Q1 2023 Gaming Industry Report Released,
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Konvoy Ventures is a thesis driven venture capital firm focused on the video gaming industry. We invest in infrastructure technology, tools, and platforms.

Streaming Channel Ownership

Gaming and Starbucks, Ninja's Twitch channel, Mixer vs. Twitch, DOTA 2 world championship

Gaming = Starbucks

With a Starbucks on almost every corner, many have described the rise of coffee shops as the “3rd space” for people. We spend most of our time either in our homes (#1) or work (#2), yet Starbucks (i.e. coffee shops in general) has become another significant place where we spend time; hence it being the “3rd space”. People can be quite social at the coffee shop or they can be more introverted and enjoy time alone. Either way, these coffee shops have become sort of a “social square” for retail.

My view: what Starbucks is for retail, video gaming is for the internet. Gaming is now much more than just “fun and games”. It is a medium for people (3B worldwide) to be social (time with friends) as well as introverted (time alone).

Ninja’s Twitch Channel

As we’ve heard in the congressional hearings of Facebook, the debate of “Platform vs Publisher” is an intense issue. In short, Twitch falls under the legal framework and protections of being a publisher. As long as the content creator (Ninja) doesn’t violate their terms of service, then Twitch cannot overstep in the curation, deletion, or manipulation of that content. However, this week Twitch was redirecting viewers of Ninja’s channel (14M followers) to other channels (manipulation), and one of the channels was inappropriate. This was a direct violation of Twitch’s legal framework as a publisher and caused extreme backlash against Twitch in the community. In short, Ninja will forever own this channel, regardless of his exclusive contract with Mixer. He even has a link on his Twitch channel (see below) that reads: “Mixer.com/Ninja”.

Microsoft (Mixer) vs Amazon (Twitch)

Microsoft bought Mixer for relatively cheap (rumored to be sub $50M) and is now paying expensive contracts to streamers like Ninja to attract a larger audience to Mixer. As a game publisher, Microsoft can use Mixer as a distribution channel for the video games it produces, such as Halo 6 next year with the new Xbox. In contrast, Amazon bought Twitch for $970M and is not paying massive streaming contracts (yet), because they’ve been #1 in this category for the past 5 years. As an e-commerce company, Amazon is primarily using Twitch as a traffic driver towards its online e-commerce store. If you weren’t aware, your Amazon Prime account comes with one free subscription to a streamer on Twitch ($5/mo, no ads).

As more attention and viewers spend time on streaming platforms, it will be interesting to see how these two companies choose to invest (or not invest) going forward. Whoever owns the audience owns the distribution (hence why we are investing heavily in tools surrounding engagement: Muxy, Opera Event, Game of Whales). Personally, I think Microsoft is just getting started, following suit with Google’s Stadia initiative announced earlier this year.

Dota2 World Championship ($33M)

The popular game, Dota2 (“Defense of the Ancients”), has their world championship (“The International”) going on right now in Shanghai (above arena) and the prize pool has surpassed $33M. For context, the prize pool for The Masters is $11M and Fortnite’s recent World Cup was $30M. There are only ~10M monthly active players for Dota2 (owned by Valve), which is relatively small compared to League of Legends (80M+), Fortnite (70M+) and Overwatch (30M+). Here is a breakdown of Dota2's prize pool:

1st place = $14.7M

2nd place = $4.2M

3rd place = $2.9M

4th place = $1.9M

5th – 6th place = $1.1M

7th – 8th place = $800k

9th – 12th place = $645k

13th – 16th place = $484k

17th – 18th place = $80k

With many of the Dota2 professional players now approaching 30 years old, their retirements will allow for younger players to fill their spots. Given the size of the prize pool, even for those who place in 10th or lower, I’d expect even more Dota2 players to try and go pro in the coming years.

Two final things of note:

Loot Boxes: The Entertainment Software Association (ESA) has announced Microsoft, Sony and Nintendo have agreed to implement new policies surrounding the disclosure of odds for randomised in-game items and loot boxes.

Kroenke / LCS deal falls through: according to Riot, “Due to circumstances unrelated to Echo Fox, Kroenke Sports and Entertainment was unable to meet Riot Games’ requirements for acquiring Echo Fox’s LCS slot. With that said, Echo Fox retains the slot.” Riot is now handling the sale of this slot (1 of 10 in the league) over the next 30 days.