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ESports Experts Weigh In On Growing Opportunities

The advent of Twitch, Azubu and livestreaming over the past three years has helped fuel the explosive growth of eSports, or electronic sports. With companies like Valve (Dota 2), Riot Games (League of Legends), S2 Games (Heroes of Newerth) and Blizzard Entertainment (StarCraft 2) offering millions of dollars in prizes with annual tournaments and seasons and full-on leagues like Major League Gaming, Electronic Sports League and others turning pro gamers into cyber athletes; there’s a new way to connect with the elusive 18 to 34 year old male gaming demographic.

Back in the Day

“back then people could get away with almost anything. Companies could abuse professional players.”

“When I first got involved in esports it was very niche,” said Steven Arhancet, director of eSports at Curse. “Back in those days we were talking thousands of people around the world and we’re joining proxy servers to watch games and download the demos. No one could really get involved. There were lots of small sites, but there was no real viewing for your average user. You had to be quite specialized and involved in the scene. Nowadays thanks to the development of flash streaming anyone can be involved with the click of a button.”

Sam Braithwaite, director of eSports at S2 Games, remembers when eSports prize pools were $15,000 versus the $8 million Riot gave out this year. In the early days there were also issues with actual payments being made on occasion, which left some pros high and dry without social media to reach out to.

“Esports the past couple of years has grown in a professional way where every single person is accountable, including the players and the tournament organizers,” said Braithwaite. “With Twitter, Twitch and Facebook, professional gamers have a huge followings that would have jumped down those companies throats. But back then people could get away with almost anything. Companies could abuse professional players. They could get away with exploiting them and their fame to draw attention, and then stiff them. In terms of the biggest growth I’ve seen with eSports it’s definitely accountability and professionalism.”

Livestreaming Comes of Age

ESports is growing worldwide. The rise of livestreaming has opened up new opportunities for brands to connect with pro gamers during practice sessions. And then there are the huge global events that Major League Gaming, Electronic Sports League, World Cyber Games, League of Legends Championship Series and other big events that happen annually.

Riot Games sold out Staples Center League of Legends Finals as a pivotal moment for eSports. In addition to the 15,000 people who packed the stadium, over 32 million people watched the competition online.

“These events cost a lot of money to put on and can’t happen every week, but what’s really encouraging news is that teams in between events are getting huge numbers as well,” said Paul Kent, COO for Gfinity. “I’m aware of a team in France that’s less than six months old who are getting 9 million uniques per month. Two or three years ago that was unheard of. That’s the most encouraging thing, that people are now associating themselves with the teams and the players rather than just the big events.”

David Miller, vice president of sales and marketing at Azubu, said that the numbers that livestreaming companies like Twitch, Azubu and YouTube are getting today are already on par with traditional broadcast programming or sports content. With eSports growing at a fast clip, what the eSports industry needs to help legitimize it is a watchdog group to offer real concrete numbers like what Nielsen does for TV.

“There are a lot of different numbers that get bounded about like overall views, video on demand views and peek concurrent views,” said Miller. “There’s a lot of work that we all have to do to educate the sector. Video advertising is set to grow to $6 billion by 2017 with annual growth rate of 13 percent year on year between now and then and that’s great news for everyone in eSports.”

Desperately Seeking Gamers

One of the keys is making the “suits” understand the potential of this audience. With companies like Coca Cola, Papa John’s Pizza, American Express and Mazda already involved in eSports, the tide is turning in favor of more money flowing into events. Miller said the fact that Twitch viewers are spending twice the amount of time glued to eSports programming as Hulu’s 55 minute average is also important for advertisers and sponsors interested in connecting with the elusive “gamer” audience.

Simon Bennett, head of eSports, EU, at Wargaming, said that eSports players are integral to the health of the game industry, especially with free-to-play games.

“It was just fans making events and enjoying themselves with other groups of dedicated individuals,” said Bennett. “For free-to-play games like World of Tanks and League of Legends, a fundamental part of the marketing strategy is to utilize eSports. It’s been proven that eSports players are worth a lot more than a normal player because they have such an influence over the community in general that they directly influence the purchase of gold items, skins, characters and other micro-transactions.”

ESports is not a fad

The Internet has eliminated the need for television, and allowed for the live consumption of events with huge engagement. Even practice sessions keeps fans glued to their screens, opening up new ways to connect with a core gamer demographic.

Azubu and Hitbox have a new streaming platform, but what’s the point?

The “Twitch-rival” clings to a cliff as its investors are likely bankrupt—again.

After a brief period of silence, Azubu is making headlines again.

The troubled streaming company launched another Twitch competitor earlier this week. Called Smashcast, the site is a combined enterprise between the company and another one-time Twitch competitor, Hitbox, which Azubu acquired earlier this year.

It’s another big splash for Azubu, but don’t expect Smashcast to suddenly become a Twitch killer.

Azubu acquired Hitbox for a sum reportedly worth “tens of millions of dollars,” according to an LA Times report. The new Smashcast platform is set on becoming a “strong #2 competitor to Twitch and the largest independent esports broadcaster outside Asia,” according to the press release.

Smashcast’s weaponry to attack Twitch’s dominance looks slim, however. Mike McGarvey, Azubu’s third CEO in six years and now boss at Smashcast, hasn’t much to show off. There’s a new viewer engagement feature—oddly called the “Hype-o-Meter”—and a “state-of-the-art 4K-ready content production studio” in Vienna, Austria. Dota 2 azubu riot

Hitbox founder Martin Klimscha, now Smashcast’s European Managing Director, emphasized that Smashcast wants to make sure that “we are differentiated from our competitors.” The capability to run 4K-streams was already introduced by Hitbox in June 2015, however. What exactly has changed technology-wise since then remains unclear.

Both companies appear to be grasping at straws with this latest project. Hitbox, founded in 2013, struggled to attract attention in the livestreaming market, despite its technological advantage and a $4 million funding round in November 2015. Azubu’s history in esports and its attempt to dethrone Twitch is even more troubling.

In January, LA Times tech reporter Paresh Dave wrote an extensive piece about Azubu’s unusual funding. Backed by Sapinda Group’s Lars Windhorst, a German entrepreneur and investor that had to declare bankruptcy two times in the past, Azubu was run on “tiny, monthly installments of debt that could be paid back with company stock.” Sapinda poured upwards of $40 million into Azubu over the course of four years, $1 million or so per month, often days after bills came due, sources told LA Times.

To this day, the company is behind on bills, sources who wish to remain anonymous told Dot Esports.

Its $59 million debt-financed cash injection from Sapinda Group and Swiss bank Sallfort Privatbank, announced Dec. 2015, was “money [that] never materialized,” one source said. “Everyone thought we had it. And we were told to spend like we had it.”

The latest change to Azubu’s management level indicates otherwise, however. After his arrival in May 2016, McGarvey cut monthly expenses in half by reducing the headcount from 75 to 50 people and terminating contracts with streamers.

Nonetheless, Azubu—now Smashcast—appears to be an esports zombie. The company is being drip-fed by its investor, who, according to a Wall Street Journal report, is in deep financial trouble again. Windhorst had to settle several multi-million dollar disputes in the last couple of months and is reportedly selling a $25-million upmarket apartment near London’s Hyde Park.

How and why is Azubu still alive, then? According to one source close to the situation, it’s to demonstrate Windhorst’s rich investment portfolio.

“Lars ran out of money and is keeping [Smashcast] alive in his portfolio to show diversification into tech for any potential Sapinda investors,” the source said.

If that’s the case, Smashcast and its latest attempt to grab attention as a Twitch rival, is nothing more than window dressing.

After all, with YouTube, Facebook, and Twitter are all emerging as potential contenders on the livestreaming market, Smashcast’s chances to establish itself as the runner-up after Twitch seem negligible.

Azubu and Hitbox boast a combined monthly active user peak of 20 million in 2016. Twitch averages about 10 million active users—every day.