Gaming vs. Hollywood
Video Gaming ($152B) is 2x larger than Hollywood ($43B) & Music ($20B) combined. Even though video gaming is the newest of the three, its extensive global reach has spawned a competitive scene that we now call “Esports” (electronic sports). Esports has 480M fans and their average age is 31.
For context, on April 27th, 2018 the movie “Avengers: Infinity War” generated $257M, producing the best opening box office of any movie up to that point. In second place is “Star Wars: The Force Awakens”, on Dec 18th, 2015 with $248M.
Meanwhile, over in video gaming, Grand Theft Auto 5 came out on September 17th, 2013 and within 24 hours had sold 11M units, reaching $817M in revenue. Within 3 days, the video game book over $1B in revenue. It then proceeded to become the highest grossing entertainment product of all time.
Slack IPO - Origins in Video Gaming
Slack used to be a game developer called Tiny Speck, which made a massive online multiplayer game call Glitch that shut down in 2012. When they shut down Glitch, the company announced that its future was in the tech it developed to keep the game's objects, characters, and actions synced up. The Slack team said at the time, "We have developed some unique messaging technology with applications outside of the gaming world and a smaller core team will be working to develop new products.”
The CEO, Steward Butterfield then created Slackbot, which became like a "familiar" in a video game: a non-player character that explains the world to you. This is still in place today when you onboard to the Slack product. (link)
Today, Slack (NYSE: WORK) has a market cap of ~$18B. The stock began trading at $26 and ended the first day up 48% at $38.62. While the stock has slightly cooled off to $35.52, it’s still an incredibly successful IPO, whose origins are in video gaming. This is only one example of the many technologies that are being developed in video gaming that may have much broader applications.
Media + Streaming Platforms + Esports Teams
Below are 3 recent examples of professional esports teams signing content & media deals. This is a trend I expect to continue as these teams continue to become media companies vs purely focused on the competitive scene:
- Team Griffin (Korea) has signed a deal with Huya (NYSE: HUYA) to live stream their content into China, which hard to access given regulations. (link)
- Team Liquid (Los Angeles) has signed a strategic partnership with Marvel Entertainment, across both merchandise and content. This is the Disney-owned Marvel Entertainment’s first partnership with an esports team. (link)
- Dignitas (UK) has added Caffeine as its exclusive broadcaster for team-related content (including original series) and streams. (link)
It’s also worth noticing that streaming companies (Huya, Caffeine) are getting into the exclusive content business, which threatens incumbents like Netflix, Hulu, and HBO. I also expect this continue as we enter the next phase of the distribution of digital media. A key shift here is that streaming companies have created platforms that directly connect the content creator and the consumer without a middle man who heavily curates the content that reaches the consumer. This is an important shift that is already underway:
- Linear TV (Fox, CBS, TNT) = B2B2C
- OTT (Netflix, Hulu, HBO) = B2B2C
- Streaming Platforms (YouTube, Twitch, Huya) = B2C
Today, endless optionality is a luxury in streaming platforms yet there are plenty of pain points to solve here, even if the midst of the more free/open distribution of content & media.
Trademark: The “Official Beer of Esports”
Anheuser-Busch (AB) just filed a trademark for the phrase; "Official Beer of Esports". This will be meaningful for their marketing campaigns as the esports market grows and more entrants allocate advertising dollars to this demographic. As this market accelerates, it’s hard to envision a world where other companies don’t challenge this trademark in court, yet until then AB will have a lock down on this phrase. Given that the average age for the US Esports fan is 28 and the global average is 31, it’s no surprise that an alcohol company like AB is highly engaged and already positioning for the industry’s growth.
