Why the MrBeast-Endorsed Creator League Fell Apart in Less than 72 Hours
The Creator League, home to some of the world's most popular influencers, found itself mired in controversy during Labor Day weekend.
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I’ve spent the past two years chronicling the esports industry as it goes through a major correction. After billions of dollars were invested across the overhyped industry in the late 2010s, there has been no shortage of depressing, yet ultimately very necessary, news around esports companies. High expectations and false promises. Layoffs. Business closures.
In some ways, today’s newsletter is no different. But if you clicked through the email subject or headline, there’s one name that does make this one a little different: MrBeast.
Yes, the most popular content creator in the world found himself in the middle of another confusing esports saga.
As the industry falls into a steep decline, creators whose bottom lines were once unaffected are beginning to feel the pinch. The creator economy is now correcting, and creators are more willing to collaborate and partner without asking as many questions.
Because of this, the Creator League emerged—a desperate attempt by a hemorrhaging esports company to bet all its chips on Web3—only to collapse before it could even launch. Here’s an inside look into the brief and tumultuous journey of the Creator League.
MrBeast first announced the Creator League on Sept. 2. The roster of team managers featured some of YouTube and Twitch’s most relevant creators, including teenage superstar IShowSpeed, singer-songwriter Bella Poarch and OTK Network, the creator group featuring some of the most-watched livestreamers in the world.
The Creator League centered on a new, fan-controlled esports league. The influencers would lead the teams, and for $20 each, fans could buy a creator’s pass to join their community, help manage the team and participate in tournaments, representing their creators’ teams.
Trouble began, though, on Sept. 3, when one of the creators, CDawgVA, announced his withdrawal from the league, citing concerns around the league’s use of blockchain technology. Before his tweet, only esports and crypto community sleuths had noticed how the backend of the Creator League worked. But now, with one of the league’s founding influencers validating those rumors, public skepticism began to rise.
By that Tuesday, it seemed the Creator League had two choices: continue in face of criticism and hope that enough fans bought in and didn’t care about the league’s blockchain backend, or cancel or postpone the league and suffer extreme embarrassment. It chose the latter.
Despite its initial billing, the Creator League was not run by MrBeast or his management company, Night Media. It actually started inside a little-known amateur esports tournament organizer named eFuse2 .
Founded in early 2018, eFuse raised $16 million venture capital on an inflated valuation in the four years after its inception. Initially setting out to build “the LinkedIn for gamers,” the company has spent the past five years building a series of unsuccessful softwares for amateur and college esports, acquiring a low-view-count esports media website, and running tournaments across the amateur and college esports ecosystem.
In other words, the company has not found a steady or reliable source of revenue, all while burning copious amounts of cash.
Faced with a difficult fundraising environment, eFuse looked for additional means of funding and it found it, in a Web3 ecosystem grant from the NEAR Foundation. Building a “blockchain operating system,” NEAR announced an $800 million fund in late 2021, issuing grants to builders integrating its blockchain into their infrastructure.
A typical NEAR grant is around $500,000. But it’s more likely that eFuse received between $2 and $5 million, a source familiar with NEAR’s process told me. That is, if it successfully launched the Creator League, the product that eFuse submitted for the grant.
The Creator League’s use of NEAR is simple. When a fan bought a $20 Creator Pass, they’d essentially be purchasing a non-fungible token (NFT), setting up a proof of purchase to validate their entry into the creators’ communities and competitions. The problem wasn’t the effectiveness of the NEAR system, or whether it's legitimate. The problem was communication.
At no point around its launch did the Creator League’s website, social media marketing or press release mention blockchain. If it did, it likely would never have taken off—as many gamers hate Web3 and crypto, as do the creators they support. In the press release announcing the Creator League’s postponement on Sept. 5, eFuse acknowledged not disclosing the use of blockchain to fans.
"We apologize for not intentionally disclosing the blockchain's limited use within the Creator League purchasing process and have implemented practices to ensure that doesn’t happen again,” eFuse vice president of engineering Shawn Pavel said in the release.
The fallout was immense.
By the Tuesday after the league’s launch, eFuse announced its postponement and that the company was making layoffs. It later revealed those layoffs to be around 30 people, or 30 percent of its workforce, in a statement to Esports Insider.
OK, before we move on, why does this presumably very unprofitable company have 90 employees to run relatively low-lift software projects and a media site?
This is the main problem with esports.
The reason there has been a steady stream of layoffs is because so many of these companies hired faster than made sense.
They did so supported by a wild set of (now clearly) not achievable promises sold to investors, who continued to push millions and millions into these businesses—despite red flag after red flag around the market. That changed in 2022, when, for the first time since the 2008 financial crisis, investors became generally bearish instead of bullish. Esports, paying for its unfulfilled hype, earned itself another black mark.
There is a market for college and amateur esports, but its ability to spend is almost non-existent. Very few esports teams at universities are recognized as legitimate. Many are just student-organized clubs. There’s not the massive amount of revenue that exists in college football or other sports. So even if there were a major need for a college pipeline or organizing software, the ability to pay for it is nearly nonexistent.
There's no demand for a platform to organize esports on the amateur level, either. Despite their tech savvy, gamers are stubborn. Many companies—from Juked to Playfire—have tried to make the gaming social network. Time and time again, though, these companies have failed. Gamers have remained on the platforms they know: Discord, Reddit, Twitter or even the games themselves, many which are social by nature. Sure, discovery of new communities is an issue, but it's not such an issue that gamers are demanding an alternative.
“Sustainability in the amateur competitive space is going to require real revenue sources just like amateur sports—entry, league and participation fees,” John Fazio, the CEO of Nerd Street, a competitor to eFuse, told me in a text conversation last week. “We all got carried away with big Twitch numbers that were flashy, but not significant revenue drivers.”
Like eFuse, Nerd Street raised significant venture capital on the vision of building out amateur esports at scale. Both have burned significant amounts of cash and are now suffering from unreliable revenue streams and a venture capital ecosystem that has turned on esports.
Nerd Street, which partnered with my company, Overcome, in late 2021 to produce a podcast series, has struggled, and reportedly still does, with late payments (including to Overcome)3 . One source familiar with eFuse’s finances told me on Tuesday that it’s dealing with similar payment issues.
After years of unsuccessful attempts to create a market, eFuse swung for the fences. On the brink of failure, it turned to Web3, another overhyped investment vertical, to find new means of funding. It cost more than the public even currently knows.
In a meeting with employees on Sept. 5 where it announced its layoffs, eFuse executives told staff that a pending investor had withdrawn after the Creator League backlash. That means the 30-person layoff was reactive after eFuse realized that it wouldn’t have the funds to move forward without that investment or the NEAR Foundation grant.
With the curtains abruptly drawn on the Creator League, its future hangs precariously in the balance, teetering between a potential overhaul and complete oblivion.
The tumultuous journey of this nascent venture serves not just as a stark emblem of the esports sector's ongoing struggles, but as a barometer for the existing volatility within the creator economy at large. It stands at a juncture, grappling with a significant reduction in advertising revenue and a stringent correction in its once-thriving investment ecosystem.
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On Tuesday, September 5, before eFuse announced the postponement of the Creator League, I reached out to eFuse CEO, Matthew Benson, to request an interview. Receiving no response, I contacted the company’s chief revenue officer, Neil Duffy, who was more receptive and indicated the possibility of arranging an interview with Benson.
However, I subsequently found myself communicating with eFuse’s external public relations representative, Gabriel del Rio. Contrary to my hopes, del Rio declined my interview request but furnished me with an official statement. To provide a balanced perspective, here is what del Rio conveyed:
Crypto?: The passes are not NFTs; they did not generate a cryptocurrency upon purchase and could not be transferred or resold, thereby posing no financial risk. At no point were the Community Passes involved in a scam or a pump campaign.
So why blockchain?: Utilizing a blockchain ensures transparency in disclosing the exact number of passes in circulation and the respective weight of each vote. This public ledger aids us in maintaining accountability by preventing overselling and subsequent vote dilution. The blockchain facilitated this process.
Tech: The Creator League relied on NEAR's 'low utility' blockchain, which essentially served as a public, verifiable ledger, akin to an advanced accounting practice.
Keen to delve deeper, I reached out to del Rio again on Wednesday, September 6, seeking clarity on the company's statements, including inquiries about the terms of service on their platform — which mentioned the sale of NFTs. Unfortunately, my follow-up questions remained unanswered.
In a related development, Nerd Street has consistently delayed payments to various stakeholders, including commentators and players awaiting prize money. Although my team at Overcome entered into a podcast production agreement with them in mid-2021 — before the onset of these payment issues — I feel obligated to disclose this information.
I appreciate Nerd Street's transparency with both myself and my team throughout this period. We’ve been paid fully for our work, but it’s important to note, when mentioning them, that this is an ongoing problem.