My analysis of the eSports market. If you like my research, you will probably also like my technology newsletter! Feel free to reach out at lakshman111@gmail.com if you want to be added or just have general comments on the research. Here is my last newsletter: http://us8.campaign-archive1.com/?u=ff23279fa1f2286aa84dc81de&id=87cfab8a27&e=[UNIQID]

1. ANALYSIS OF THE ESPORTS MARKET
August 2015
Lakshman Mody

2. August 2015  Lakshman Mody
INVESTMENT TRENDS
VALUE CHAIN
INDUSTRY OVERVIEW
KEY METRICS
CUSTOMER PROFILE
TWITCH

3. How big is this market?
INDUSTRY OVERVIEW
August 2015  Lakshman Mody

4. $260M
GLOBAL MARKET: $260 - $612
$612
-
Newzoo, SuperData  August 2015  Lakshman Mody

5. Newzoo  August 2015  Lakshman Mody
HOW IS THIS MARKET GROWING?
$130
$194
$465
2012 2014 2017
76
117
19058
89
145
2012 2014 2017
Frequent Viewers
Occasional Viewers
Esports Audience Growth (Million) Esports Revenue Growth ($Million)
CAGR +20% CAGR +29%
134
206
335

6. “According to SuperData research, by year end the market will be a $612 million
dollar sport with a billion dollar valuation by 2018.”
Newzoo, SuperData  August 2015  Lakshman Mody
WHEN WILL IT BE A BILLION DOLLAR MARKET?
$3
$5
$2
$7
$15
2014 2017 2020
Esports Growth Scenarios (Million)
Based on Annual Revenue per Enthusiast
Conservative
scenario
Optimistic
scenario
$1.1B
Market
$.5B
Market
$3.0B
Market
$1.0B
Market

7. Why should we pay attention to this market?
KEY METRICS
August 2015  Lakshman Mody

8. ESPN (Newzoo)  August 2015  Lakshman Mody
VIEWERSHIP PERSPECTIVE
5
13.8
15.5
20
25
27
112.2
Stanley Cup
World Series
NBA finals
Dota 2 - The International
Masters
League of Legends
Super Bowl
Total Viewership During Championship Matches in 2014 (Millions)

9. PRIZE MONEY PERSPECTIVE
$0.4
$1.0
$1.3
$3.8
$4.1
$5.0
$5.1
$10.0
Call of Duty (2015)
Leage of Legends (2014)
Smite (2015)
Stanley Cup (2014)
NBA Finals (2014)
Dota 2 - The International (2014)
Super Bowl (2015)
World Series of Poker (2014)
Championship Prize Money (Millions)
ESPN (Newzoo)  August 2015  Lakshman Mody

10. Who are the people watching esports?
CUSTOMER PROFILE
August 2015  Lakshman Mody

11. • It is a young sport. Over half of
adult esports viewers are younger
than 35.
• “The average eSports viewer
watches 19 times a month; average
session is more than two hours.”
That is over an hour a day.
SuperData, iMediaConnection, ESPN(Newzoo)  August 2015  Lakshman Mody
WHO IS WATCHING?

12. Newzoo  August 2015  Lakshman Mody
THIS IS A SPECTATOR SPORT
Of all esports
viewers
40%
do not play any of
the top epsorts
franchises. Another
sign that esports is
becoming a
spectator “sport.”

13. SuperData  August 2015  Lakshman Mody
WHERE ARE PEOPLE WATCHING?
Most Visited Streaming Sites Among US Esports Viewers
36%
13% 12%
9% 9%
7% 7% 6%

14. How much money is flowing and who is it going to?
INVESTMENT TRENDS
August 2015  Lakshman Mody

15. CBInsights  August 2015  Lakshman Mody
HOW MUCH MONEY AND HOW MANY DEALS?
Esports & Game Streaming Financing Trend (# of deals and $Millions)
$9 $10
$15
$1
$11
$35
$15
$3
$21
$54
$10
$16
$19
$40
$37
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
1
1
1
1
1
2 2
3
2
3
2 2
4
8
12

16. WELL FUNDED ESPORTS STARTUPS
Company What they do Investors Total Disclosed
Funding ($M)
Machinima Entertainment Network Google, Redpoint $92
Major League Gaming League Oak Investment Partners $67
Raptr Optimize Settings Accel, Founders Fund $41
Azubu Event/Game Streaming Sapinda Group $35
Kamcord Game Recording A16Z, GV, YC $28
Curse Gaming content and
digital products
SoftTech, Riot Games $21
Vulcun Betting Sequoia, Matrix $13
Unikrn Betting Mark Cuban $10
Skillz Cash Tournament SDK NextView Ventures $7
AlphaDraft Fantasy Esports Upfront Ventures $5
CBInsights  August 2015  Lakshman Mody

17. How did Twitch put esports on the map?
TWITCH
August 2015  Lakshman Mody

18. • Amazon acquired Twitch for $970M. By the end of last
year, it had 100 million users having grown over 2x year
over year for the last 2 years.
• Some analysts point to the fact that when Twitch was
purchased in 2014, users watched over 3.5 billion hours
globally. In 2018, this number is expected to grow to over
6.5 billion.
• It is interesting that the acquisition price was staggeringly
more than the entire market was worth, indicating that
Amazon must have expected the market to drastically
grow and for Twitch to be positioned to capture a lot of
that growth as the leading streaming service (slide 13).
Bloomberg, CBInsights  August 2015  Lakshman Mody
TWITCH

19. How does this industry operate?
VALUE CHAIN
August 2015  Lakshman Mody

20. SuperData  August 2015  Lakshman Mody
ESPORTS VALUE CHAIN PARTICIPANTS
Participants Description Examples
Publishers Companies that make the
games
League of Legends is made
by Riot Games
Teams Professional teams that
compete in tournaments
NewBee is the highest
grossing team
Leagues Organizers of online
competition or esports betting
platforms
Major League Gaming and
Vulcun
Platforms Some companies are channels
that broadcast games and
others provide the
infrastructure for
tournaments.
Twitch and Xfire
Brands Brands that sponsor teams,
leagues, publishers, etc.
Logitech

21. Other Insights and looking forward
CONCLUDING THOUGHTS
• “The decision to use live streaming and eSports as a central
component of a game’s marketing strategy changes the design
requirements. Broadcasting digital video content live over the
Internet, called live streaming, has become so central to
competitive gaming that titles like SMITE have this functionality
built into the game.” Therefore, streaming will become easier as
this new functionality is added in-game.
• The Twitch acquisition suggests that Amazon expects this industry
to rapidly grow and companies that stream to be able to capture a
major part of that growth.
• The trajectory of esports mirrors an accelerated trajectory of
physical sports, but on a global scale.
SuperData  August 2015  Lakshman Mody