So we had a chat about esports and gaming with Ben Holmes of Index Ventures on the stage of Arctic15 a few weeks ago. From that, I realized that not many people actually know how big this phenomenon is and the fact that it could be one of the largest sport industries in the coming years. This weekend, we are also heading to ESL One Dota 2 tournament happening in Frankfurt, so I thought to share my opinion on the industry and where it’s going.
It might surprise you to find out how big it actually is and what you can do within it.
Full disclosure, I am a gamer and always have been. From the moment I got my hands on Prince Of Persia (the very first one) to playing competitive Counter-Strike. Today, I am basically addicted to watching Dota 2.
Three years ago, I remember telling investors at Slush that e-sports will be big. They laughed me off. Now – not only do they listen – they put their money into the industry at a rather fast pace. Index Ventures, for example have invested into Superevil MegaCorp and Faceit. Other investors have put hundreds of millions into the business, such as the $100 million dollar investment by a single investor into a Russian gaming organization – Virtus Pro.
Oh and let’s think about the exits too. The industry is basically in its inception stage, and yet we are already seeing substantial exits. The organization behind the tournament we are about to visit, ESL, got bought by MTG for €87 million. They also bought Dreamhack for nearly €30 million.
Why is this happening? Being a gamer, I saw the times when your best bet was to win a computer mouse if you participated in a tournament. Personally, I won game-time in an internet cafe when I played Counter-Strike. Today, the biggest tournament in e-sports is The International (Dota 2) and the prize pool for that is $18 million dollars. Just for reference – Superbowl, Cricket, Masters in Golf, NBA Finals, Stanley Cup, Le Tour De France – all have less. Superbowl is around $8 million and NBA Finals is around $7 million.
Yapp, there are computer gaming millionaires already. Most of that money is generated due to the fact that the prize-pool is crowdfunded by making people buy an in-game item with a portion of it going towards the prize-pool. Many buy a few of them, such as myself, just to support the game.
However, where is the money? After-all – salaries of players are still below standard, contracts are not perfect, supporting organisations and tools are not in place. Well, that is exactly where the opportunity for startups and entrepreneurs lies. This is one of the fastest growing sport industries in the world and it is missing pretty much everything that any other sport has. At the same time, the finals of major tournaments can reach over 30 million viewers. NBA Finals of 2015, which was “record-braking” by all counts had – 23,254,000 viewers. Yet at the moment a single NBA team can be worth more than the whole of e-sports and if you look at the above numbers – this will change radically and fast.
As we are heading for ESL One in Frankfurt, which has $250,000 prize-pool with close to 10,000 spectators watching it live, we had an interview with Stuart Ewen, Product Manager at ESL.
According to Ewen, one of the reasons for growth is the fact that competitive gaming has never been so accessible and that “people everywhere want to take their game to the next level and supporting esports opens up avenues to get there.”
For example ESL One Frankfurt has grown from a small event to one that now has over $250,000 in prize money, 15 000 guests per day (Yapp, the whole of Slush watching e-sports), and 10 million online viewers over the duration of the event.
Personally, having been to a few events, the main difference from say watching football is the unity between the fans. Everyone is friendly no matter which team they support. On some level – they are all a part of this crazy group that likes to watch something that is still not accepted by the main stream community. That makes the watching experience extremely friendly and memorable.
According to Ewen, your day as a spectator will be more akin to attending a festival: “There are matches to watch, booths to explore, signing sessions to attend, cosplays to admire, artists to be inspired by and more. We try to give fans something to do at any hour of the day, since maybe their favourite team isn’t playing and they’re tired of cheering. A festival atmosphere where even a casual fan can find something to enjoy is our goal with ESL One Frankfurt.”
So what can you do in e-sports? “It’s limitless really. Despite esports being as big as it is now, it’s still very much a wild west in terms of what can be accomplished with respect to production, stage design, event planning, and more. We’re keeping pace with traditional sports in terms of broadcast design and presentation, but a lot of the infrastructure around the teams, players, and events is still growing. Everyone in the industry is still learning, and trying to innovate so that their product is the best one out there. Maybe it takes the form of a new way to stream content, a creative stage design, or even a new game altogether, but there are countless ways to get involved. As I mentioned above, just try to think of ways to apply your skills in an esports environment and I’m confident that there will be a niche you can fill.” – Stuart Ewen.
Startups from the region are already on-it and we hope to see more of them joining the space. For instance Oddshot, was basically started in ArcticStartup offices, when one of the founders was still helping us out.
Today – they are a major player in esports, providing moment capturing and replays for the industry. Frankly, I did not even believe in the idea myself but not only did Kane Waltman and the team prove me wrong – they made it big time and showed me that e-sports is a huge opportunity and it’s completely up for grabs as it stands.
P.S. If you happen to be in Frankfurt, we will be happy to meet as we will be conducting interviews for an esports edition of CoFounder. Just tweet @DSarle or message me on Reddit.