Gaming and E-sports, two giants that will not stop growing in 2021
By Daniel Ruiz-Giménez Coderch, CMO at Kaikoo
How have video games gone from being an arcade game entertainment to an industry that generates billions of dollars a year? What are “esports” and how do they manage to fill entire stadiums around the world?. What role can start-ups play in the sector?. These are some of the key questions we need to be able to answer if we want to better understand where one keystone of the always changing entertainment industry is moving.
The gaming industry is growing so much and so fast that according to Forbes it will have surpassed $300 billion profit and more than 2.5 billion gamers around the world by 2025. Indeed, we are talking about 35% of the world’s population. The ability of the industry to transform consumption habits and patterns cannot be underestimated and yet many non-endemic companies are still not aware of the importance of video games in the lives of many consumers.
Think of it this way: just as Apple is not a simple hardware and software company, or the Super Bowl is not just a game of American football, Fortnite or League of Legends are not just video games either. They are mass phenomena that mark trends, carry baggage and draw a popular subculture. They are able to manufacture powerful collaborations with third parties, promote products and more importantly, attract, connect with and retain different segments of the global audience. Especially the youngest ones, elusive to traditional media.
It should not surprise us that Netflix platform CEO Reed Hastings said he considers Fortnite a direct competitor, even above HBO. Nor that Amazon, Windows, Google or Facebook are all strongly positioned in the video game sector. And even more importantly, let’s not forget Tecent Holdings, the Chinese technology giant, with participation in more than twenty companies in the video games industry.
Thus, while the players continued doing their own thing, the industry has been expanding around them. With the development of the sector, its competitive scene, esports, gradually flourished. Its growth has been meteoric to the point that in 2020, at the height of the global pandemic, esports will generate revenue of $1.1bn and an audience of almost 500 million in 2020, according to the analytical company Newzoo.
As an example of recent success, the League of Legends Worlds 2020 took place in Shanghai, China, in September and October of this year. A tournament in which the 22 best teams in the world competed to see who would be worthy of lifting the Summoners Cup. The tournament, organized by the game’s developer, Riot Games, reached a reached a global audience of 100 million viewers, making it the largest esport competition on the planet.
Contrary to what anyone might think, being a professional video game player is as serious a job as a traditional sports elite athlete. Players train to compete at the highest level and do so in a specifically enabled environment so that they can develop as professionals: in a gaming house where coaches, analysts, nutritionists and psychologists prepare them to perform to the limit of their possibilities. And it’s a profession they can make a lot of money from. In 2020 the average salary of players competing in the League of Legends Championship Series of North America surpassed the $400,000 mark. Maybe these numbers catch more than one reader by surprise. And yet, it is possible to draw parallels with what happens in the elite of the music industry or in traditional sports such as football. Beyond the moralistic debate, the question is usually settled with the “if they generate it…”.
The development of esports in Spain
The development of the esports ecosystem has been led in large part by the impetus given by some countries such as the United States, Japan, China or Korea. However, before resorting to the “Iberian defeatist thinking”, Spain is one of the world leaders not only in the video games industry, but also in the competitive scene, and it ranks in the top 10 in revenue from video games (1,479 million in 2019) and 12 in esports audience ranking (5.5 million).
“Esports are the entertainment not of the future, but of the present and the current pandemic has shown this,” according to Rafael Espinosa de los Monteros, CEO of Fluzo Studios. “The esports market is already a great opportunity for established companies as well as for technological start-ups. Growing public, based on strong technology and still lacking business models that make it more stable”.
It is increasingly common to see new business initiatives specifically dedicated to providing a service or product within the framework of esports. The professionalization and technification of the sector has brought with it the development of start-ups such as Streamloots, a company of Valencian origin that provides players with monetization options in exchange for carrying out actions with the community. The company closed in 2019 up to three rounds of financing for a total value of 1.5M euros.
Another example is MAD Lions, a Spanish esports club founded in 2017 that in practice has functioned as a startup and that. Since its foundation MAD Lions received more than 2M euros in funding until in May 2019 it was acquired by OverActive Media, the global organization of esports i entertainment. In 2020 the valuation of MAD Lions is already over 108.3 million euros.
Demium and its commitment to the sector
Aware of the possibilities of this industry and always at the side of those entrepreneurs who seek to create value, Demium decided to bet on esports. It did so by introducing various business initiatives related to the sector into its incubation program for startups. That’s how Kaikoo got to Demium Malaga.
As we have seen, millions of people enjoy the competitive scene of video games every year. Hundreds of thousands debate on social media about which team will win in that competition or what was the best play of the game yesterday. And yet it all revolves around one main actor, the professional player. Becoming a professional player is not an easy race, it’s reserved for just a few. Those who want to become legends in a game must watch dozens of competitive games to learn strategies, train thousands of hours and carve a name in the scene until someone finally gives them a chance. And yet, despite how many try their hardest, there are many players who will never reach their goals, not because they do not have it, but because they won’t be able to squeeze out all the potential they have.
How is that possible? Because not everyone has the necessary tools to go Pro. The problem is that not all players have a coach behind them who can teach them the way. And not all of them know how to improve ny themselves efficiently. Moreover, there is no training software tool to guide and help players train to improve and reach the top.
This is how we thought about Kaikoo. A data-based platform that collects quality data from the best players at a competitive level and offers tools to improve the training efficiency of any player out there.
Kaikoo is also an essential software for professional coaches through which they can assign timescaled tasks to the different members of their team, analyze their rivals and access thousands of statistics about the game.
Thanks to the support of Demium Málaga through its mentorships, advice and first level facilities we are turning the development of Kaikoo into a reality. In the coming weeks we will continue to share more details about how we plan to revolutionize the competitive scene with Kaikoo, our platform towards esports stardom.
