What is Esports, Exactly?
Same as sports, but instead of playing with a ball, you play with a computer. Esports has players, coaches, analysts, casters, leagues, local events, stadium-filling championships, merchandise sales, betting, long-term player contracts, sponsors, and as of recently - franchises. For millenials and younger, esports is equivalent to sports.
Esports wasn't much of a phenomenon until Internet became widespread, and even in 2010 it was still tiny. But last year, 43 million unique viewers watched finals in one of the games, League of Legends.
Average ESPN viewer spends 7 hours/week watching. For Twitch, a game streaming web site, the average user spends 20 hours/week watching others. 53% of esports fans are full-time employed. 30% are in high-income bracket. Everyone's realizing how underserved that demographic is, how fast it's growing, and thus how big of an opportunity it presents. There are hundreds of sports teams in the world worth $500M+, but only a handful of esports teams worth $50M. Assuming esports will be even 1/5th the size of sports in the next 5-10 years, the window of opportunity is simply become obvious to all, not just those in the know.
Esports is still a jungle, but the roads are being paved fast. Vainglory, the game title we started in, is on the verge of implementing a franchise system similar to NFL, guaranteeing minimal payment to teams to support them, sharing broadcasting + ticket sales revenues, etc. GankStars is favored to be granted the San Francisco franchise spot, given our long history and success in the title. Later this year, much bigger titles such as Overwatch will follow the lead; we are aiming for a franchise spot there as well.
Real or a Bubble?
For the longest time, only endemic sponsors existed in the field, i.e. companies related to video games and computers, such as Intel, Razer, Logitech, ASUS, HTC, Alienware, etc. But lately, especially at the start of 2017, many non-endemic companies entered the fray, from VISA to Adidas to Audi, each sponsoring a team. Coke had been running a Coke Esports twitter for over a year now, ESPN is running ESPN Esports coverage online (and even covered some esports events on TV), TBS is broadcasting an esports league on live TV (and, concurrently, online, where viewership peaked at 1 million in February during the finals), and many esports events per year fill entire stadiums. Esports is real, growing rapidly, and here to stay because it has all of the qualities required of it to be a sport.
While current average monetization per esports fan is around 7 to 8 times smaller than per sports fan due to underdeveloped industry, long-term esports actually has more ways to monetize than sports. In addition to the usual event tickets and merchandise, esports fans can purchase in-game items of their favorite teams. For example, in Counter Strike, players can purchase custom painting schemes ("skins") for their guns made by their favorite teams. Teams sell hundreds of thousands worth of dollars of such skins per year. A virtual product that's cheap to make, costs nothing to replicate and can be purchased by millions? That's the true power of esports.
So Who's Investing? Links Please
76ers, Ted Leonsis (Rizards owner), Peter Guber (Golden State Warriors co-owner), Alex Rodriguez, Shaq O'Neal, Rick Fox, Jimmy Rollins, Steve Aoki, Magic Johnson, Wesley Edens (Milwaukee Bucks co-owner), Miami Heat, Ronaldo, and Ashton Kutcher all invested into esports in 2016/Jan 2017 (read more on ESPN). Over a dozen European soccer clubs bought esports teams last year, and Holland became the third country to have a national esports team. Dallas Cowboys are also looking for a team. There's also this article on why these owners and others say esports matters.
Just on Feb 16, Canadian Super Channel broke news about bringing first 24/7 esports channel to North America. That link, of course, is to ESPN's coverage of the news.
What' the ROI?
It's simple. As with any sports team, you buy into ownership (an average NFL team is worth $2.2 Billion today) and dividends, if any are distributed. Your kids and friends get box seats to events. The team makes profit from sponsorships, league revenue splits, and prize winnings (which are substantial and often crowd-sourced - in 2016, the champion team in a game called DOTA won $5,000,000). If you love sports, you will love being invested in esports - it's the same adrenaline rush.
Barely 2 years old, we have placed 1st, 2nd, or 3rd worldwide every single season in the past 2 years (8 seasons in a row), despite sometimes-major changes to player roster. We've proven beyond the shadow of a doubt that we're not a one-trick pony and that we can find and train the best players out there, every time. Getting one win in sports is a matter of statistics; getting them consistently is a matter of skill.
All of this was done with a CEO who worked full-time at Intel during the first 2 years of GankStars' existence and was in the US on a work visa. In December 2016 he got his green card, left Intel, and now works on GankStars full-time. If the organization could have been that successful with only evenings and weekends to dedicate to it and $0 investment, imagine what we can do now, especially with some support? We're a hungry, ambitious team looking for nothing more but a chance to build one of the best esports team in the world, with a worldwide following and a monetization capacity like no other.
How Would GS Use Investment?
Rocket League is an up-and-coming game, with fast-growing prize pools and viewership, but still-cheap players/teams. We have a few teams in mind that we would like to test and pick up one of them; entering the game now will have tenfold returns down the road.
At the same time, we'd like to enter Overwatch, a game predicted to be the largest esports title of 2018. Made by Blizzard, a veteran in esports, the game was an instant runaway hit on its release and will soon implement the best franchise system we've seen in esports to date, very similar to NFL. Team prices will go up fast this year, and we want to secure a team on a fixed-price contract now, before that happens. That guarantees large promotion and opening doors to bid on a franchise spot once they go up for sale.
Outside of that, we'd like to expand our staff and focus heavily on recruitment, content production, local events, and various other brand-building activities. 2017 is a vital year for esports organizations like ours.
I'd love to chat, call me - Alex Novosad, CEO