AGORACOM Small-cap Investor Relations Blog

SPONSOR: Enthusiast Gaming Holdings Inc. (TSX-V: EGLX) Uniting gaming communities with 80 owned and affiliated websites, currently reaching over 75 million monthly visitors. The company’s partial 2018 (first 9 months) revenue of $7.4 million representing a 625% increase over the same period in 2017.

As millions of dollars pour in, esports teams offer varying visions of the future

• Tens of millions of dollars continue to flow towards top esports organizations, with Gen.G announcing a $46 million investment round Wednesday,
• A raise featuring money from a mix of Silicon Valley venture capital firms, figures in traditional sports and actor Will Smith.

Gen.G., the parent company of the Overwatch League’s Seoul Dynasty, recently brought in $46 million in fundraising. (Robert Paul/Robert Paul) ByNoah Smith April 17

Tens of millions of dollars continue to flow towards top esports organizations, with Gen.G announcing a $46 million investment round Wednesday, a raise featuring money from a mix of Silicon Valley venture capital firms, figures in traditional sports and actor Will Smith.

Flush with cash, and in some cases strengthened by the enforced scarcity of a franchise model in publisher-driven leagues built around games such as Overwatch and League of Legends, esports organizations are starting to embark on long-term visions to shore up their positions for the future. The visions themselves are far from uniform however, as some seek to emulate traditional sports teams while others see something quite different, operating more like full-on corporations than merely a competitive organization.

Akin to European sports clubs that have teams which compete in various sports — think Maccabi Tel Aviv, Real Madrid, and Bayern Munich — esports organizations are companies that own teams which participate in several different video games. But for some their business model extends into other areas as well, including content creation and apparel. In this way esports organizations are breaking from the established business models of traditional sports, based heavily on television broadcast revenue and box office receipts, to reimagine their place in a new, online and global industry. The financial ecosystem around many such outfits encompasses competitive video games, player streaming on platforms like Twitch and Mixer, original unscripted content and even gambling.

Cloud9, which raised $50 million last year and $25 million in 2017, has decided to place some of its upcoming focus and capital on creating a competitive structure for young players.

“Imagine baseball was invented last week, what would Little League look like?” said Dan Fiden, president of Cloud9. Fiden said that, unlike traditional sports which have youth leagues, esports for kids is completely unstructured.

“Some of the players we sign have never been coached in anything ever,” he said.

The organization’s planned Los Angeles headquarters will feature a public space where fans can meet up, interact with players, watch games and it will also contain the “equivalent of the esports little league diamond,” according to Fiden.

“We want to continue to continue to launch programs like this to learn how best to organize and coach kids. We want to figure out the curriculum,” Fiden said, but noted his organization’s core business remains trying to win games.

Gen.G is also trying to move beyond the footprints of existing sports teams via its international focus and content production, both common in an industry that has been always been international and which considers South Korea to be its Mecca. For content, fans expect access to top players through Twitch and YouTube.

“We don’t have to just build versions of what we’ve seen yesterday,” said Gen,G CEO Chris Park, who was previously a senior executive for Major League Baseball.

Park said his company will continue to place a heavy focus on growing in China, Korea (they own the Seoul Dynasty team in Overwatch League), and the United States.

In a departure from traditional sports, he said Gen.G will not only be looking to attract top players, but top content creators as well, since they plan to “create content that shows gaming is a culture and way of life.”

The 100 Thieves franchise, which received a high profile investment from singer Drake, has established itself as an apparel company, with its limited edition gear quickly selling out after its becomes available online.

The differing approaches illustrate that esports is still very much amorphous and in its very early stages, even as investor attention — and money — has arrived en masse. Park said that his organization was “oversubscribed within hours” of announcing their latest raise. Fiden said there has been “strong interest” in Cloud9 from investors since 2017.

Last year’s notable raises, in addition to Cloud9, include $38 million for Echo Fox, $37 million for TeamSoloMid, and $26 million, including money from Michael Jordan, for Team Liquid.

A 2018 Goldman Sachs report stated that esports have landed venture capital investment totaling $3.3 billion since 2013, and $1.4 billion as of the middle of last year.

“We [the esports industry] look like the NBA did in late 60s, early 70s,” said Canaan Partners’ Maha Ibrahim, who has led the firm’s investment in Gen.G.

Driving the spiraling valuations and investments, according to Ibrahim and fellow investor in Gen.G, Roger Lee, of Battery Ventures, are a mix of Overwatch League’s exposure on ESPN and an overwhelming amount of data to support the viability of the enterprise. Seventy-nine percent of esports viewers are under 35 years old and this audience, on Twitch and YouTube, outstrips HBO, Netflix, and ESPN combined, according to Goldman Sachs.

Lee believes top esports teams have more visibility than a comparable baseball team, and that once esports starts “generating more interest, they’ll be worth the same amount.”

Ibrahim agreed, saying, “Teams will be billion-dollar entities, of that I am sure.”

For now, valuations, like those for many start-ups, are based on the hope that attention will be converted to revenue at some future date. A plurality of team revenue is from sponsorships, according to Goldman Sachs, which projects that by 2022 that will shift to come from media rights.

Video games, including the professional competitive element, are not widely seen as a threat by traditional sports leagues or teams — especially those like the NBA and most of its franchises, which have co-opted them. But in Hollywood, games like the Fortnite are increasingly seen as a threat. Netflix, which is expected to spend $15 billion on shows this year said in a recent shareholder letter that, “We compete with (and lose to) Fortnite more than HBO.”

“This is more than a movement, it’s the next generation of media and media consumption,” Ibrahim said.

Source: https://www.washingtonpost.com/sports/2019/04/17/millions-dollars-pour-esports-teams-offer-varying-visions-future/?utm_term=.bef4a811e2d1

SPONSOR: Enthusiast Gaming Holdings Inc. (TSX-V: EGLX) Uniting gaming communities with 80 owned and affiliated websites, currently reaching over 75 million monthly visitors. The company’s partial 2018 (first 9 months) revenue of $7.4 million representing a 625% increase over the same period in 2017.

Will Smith takes slice of Esports team’s US$46 million financing

• Actor Will Smith and Japanese soccer legend Keisuke Honda are among the new investors in esports franchise Gen.G, which announced a new $46 million round of financing Wednesday.

Eben Novy-Williams, Bloomberg News

Will Smith reacts at a closing ceremony press conference during the 2018 FIFA World Cup at Luzhniki Stadium on July 13, 2018 in Moscow, Russia. (Photo by Dan Mullan/Getty Images). , Dan Mullan/Getty Images Europe

Actor Will Smith and Japanese soccer legend Keisuke Honda are among the new investors in esports franchise Gen.G, which announced a new $46 million round of financing Wednesday.

Smith and Honda’s Dreamers Fund, a investment vehicle they launched last year, are joined by Los Angeles Clippers minority owner Dennis Wong and Michael Zeisser, former chairman of U.S. investments at Alibaba Group Holding Ltd.

“It’s exciting to see the worlds of technology, media, sports and now celebrity come together,” said Chris Park, chief executive officer of Los Angeles-based Gen.G.

Gen.G operates teams in seven different video games and has offices in China, South Korea and the U.S. Its franchises include the Overwatch League’s Seoul Dynasty, which will move to South Korea from Los Angeles next year.

In addition to handling that transition, Gen.G is expanding in China, investing in player development and trying to increase revenue from esports-specific areas like streaming and the sale of in-game items.

“The coming years are going see our company really start to crystallize its identity, not just as a brand, but also as an enterprise,” Park said.

To that end, Smith and Honda will join 11-time National Basketball Association All-Star Chris Bosh, already a Gen.G adviser, in helping grow Gen.G’s media presence. That includes creative and commercial projects, and helping Gen.G athletes with content creation.

Other new investors in Gen.G include Battery Ventures, New Enterprise Associates, MasterClass co-founder David Rogier and Stanford University. Silicon Valley Bank, which helped with the fundraising, is becoming both an investor and a sponsor.

Source: https://www.bnnbloomberg.ca/will-smith-takes-slice-of-esports-team-s-us-46-million-financing-1.1245904

SPONSOR: Enthusiast Gaming Holdings Inc. (TSX-V: EGLX) Uniting gaming communities with 80 owned and affiliated websites, currently reaching over 75 million monthly visitors. The company’s partial 2018 (first 9 months) revenue of $7.4 million representing a 625% increase over the same period in 2017.

Twitch’s Head of Esports on the Trends Driving Viewer Engagement

• 2018 was a stellar year for Twitch .
• According to Twitchtracker, the streaming service grew its average concurrent viewers by 43% to cross the one million average across the entire year, while streamers chasing the dream of Twitch stardom grew by 70% to 3.4M broadcasters per month.

From Fortnite’s  breakout success and Tyler ‘Ninja’ Blevin’s rise to mainstream celebrity status, to Overwatch  driving new styles of interactive engagement with fans – the year was about a lot more than just seeing the statistics continue to climb. It redefined the trends we thought we knew about what streaming is all about and how esports builds its fan dynamics through real-time interactions.

“Battle Royale games are highly competitive and easy to follow. They translate very well to Twitch.”

It also saw a clash of the traditions of team-based esports with the trend of viewers falling in love with Battle Royale as their favorite game genre to watch.

“Battle Royale games are highly competitive and easy to follow. They translate very well to Twitch,” Justin Dellario, head of esports at Twitch, told The Esports Observer. “Twitch viewers thrive on live, shared moments and there is no shortage of that spontaneity in Battle Royale games.

“Best of all, Battle Royale games are simple – fight to be the last one standing – so nobody is left in the dark when they see a best play or big win.”

Dellario joined Twitch in February 2016, and since that time the wider entertainment industry has woken up to the idea that game streaming isn’t a sideshow but an actual competitor to its living room dominance. According to Dellario, the strength of Twitch is its community spirit.

Credit: EA Games

“That’s what today’s young audiences crave: the ability to interact and even influence what they watch. Twitch gives them that opportunity to do so with their fellow fans, their community,” said Dellario.

“People watch Twitch for shared moments, something to enjoy with like-minded people. That’s no different than sports fans gathering at a bar or a friend’s living room to watch a game. How people interact with content and content creators on Twitch builds a live, shared, interactive viewing experience that provides that exact atmosphere from the comfort of wherever you are watching from. That’s what we call multiplayer entertainment – unique, live, unpredictable experiences created by the shared interactions of millions.”

“It’s important to note that while viewer rewards play a part in driving viewership, they also play a part in driving engagement and play time.” 

That blend of interactivity and community is also represented in game developers delivering rewards to viewers, particularly around esports tournaments, as part of using the Twitch platform. And Dellario sees them shifting from a viewer incentive to a community expectation.

“It’s important to note that while viewer rewards play a part in driving viewership, they also play a part in driving engagement and play time,” Dellario said. “They cause players to return to the game to use the rewards, continue to have experiences that keep them tied to the game, and ultimately help drive them back to watching again to complete the loop.

“Developers recognize the need to strengthen this bond with their communities inside and outside of the game.”

One of the deepest integrations between the Twitch fan experience and an esports competition was the launch of the Overwatch League All-Access Pass. For a one-off season subscription price (unique compared to Twitch’s typical monthly subscription system) a viewer gets a special viewing experience with real-time game statistics, options to watch specific player cameras, or combine multiple views to create their own custom viewing experience.

Credit: Blizzard

“We are always looking for ways to enhance the esports broadcast experience for our partners and viewing experience for the fans,” said Dellario. “The Overwatch League All-Access Pass was the result of our work with Blizzard to develop new methods of engagement and learning from the community on how to provide more control in how they watch and experience matches.”

The top personalities on Twitch now single-handedly command audiences just as big, or bigger, than the biggest weekly esports leagues on the platform. So some events are finding new ways to get the best of both worlds through one of the newest trends on Twitch – co-streaming.

“We just saw Ninja gather a large viewing party for Thursday Night Football, bringing the program to people who may not otherwise watch it…”

“Many of our top streamers got successful because they are entertaining commentators of their own gameplay. Therefore, letting an online personality present the content in a way that resonates with their viewer community is a perfect way to find a new audience,” said Dellario.

“Twitch viewers enjoy their content more when they get to enjoy it with commentary from their friends, and especially their favorite personalities. What that creates is a unique viewing experience they can’t get from watching something alone.”

This co-streaming concept is even extending beyond the realm of esports and gaining the attention of traditional sports leagues as well.

“We just saw Ninja gather a large viewing party for Thursday Night Football, bringing the program to people who may not otherwise watch it – cord cutters and cord nevers,” Dellario said.

Credit: Twitch

“That’s, of course, where you might run into challenges. Co-streaming counts on getting the right personalities who can get creative in a way that compliments your content and gets their viewers interested. However, we were able to secure that with the NFL by handpicking which streamers got rights to co-stream Thursday Night Football.”

For Dellario, one of the biggest lessons in his three years at Twitch has been seeing streaming and esports “go hand-in-hand” as commentary, personality, and community make Twitch the preferred place to watch.

With Twitch Rivals, we are further fostering the relationship between esports and streaming.”

“People don’t just turn out for the game. People turn out for personalities in esports, and we have proven that esports help boost personalities through Twitch Rivals,” Dellario said.

“Twitch Rivals is a series of competitions organized by Twitch, which pits our top and growing streamers against each other in varying formats of competition and challenges spanning all types of popular and budding game categories.”

Rivals events use a central broadcast hub as a base for viewers to tune in and catch the big picture coverage, while all participants are streaming their personal point-of-view where their fans – or new fans – can tune in.

“This helps streamers grow their channels while maintaining their traditional programming and broadcast times. With Twitch Rivals, we are further fostering the relationship between esports and streaming,” Dellario said.

Want to hear more about Twitch’s role in the esports industry? Justin Dellario will be a speaker at the HIVE esports business conference in Berlin on April 11, 2019. The first international esports business conference in Europe’s capital of esports. An unprecedented conference format featuring thought leaders of industries adjacent to esports sharing their insights. Click here to reserve your seat!

This interview was conducted by Trent Murray.

Source: https://esportsobserver.com/twitch-hive-berlin-interview/