Video gaming will continue to become more deeply integrated into our culture via media (streaming, viewership, content), music (digital concerts for 10M people), fashion (jerseys, lifestyle brands), retail (Walmart, etc), and more. Even with 3B gamers and 480M people watching esports today, we're still in the earliest days of these trends playing themselves out at scale.
As a firm, we are focused on investing in the technology & "picks & shovels" of this space and this will remain our focus. We believe pro-teams are too expensive and games are too binary. The quality deal flow around infrastructure is accelerating.
1) Overwatch League just lost their commissioner to Epic Games - I’ve been vocal about my concerns and negative outlook for the Overwatch League, yet it seems like their commissioner may share a few concerns of his own. With the league’s viewership down 30% y/y, their commissioner, Nate Nanzer, has left the Overwatch league to join Epic Games to work on Fortnite’s competitive scene. This league should not have franchised (exhorbitant $20-35M buy-ins) and should have pursued a more cautious promotion/relegation system due to the game being so new & chaotic to watch. Now, their leader has jumped ship. Ever tougher times are coming for the Overwatch League. (article here)
2) Streaming companies are mimicking Netflix & Hulu - Caffeine (a Twitch competitor) just became the exclusive broadcast partner for Team Dignitas, who have a League of Legends franchise spot. They will exclusively use Caffeine for their team content and streamers. Interestingly, Caffeine has also locked in the distribution rights to the shows that Dignitias will create. What worked for Hulu, Netflix, and HBO via exclusive content deals is now becoming apart of the path forward for streaming companies like Caffeine, Twitch, and YouTube. (article here)
3) Walmart is selling LCS team jerseys - not only is Walmart putting gaming centers inside of their stores (partnership with Esports Arena), they’ve also launched an Esports Fan Shop and have an exclusive headband deal with Ninja (Tyler Blevins, 14M followers on Twitch). This week, Walmart has announced that they are going to start selling team jerseys for the League of Legends Championship Series (LCS), the franchise league that sold buy-ins for $10M per franchise spot (10 total). Just like jerseys for traditional sports, consumers continue to spend money on the competitive teams they support. Esports is increasingly taking a more prominent position in the world of competitive entertainment and Walmart’s involvement is further validation of the fandom behind video gaming.