are no women who are in the initial draft pool, and just to make it clear, and whittling down from the 72,000, it's by avatars in essence, it's blind. And so there are -- I'm not concerned that there was something wrong with the process necessarily. What I'm concerned about, and this is a much larger issue in the gaming community that Strauss and Brendan and I have talked a lot about, is that something is going on in the gaming community that either is not attracting women or is repelling women from wanting to be part of it. And given what the NBA's track record has been, especially in the areas of diversity and inclusion, along with the launch of this league, we are making a concerted effort, led by Oris Stuart, who is the head of diversity and inclusion at the NBA, to create a task force designed so that next year when we're sitting here for the draft, we will have a pool of women who are participating, as well.

But I think that's something that we -- if we set our minds to, we can accomplish. So that's a slight disappointment, but more importantly, it's the best part of this job, I think, to be meeting and bringing in a whole new generation of NBA players, in essence, to this game.

Q. Adam, and maybe Brendan, too, I know these 102 gamers today, this is their career and livelihood, but many an NBA player has told me they're going home in the afternoon to play NBA 2K or they're very concerned about their ratings, so will your players get integrated in some type of way with their teams or will you guys capitalize on the human player?
BRENDAN DONOHUE: I think the beautiful thing about it is the NBA players just organically like the game, and I think that's a huge plus. I think in terms of -- I don't think we need them playing in the league. The amount of time and effort it takes to become one of the 102 is an extraordinary amount of time. But no, it's great that our players just authentically like the game.

Q. Adam, you were speaking earlier, and the word athlete came up several times. One of the biggest debates in esports is are these players athletes or not? In your eyes, someone from a traditional sports background, calling them athletes is huge for this argument. What makes you see them as athletes?
ADAM SILVER: One, I do see them as athletes, and number two, I see them as athletes because I think it requires a unique combination of physical and mental skills to excel. And I think it's not that different than in the NBA where of course you have to have incredible physical skills, but our very best players bring a certain mental focus and prowess to the court, as well, and I think this is -- it's a different set of physical skills here certainly, but just to watch these gamers/athletes compete, what I've read about the training regimens they go through, it's incredibly hard work.

You know, and to your point even, we're already working on how we can avoid burnout among some of these athletes because they go at it so hard. Brendan, anything you want to add, or Strauss has familiarity with this, too?

STRAUSS ZELNICK: You know, it's a great question, and Adam alluded to it, is this combination of making your brain work and your body work, and that's a definition of a great athlete, and I think you're going to see an awful lot of excitement on the part of 102 soon-to-be professional athletes. You're absolutely right, 10 years ago I think many people would never have dreamed that we'd have an intersection between video games and professional sports, and yet here we are today. And you know, this is all great for us. We've been in and around this business for a very long time. The big story, the most exciting part, is that 102 lives are going to change in just a few minutes today, and once you see them and you see the palpable excitement, and then once you see them play, you'll have no doubt that the answer to the question is an emphatic yes.

Q. Probably best for Brendan and Strauss, there are NBA fans and there are 2K fans and some kind of overlap in the middle. What's easier in your eyes, to convince NBA fans to watch and play more 2K, or to convince 2K fans to watch more NBA?
STRAUSS ZELNICK: You know, I don't think we're going to have to convince anyone. Our view is give people an amazing experience and they show up for it. I think if we're in convincing mode, we probably already have not done as good a job as we need to. Our job now is to take these incredible players and Brendan's leadership and his team and now make sure that the viewing experience, because this will largely be a media viewing experience more at least initially than an in-person experience, is phenomenal and exciting. The good news is 400 million people are pre-sold, 200 million people are avidly pre-sold, as Adam mentioned. They're not that familiar with our sport yet because we've had a couple million people watch our two tournaments so far.

We have to make sure that experience is great. That's our job. It's not going to happen by accident. But if we give them a phenomenal experience, they'll show up for it.

ADAM SILVER: I just want to add in response to your question, I'd say from the NBA standpoint, we see a direct link, especially between our young gamers and then them developing an avidity for actual NBA games, and in fact, in last week's Sports Business Journal, there was an interview with Chuck Todd, the NBC correspondent, and it was just a general interview about his sports fandom, and he talks about how his son became a fan of a Washington Wizards, I guess where they live in Washington, D.C., and I sent it to Strauss. He said his son became an avid player of NBA 2K, so much so he said it was remarkable, all of a sudden -- because his son wasn't watching games on TV and he couldn't figure out how his son knew the rosters 1 through 12 and knew all the players in the league, and then he saw how his son was learning it through -- by virtue of playing NBA 2K, but then Chuck Todd says in the article, that then translated into them becoming Washington Wizards season ticket holders, so I think that's a perfect example of your question.

Q. You mentioned about the larger pool. Actually obviously you want to grab more people, no matter if it's women or men or the nationality. Actually by knowing a lot of great gamers actually from Asia, especially South Korea and China, have you considered to drive them in the future? If so, how would you approach that?
ADAM SILVER: Well, you know, we are trying to attract those gamers now, and of course out of the 72,000 people who initially tried out to be in this first class who were whittled down to the 102, many of those participants were in Asia. But in addition, another unique opportunity we have here, which is a little bit different than in our bricks and mortar leagues, so to speak, is that we're at 17 teams right now, and those are all, of course, NBA teams, and it's our projection that by year three, all 30 NBA teams will be participating. But then something Strauss, Brendan and I have talked about is that, especially in markets in Asia, in China in particular, particularly South Korea, can we then expand beyond the existing footprint for the NBA, and there, where it's literally days -- and again, let's get started this year and see how we do, but we're very enthusiastic about the potential to have the Shanghai franchise, to have the Seoul franchise, to have a Tokyo franchise.

So those are all things that are sort of -- as part of our blueprint right now, but again, I don't want to get ahead of myself. We are very focused right now on the 17 NBA teams that are launching and then expanding within the existing NBA footprint.

Q. Was there ever a consideration to bring an endemic esports team into the 2K league? Was there talk to bring in the league like the TSNs or Echo Foxes of the world?
BRENDAN DONOHUE: Yeah, so I would say that we started with our 30 NBA teams, but I think it's important to note that, for example, you mentioned other titles, League of Legends just awarded 10 franchises, seven of them are NBA-owned teams. So I think you're going to see a lot of crossover between the owners of the NBA 2K League teams and other titles, as well.

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