Unlocking The Esports Revenue Opportunity

Unlocking The Esports Revenue Opportunity


IABM Member Blogs
Blogs written by the IABM Team
To submit your blog email marketing@theiabm.org

Unlocking The Esports Revenue Opportunity

By Yash Patel, General Partner at Telstra Ventures

Fri 05, 02 2021

Yash Patel, General Partner at Telstra Ventures

When we announced back in 2018 that we had made an investment in the parent company of US esports team Team SoloMid (TSM), it raised a lot of eyebrows. It was a little different to our usual investments, plus esports was still seen as a niche interest and its participating teams not considered comparable to traditional sports franchises.

But that perception has changed – today esports is a key growth area in the interactive media space.

This trend can also be seen in another of our esports investments, Skillz, which in December became the first publicly-traded mobile esports platform. Skillz is poised to capitalise on the massive growth in mobile gaming, which it expects to more than double in value by 2025 to be worth $150 billion. It is planning new monetisation models and international expansion opportunities that will allow it to dramatically expand its addressable market.

Skillz is democratizing esports for everyone. Traditional esports has always been associated with PC and console gamers and more hardcore, first-person shooter and Battle Royale games. But it turns out that mobile esports is a massive opportunity, magnitudes larger than PC and Console gaming and with a more diverse user base. We are huge believers in the growth of esports for everyone, and investing in the platforms and digital brands that drive this acceleration to the mainstream.

In December I took part in a webinar hosted by SVG Europe, supported by Telstra and Telstra Ventures, which examined the state of the esports industry: how it was unlocking new revenue streams and attracting new players and fans at a rapid rate.

On the webinar, Daniel Ahmad of Niko Partners provided data on the phenomenal recent growth of esports. The sector now generates more than $1 billion in revenue per year with Asia accounting for about half of this total. According to Niko, five of the top ten highest-grossing mobile games in Asia in 2019 were esports titles, with more than 500 million players in total and a similar-sized fanbase. The North American market is not far behind.

However, like most industries, esports has had to adapt to the pandemic. This meant that the showcase live events had to be suspended, but the sector has been hugely successful at pivoting to an online proposition – a testament to the broadcasting and content distribution innovation that has been the hallmark of esports tournaments in recent years.

Steve Jalicy of ESL, the world’s largest esports production company, explained on the webinar how ESL had actually managed to increase its number of tournaments this year as a consequence of going online. Jalicy estimated that more than 300 major esports tournaments were hosted in 2020, not including a huge longtail of smaller tournaments.

The pandemic had other impacts too. In the period where no traditional live sports were happening, we saw many broadcasters look to esports to fill a gap in the schedules. And the consumption habits of online gamers also witnessed change. Speaking on the webinar, Anna Lockwood (Head of Global Sales at Telstra Broadcast Services) explained how there were volume increases in gaming activity recorded on both Telstra’s domestic and international networks, although now consumers were gaming at all hours of the day.

Lockwood noted that Telstra has invested significantly to support these new trends, providing new gaming bundles for its Australian consumers, and working with gaming developers on an international basis to ensure its networks were able to support an optimised gaming experience.

We had an interesting discussion on what happens next. There will be an appetite for big in-person tournaments (such as ESL Cologne) to return, but the online experiences will be here to stay.

The industry is also reliant today on brand sponsorship and media rights, in the same way as traditional sports, but that could change as new revenue opportunities are realised. This could include betting, e-commerce and digital offerings. For example, one of Team SoloMid’s fastest-growing businesses right now is Blitz.gg, a player and coaching tool that allows TSM fans to improve their gaming skills.

And, finally, my esports prediction for 2021 will be that the teams and leagues start to organise along similar lines to traditional sports, allowing the market to break out from being seen as only a marketing platform for games publishers to becoming a fully-fledged sports and entertainment industry in its own right.

Watch the SVG Europe tech webinar in full here:


Search For More Content