The Lucrative Business of eSports

Greetings from my childhood bedroom, where I’m presently writing, here in sunny Santa Rosa, CA. Recent fundings have illuminated an industry that brings me right back to my childhood as a 90s kid watching my older brother play video games. That industry is the eSports gaming category, and more specifically, the streaming services that allow others to participate by watching gamers do their thing in games like League of Legends (made by Riot Games), Counter-Strike (made by Valve), and Fortnite (made by Epic Games). With prize pools worth millions for the winners of the Fortnite World Cup, I can officially challenge my parent’s insistence that my brother was wasting his time. If only he had stuck with it.

As we covered in our recent PrivCo 50 Report, the gaming industry is one of the fastest-growing industries in Q2, 2021. When the pandemic sent people indoors and halted live sports, more eyeballs than ever were glued to screens playing and increasingly watching video games. Viewership of competitive video games is at an estimated 26.6MM monthly views, and if we know anything about media businesses, those viewers mean major opportunities for investors, gaming companies, and the players themselves.

     
                                                                  image cred: The Guardian

Twitch has the most name-brand recognition for a streaming service that allows gamers to invite viewers into their bedrooms and basements to fight, strategize, and survive in virtual worlds. The company was purchased by Amazon back in 2014 for under $1BN. Now content created on Twitch is becoming NFTs, with the advent of Eternal, the NFT marketplace for Twitch clips that just raised a seed round from Mark Cuban.

Boom.tv is an event platform for creators, clubs, and communities in eSports. Caffeine is another event and community platform for gamers and entertainment. For the uninitiated, its website looks like a dizzying portal into another world, and the company just raised $113MM in Series D funding last summer.

These companies are more Twitter than Facebook and more Discord than Messenger, fitting nicely within the growing landscape of new consumers challenging the old guard of the entertainment industry. Turns out, watching my brother play Tomb Raider in 1995 made me an “early-adopter” of the phenomenon.