Once the subject of skepticism (who would want to watch people play?), the question of esport’s legitimacy and popularity has been answered with a resounding yes. Now, the question is how large can it grow? So far, the answer is pretty big. Already valued at about $655 million in 2017, the industry is expected to reach $1.2 billion by 2019, according to Statista. Team SoloMid – one of the major breakout team successes – recently received a $25 million investment from Silicon Valley-based venture capital firm Bessemer Venture Partners and has sponsorships with HTC, Logitech and Geico. After Shaquille O’Neal went to a tournament with his son, he invested in NRG Esports, another multi-million competitor. And Epic Games, creators of the smash sensation Fortnite, pledged to invest $100 million into competitions.
As a result, dozens of entrepreneurs recognize that the young industry has plenty of room for fresh startups. So far, there are esports accelerator programs, venture capitalists, investors, lawyers and data analysts. Esports broadcasters, event planners and trainers are becoming more common. An Esports Bar Association launched this spring. There are even esport-focused nutrition companies. And in February, Nicola Piggott, Anna Rozwandowicz and Kalie Moore started the first esports-focused PR consulting firm, the Story Mob.
“As esports grow, so will the business and the economy around it,” said Rozwandowicz. “A few years ago, it was hard to imagine that there would be esports lawyers or esports psychologists – but those are now real professions where you can have a legit career. I believe that the growing popularity of esports will enable the growth of vertical businesses, mostly related to travel and lifestyle.”
Each co-founder previously worked in esports communications: Kalie at BITKRAFT Esports Ventures; Piggott for League of Legends developer Riot Games; and Rozwandowicz at ESL. Now they hope to use their knowledge of the scene to help esports brands, teams and players navigate the high level publicity they often get thrusted into.
The Story Mob’s services are similar to other traditional entertainment communications firms, but use its specialization to help clients figure out how companies or players can best connect to gaming's devoted, ever-changing fan base.
“They’re young, global, educated and have a disposable income they are not shy to spend on something they love and really enjoy,” Rozwandowicz said. “At the same time, those fans can see right through a weak PR statement, will call you out if they know you’re not being honest and when your delivery is poor.”
From crisis management to strategic planning and media training, Story Mob helps clients appeal directly to the “most valuable fans in the world.” The consultancy’s clients include Riot Games, major teams like Team Liquid and Fnatic, and growing startups such as Dojo Madness, a company that makes apps to coach and assist players.
Story Mob also participated in – and now represents – BITKRAFT Esports Ventures, an esports-only accelerator program that helps early-stage investors and companies thrive in the blossoming industry. Located in both Los Angeles and Berlin, the company has already helped an esports creative agency, an esports social media app and roughly 18 other clients.
Making sure esports are up to the standards of other entertainment industries is essential to its success, and companies like Story Mob have encouraged everyone from hedge fund investors to Silicon Valley CEOs to join the games. Most recently, NBA owners have flocked to esports, franchising multiple teams for the Overwatch League and any other game they can get their hands on. Notable names include NBA Commissioner Adam Silver, who encouraged the league to get involved and promote NBA 2K competitions. Mark Cuban, Dallas Mavericks owner and Shark Tank favorite, even told an esports panel that League of Legends was “more of a sport than golf.”
Two other team owners – Golden State Warrior’s Peter Gruber and Washington Wizard’s Ted Leonsis – helped form Axiomatic Gaming. Along with multi-millionaires Jeff Vinik and Bruce Karsh, Gruber and Leonsis act as co-executive chairmen to the “broad-based” company that has holdings in diverse esports and video game companies. Their top execs have nearly $5 billion in combined wealth, and its board consists of 15 heavy-hitting investors, including AOL Co-Founder Steve Case and NBA superstar Magic Johnson.
Axiomatic made an industry-changing decision in 2016 when it acquired controlling interest in Team Liquid, one of the first major esports teams that has become one of the biggest and most varied organizations on the scene.
With Axiomatic’s support, and the increased financial interest in esports, Liquid Gaming went from a grassroots website in 2000 to a multiregional company with some of the biggest tournaments and most dominant players on its team. Since buying Liquid, Axiomatic has helped it “achieve a multifold appreciation of the team’s value,” Axiomatic’s Director of Communications Lizzie Leader said. To keep up with Liquid’s success, Axiomatic has assisted with media, fan acquisition, audience engagement and player quality of life.
“As more money enters the stakes, and the stakes rise, these are the things – that at least at a team level – many esports managements are beginning to contemplate for the first time,” Leader said. “I think that is where the guidance of the Axiomatic ownership really has been invaluable.”
Many other sports or entertainment businesses also want to get in on those stakes. Mark Cuban and Ethereum Co-founder Anthony Diiorio invested in Unikrn, seeking to develop the first major gambling site for gaming tournaments. Aram, a European event production company, well-known for producing esports events such as IEM, also produces traditional events for The Voice and Miss Universe.
Axiomatic also joined the Disney Accelerator in 2017, which is Disney’s own program that helps entertainment tech companies grow, while also creating important partnerships with the company. The accelerator has recognized the importance of gaming in the market, and not only took Axiomatic its program, but also Fortnite creators Epic Games.
Everyone from Drake to your neighbor might be playing Fortnite, but the average revenue per fan in esports is $3.60. In the NFL, its $60. If fans are engaged, actively online and have disposable income, why are they spending so little? This question led Johannes Waldstein to start his own esports-related business, FanAI. Waldstein, the CEO, believes the discrepancy comes from how little companies actually know about their consumers. Do esports fans engage with certain brands? What websites do they use? Where do they eat and what do they drink?
FanAI uses artificial intelligence to measure data from fans, often through social media usage or first-party information, and uses that information to see how companies can best advertise to viewers. The goal, according to the website, is to help companies understand their consumers to “sell more tickets by discovering new fans and [optimizing] ad spend.”
“Our platform turns data into action, and channels the results into a sponsor’s bottom line,” Waldstein said.
In other entertainment businesses, such as sports or film, handfuls of different agencies offer this information. But in esports, FanAI is one of the first to offer detailed analysis and marketing data. Waldstein came from the marketing world where he helped retailers and entertainment businesses use data to evaluate how effective their advertising campaigns were. When he looked at esports, he realized that much of this data was unavailable, despite a fanbase that largely interacted online and via social media.
Most recently, FanAI helped Dr. Pepper score a sponsorship with Team SoloMid (TSM). Dr. Pepper depended on FanAI “to analyze which team’s fans matched best with Dr. Pepper’s existing audience,” said the Esports Observer. Waldstein and his team combined social media data and information from different esport teams to find out which one had the most overlapping followers of Dr. Pepper and and the organization.
“Data and insight helps this by explaining who the esports audience is and how valuable it is to brands and sponsors who currently don’t know who the esports audience is or how they spend in their category,” Waldstein said.
For Waldstein, the Dr. Pepper sponsorship is just one example of how data can validate esports to investors and advertisers, and should encourage more partnerships outside the world of tech and gaming.
“We have data on millions of fans and as the taste of those fans change and grow, we help our clients work with their sponsors and partners to create great experiences for their fans,” Waldstein said.
Thanks to major deals inside and outside the world of gaming, FanAI has raised $4.5 million overall, participated in BITKRAFT, and picked up partnerships with teams from Overwatch, League of Legend’s biggest North American tournament, and ELEAGUE. They plan to raise Series A financing later this year.
Part of why esports is so attractive to investors, Waldstein said, is its unlimited potential for business ideas like FanAI. In the near future, he expects companies focused on player performance, virtual reality, brand data and more engaging online overlays of tournaments. Another big area for growth is in managing or assisting professional streamers or online video content makers.
For Axiomatic, esports longevity lies not only in its financial possibilities, but the genuine love from fans. By combining the thrill of competition, the energy from a stadium full of fans, and the many storylines it can create, it’s no surprise consumers love it.
“People get really hung up on the semantics of if esports are a sport,” Axiomatic’s Leader said. “But really, it’s just a form of entertainment.”
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