The Nexus
Published in

The Nexus

Esports Market Ecosystem Map — January 2016

This year kicked off with a bang. Vulcun announced the end of paid fantasy on their platform. Discord, a social platform for gamers, raised a $20 million round. There was also continued investment in the tournament and league space, with FaceIt announcing a $15 million Series A round.

What does this all add up to?

First, it is clear that there are three major non-developer leagues — ELEAGUE, MTG-ESL-ESEA-Dreamhack, and Faceit — with a major focus on CS:GO. The resurgence of CS:GO and its effect on esports cannot be understated. In addition to leagues focusing on CS:GO, there is a whole layer of the esports ecosystem built around in-game items for CS:GO. Valve is increasingly looking like Android versus Riot looking like iOS. It remains to be seen what Activision-Blizzard chooses to do, but it appears to be leaning towards the iOS (vertical integration) model.

Second, we’ve removed the fantasy esports and gambling layer from the ecosystem map because it was never really relevant (in terms of having an effect on the industry) and now its irrelevancy is confirmed. Last June, Vulcun co-founder and Murtaza Hussain wrote about doing everything it takes to not get into the low margin high volume business that is daily fantasy sports. It seems that the latest incarnation of Vulcun is focusing on in-game items. Unikrn is going down the same road.

Third, we’ve added a social layer to the esports ecosystem map. Last July, Riot Games’ $30 million investment into Curse was a recognition that Curse Voice (and voice chat in gaming in general) was an important space to be a part of. Discord has become a popular alternative to Curse Voice, Team Speak, and Skype. We also moved Instant eSports from news aggregation to this layer because users are using it for social interactions. The news and notifications are what keeps them coming back.

Finally, we removed Coaching and added in Statistics. TSM, Curse, and ZAM are the three major players in the statistics space and although ad-supported web properties don’t seem very sexy, the sheer volume and engagement of the audience makes them highly profitable assets.

Next month, we will finally do a deep dive into the broadcasting and encoding layer of esports. We believe that this space, like the social layer of esports, has the opportunity to provide venture-like returns.

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) — 12.3 million monthly active users (source:Valve, 1/31/2016). Steam figures only account for North American data.
  3. Counter-Strike: Global Offensive (CS:GO), Valve Software (PC and console) — 10.3 million monthly active users (source: Valve, 1/31/2016)
  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.
  2. Overwatch, Blizzard Entertainment (PCS) — closed beta launched on 10/27/2015. Initial response from the community is very positive.

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

Reporting

  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.

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
  6. Bruce.gg — Auto-generated highlights for coaching and sharing, currently focused on Dota2

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

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

Others not listed

  1. Mind Games: eSports Psychologist
  2. Skillz: Skill-based gaming platform. $15 million Series B, September 2015
  3. Abios: eSports calendar
  4. Battlefy — Tournament management platform, $2 million Seed, December 2014
  5. Matcherino — eSports fan engagement platform where fans can crowd-source and crowd-funded matches (and more), $1.25 million Seed, December 2015
  6. WME/IMG: January 2015: Buys eSports agency; May 2015: Invests in AlphaDraft; June 2015: Signs three teams (Cloud 9, Dignitas, and SK Gaming); September 2015: Announces the first major agency brokered sponsorship deal.
  7. GoodGame Agency: Acquired by Twitch in December 2014.
  8. Unikrn — Betting, $10 million in funding to date
  9. AlphaDraft — Fantasy, $5 million in funding to date; acquired by FanDuel in September 2015

Thoughts? Agree? Disagree? Would love to hear from you. Leave a comment or a response. If you liked the post, please hit ♥ so others can enjoy it too.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store