Esports. Everywhere | THE NEXT LEVEL LONGFORM 01
Where eSports Is Heading Next
Today is Day 1 of the Super Bowl of eSports or the League of Legends World Championships. There has been a lot of coverage on the growth of eSports and even a dedicated section at the storied NY Times. Most articles concentrate on “hardcore” eSports across PC (League of Legends, DOTA 2, CS:GO), Console (Call of Duty, Smite), with competitive leagues and live events. I want to focus on the next phase.
I believe we are the start of a renaissance within eSports that will broaden distribution, take the genre from Hardcore to Casual, see the emergence of Skill Based Gaming and Daily Fantasy, and the shift to Mobile. Let’s all get ready to play.
eSports Broadens Distribution
There are two primary ways to currently experience eSports: Attend a Live Event or watch via digital channels and their mobile apps (Twitch, YouTube Gaming, MLG, Azubu, Hitbox). No doubt that both of options will continue to flourish like the first eSports event at Madison Square Garden or the 20M Unique Viewers that watched the DOTA 2 International 5. New options are emerging:
Movie Theaters
There have been one off eSports events at theaters in the past, however recent deals are looking to provide regular content throughout the year:
- ESL will broadcast 5 events at 1,500 global theaters along with an eSports documentary.
- Cinemark and SoftBank have invested in Super League Gaming, which turns theaters into custom eSports events. There will also be a Minecraft league across 70 locations in the US.
- Cineplex, Canada’s largest theater operator, has invested $10M to buy WorldGaming and $5M to create a new competitive gaming league that will be operated at it’s locations.
TV
eSports has a long history on TV. 10 years ago, ESPN and EA launched Madden Nation, the first eSports competition on TV. The following year in 2006, USA Networks partnered with Major League Gaming to bring gaming tournaments to viewers. However, both of these were well ahead of their time. Now in 2015, with the overall growth of eSports, and improvements to technology and broadband; a better time to launch TV programming with a digital counterpart. With continued declines in millennial TV viewership, this is an opportunity to capture eyeballs in the coveted ad demographic.
- ESPN recently aired the “Heroes of the Dorm” tournament on ESPN2 (with subsequent freakout).
- The biggest news, TBS announced this week a partnership with Valve to create a CS:GO league that will air live on Friday nights along with additional digital outlets. Look for more in-depth stories around players and an opportunity to teach eSports to a new mainstream audience.
Hardcore to Casual
The current crop of popular eSports titles requires a decent learning curve and a significant amount of time to develop the necessary skills to become a Pro Gamer or even an amateur competing in their first tournament. With the slowing of brain activity after the age of 24 for fast-action gaming and the relatively short life-span of a Pro Gamer, eSports can seem limiting to the general audience. We are now starting to see the shift to casual eSports.
- This month, Zynga held the first Words with Friends tournament that was streamed live with a $25,000 Grand Prize.
- Looking to turn one of the world’s oldest sports into an eSport, Elite Chess League to launch in 2016.
Furthering the move to Casual will be the emergence of Skill Based Gaming continued below.
The Rise of Fantasy eSports and Skill Based Real Money Gaming
If you’ve watched a minute of College or Pro Football, you’ve probably seen the ads for DraftKings and FanDuel. Considered a game of skill vs. gambling, the Daily Fantasy market has exploded over the past year and covers all major sports. Earlier this year, three startups launched to bring eSports into the space, which is estimated to bring in $20M in entry fees this year alone:
- AlphaDraft*
- Vulcun
- Unikrn (Traditional sportsbook vs. Daily Fantasy)
*As a sign of how quickly this industry has evolved, two major announcements this week alone: DraftKings launched League of Legends eSports and FanDuel acquired AlphaDraft. Further, DraftKings is seeing higher participation in their first League of Legends event than College Football, NASCAR, and English Premier League. Expect to see more team/player sponsorships and ads in gaming media. There will also be entrants from traditional online Sportsbooks like Manny Pacquiao affiliated Vitalbet.
The second trend is the growth in Skill Based Casual Gaming for money. This isn’t new for Casual games with Woldwinner launching almost a decade ago. While this market for web based games may have plateaued, a few startups are looking at the transition to mobile to grow the overall market:
- Czech startup Cashplay was one of the earlier entrants into the space launching in 2013 and integrated into games like College Football Hero.
- US based Skillz also launched in 2013 and has recently closed a $15M Series B funding round bringing their total to almost $30M raised.
- With a known global brand into the fold, Playboy and Gamblit Gaming announced a partnership which will also bring the IP to land based casinos.
The Mobile Moment
With a dominance on PC and consoles fueling eSports growth, there is an enormous untapped market on mobile which could drive the industry even further. Outside of the apps for the live streaming services and skill based gaming both mentioned above, mobile hasn’t been a true platform for eSports. Here are two reasons why that may change:
A True Mobile eSport
The first attempt to emulate a successful PC eSport was was Hammer & Chisel which raised $8M+ in 2013 to release Fates Forever last year. While the game garnered great reviews, it wasn’t a commercial success. Super Evil Megacorp’s Vainglory could be the breakthrough hit. SEM is pushing heavily to make this the first mobile eSport:
- While raising VC money is not a sign of success (“Congratulating an entrepreneur for raising money is like congratulating a chef for buying the ingredients”), raising $41M over the last 15 months gives them runway for expansion.
- SEM is also building out tournaments with a partnership with ESL, which will be the first mobile-only game that they’ve ever hosted.
- The biggest development is the Vainglory International Premier League which recently launched in Korea and will be broadcast twice a week live on Korean TV.
With a similar to approach to leagues, tournaments and prize pools is Blizzard’s Hearthstone with a World Championship during BlizzCon (Hearthstone is available on PC but primarily played on mobile).
Taking a somewhat more limited role is Supercell’s Clash of Clans. The Philippines held one of the first tournaments along with the upcoming ClashCon. Considering that Clash of Clans can generate $5m+ every day, Supercell is focused on fostering the overall community but don’t disregard them for future, bigger eSports events.
Mobile Gaming Live Streaming
PC/Console Live streaming and eSports go hand-in-hand and is one of the main factor’s in the genre’s surge the past few years. While mobile game live streaming is also not new, (Twitch partnered with Gameloft in early 2014 but for one game only) there hasn’t been a broad platform play until this past year with the launch of three mobile live streaming platforms:
I would be shocked if Twitch, YouTube Gaming, and Unity didn’t move in this direction.
2016 will see a lot of these developments launch or continue to drive traction. What’s else am I thinking about? League regulation, additional game genre’s, non-endemic brands, and virtual reality. More for the next time.
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