Esports Market Ecosystem Map—February 2016

The broadcasting and encoding layer of esports is attracting a high level of VC attention recently. But before we get started on that topic, we want to direct your attention to “The eSports Landscape” by Blake Robbins. It is by far, the most comprehensive list of esports startups and companies in the market. It is serving a need as many startups contact us to be added to our list, which was never designed to be comprehensive. Our market ecosystem map is focused on tracking the major changes and trends based on discussions with insiders and analysts.

The broadcasting and encoding layer can be grouped into two buckets: live streaming and recording software and plugins/add-ons.

Live Streaming and Recording Software

The live streaming and recording software market is dominated by Open Broadcasting Software (OBS), which is free and open source, and XSplit, which has free and premium subscription options. Companies that are trying to displace OBS and XSplit include: Gameshow, elgato, Overwolf, and most recently Razer.

We find more promise in the startups focusing on browser/cloud-based solutions versus competing directly with OBS/XSplit. The value proposition is less CPU usage, minimal setup required, and the ability to collaborate with other streamers/content creators/producers. The two startups to watch out for in this space are Infiniscene and Stage TEN. We are more bullish on Infiniscene because it is founded by esports veterans and gamers while Stage TEN is founded by TV industry/production veterans.

Plugins/Add-ons

Plugins and add-ons focus on enterprise (Maestro), retail (Twitch Alerts), or both (Hubtag). Maestro offers white-labeled layers over streaming platforms for enterprise customers, such as tournament organizers like ESL.

Twitch Alerts and Stream Pro are web apps that help streamers engage with their viewers through alerts, donations, labels, and other tools. Both are free to use. Hubtag is an OBS plugin that provides additional features for streamers focused on production.

The big question here is, so what? Unless Twitch comes out like Slack with a fund ($80 million) to invest in startups that integrate Twitch, we believe that the only viable retail monetization model for plugin/add-ons are donations-based. The enterprise monetization model doesn’t bode too well either — there aren’t enough major events or enterprise partners to build a venture-backed business off of. For an individual coder who is doing this as side hustle, maybe.

Furthermore, if there is software that is so valuable to streamers, it is likely that only the top streamers, Twitch Partners, are going to pay. There are 11,000 Twitch Partners. That’s a small base to build a business on.

As always, please tweet me @notvert with additions and/or corrections

Tier 1 Games
Tier 1 games have the highest amount of monthly active users, the highest amount of total prize pools, and the highest amount of monthly hours streamed. That leaves us with:

1. League of Legends, Riot Games (PC) — 67 million monthly active users (source: Riot, January 2014)
2. Dota 2, Valve Software (PC) — 12.45 million monthly active users (source: Valve, 2/29/2016). Steam figures only account for North American data.
3. Counter-Strike: Global Offensive (CS:GO), Valve Software (PC and console) — 10.45 million monthly active users (source: Valve, 2/29/2016)
4. Hearthstone, Blizzard Entertainment (PC, tablet, and mobile) — 25 million registered users (source: Activision-Blizzard, Q4 2014).

The two non-tier 1 games to watch in esports this year are:

1. Vainglory (mobile) — 1.5 million monthly active users (source: Venture Beat, 7/1/2015). Vainglory is pushing the frontier of mobile esports. Many top esports teams have recently expanded into Vainglory.
2. Overwatch, Blizzard Entertainment (PCs) — May 2016 open beta launch.

Major Esports Franchises

1. Fnatic — Teams fielded: League of Legends (top team in Europe), CS:GO (top team globally), Dota 2, Smite, Battlefield 4 (won the last four ESL tournaments), Heroes of the Storm
2. SK Telecom T1 — Teams fielded: League of Legends (Season 3 and Season 5 World Champion), Starcraft II
3. Evil Geniuses — Teams fielded: Dota 2 (International 2015 Champions, third place International 2014), Halo (Halo Championship Series Seasons 1 and 2 Champion), Starcraft II, and a variety of fighting games (first place, Street Fighter EVO 2015)
4. TSM — Teams fielded: League of Legends (either first or second place in the last six North American splits), Hearthstone, CS:GO, Smite, and Super Smash Bros.
5. Cloud 9 — Teams fielded: League of Legends (either first or second place in four of the last five North American splits), Heroes of the Storm (1st World Champions), CS:GO, Halo, Smite, Super Smash Bros., and Dota 2.
6. Team Liquid — Teams fielded: League of Legends, Hearthstone, CS:GO, Heroes of the Storm, Street Fighter, Super Smash Bros., Halo, and Starcraft II.

Leagues (ESL, Dreamhack, and ESEA are all owned by MTG)

1. Electronic Sports League (ESL) — Acquired by Swedish media company MTG for $86 million in July 2015. Has a strong presence in League of Legends, Dota 2, Halo, CS:GO, Battlefield 4, Starcraft II, and more.
2. Dreamhack — A digital festival which holds the world record for the largest LAN party and has been involved with eSports and gaming for many years
3. ESEA — A CS:GO tournament platform
4. E-League — A CS:GO league, joint venture between Turner Broadcasting and WME/IMG
5. FACEIT — An eSports competition platform, owns one of the most popular CS:GO leagues, $15 million Series A, January 2016

News

1. ESPN — The ESPN of Esports has arrived — ESPN
2. theScore eSports — eSports mobile platform with in-house reporting, launched in February 2015.
3. reddit — Some breaking news will continue happen on game subreddits because the most hardcore fans keep track of their favorite players’ and teams’ every move.
4. Yahoo — Launched on March 1st, 2016
5. HLTV — Top CS:GO news site

Statistics

1. Curse — Owns many eSports games training, coaching, and data web properties
2. TSM — Like Curse, TSM has slowly been building a portfolio of statistics and other content web properties focused on esports
3. ZAM — The OG gaming database/news/stats conglomerate

Networks

1. Twitch — Still the dominant force in user-generated streaming
2. YouTube — Hasn’t been able to break the stranglehold that Twitch has on the market
3. Azubu — Continues to fight for relevance in a world of giants.
4. Ongamenet (OGN) — OGN is a South Korean cable television channel that specializes in broadcasting video game-related content. They also organize tournaments.

Niche Networks

1. Kamcord — Live streaming for mobile games, $15 million Series B, December 2014 (more single-player focused)
2. Mobcrush — Live streaming for mobile games, $10 million Series A, August 2015 (more eSports focused)
3. Plays.tv — Capturing player’s personal highlights
4. Oddshot.tv — Spectator-captured highlights
5. Hitbox.tv — High-quality live streaming

Social

1. Instant eSports — YC Summer 2015, inked a partnership with MTG
2. Discord — Voice and text chat for gamers, $20 million round in January 2016
3. Curse — Voice chat for gamers

Broadcast & Encoding

1. Open Broadcasting Software — free, open source live streaming and recording software
2. XSplit — live streaming software with free and premium subscription options
3. Maestro — white-label layers over streaming platforms
4. Twitch Alerts — web app that help streamers engage with their viewers through alerts, donations, labels, and other tools
5. Stream Pro — same as above
6. Hubtag — OBS plugin which provides tools for streamers

In-Game Items Economy

Raffling: Users put in skins, raffle executes, one winner collects winnings, raffling company takes cut. Heavily tied to streamers and interaction.

1. Skin Arena
2. CS:GO Jackpot
3. CS:GO Shuffle

Betting: Bet with skins

1. CS:GO Lounge

Marketplace: Since the Steam Marketplace has a $400 maximum listing, third-party marketplaces have emerged to cover the market for skins above $400. This serves as the mechanism to “cash out.” Vulcun owns one of these sites.

1. OPskins
2. BitSkins
3. Skins.GG

Pricing API: Third-party pricing API of in-game items has become a utility across the economy. There is an opportunity to become the “stamp of approval” of in-game items. However, the risk of companies building their own pricing APIs has already started.

1. CS:GO Analyst

For others startups not listed, check out the full list here: The eSports Landscape.