My Thoughts on Esports

My Thoughts on Esports –

I have been following the esports and gaming space professionally pretty much since I started working as a VC at Rubicon Venture Capital and have finally decided to put my thoughts on the industry out there. Rubicon made its first investment into the space in 2014 and my own interest dates back to when I first started playing video games. Ever since I was 10 or 11 years old, I always enjoyed watching my older cousins and friends play video games, so the explosion of streaming on Twitch made perfect sense to me, especially given the colorful characters of some of the streamers.

The recent developments in esports have been particularity intriguing. The rapid professionalization of esports has captivated many in the gaming, sports, marketing and advertising industries about how to make sense of the recent developments and how to engage with this rapidly growing industry and its affluent and engaged fanbase.

While some of my fellow VCs and others did a great job explaining and outlining the industry, I wanted to do something a bit different. Below, is a list of 20 high-level bullet points that spell out my views on the industry and the various opportunities that exist.

Agree? Disagree? Questions? Comments? Coffee? Lunch? Ping me. Feel free to email me at mat at rubicon dot vc


  1. Esports is just the tip of an opportunity that is emerging in this field, which enables monetization of a much bigger market: those who casually watch streamers or events. If you don’t play a particular game regularly, you might still watch a competitive tournament. I don’t play baseball, but still enjoy watching the game or going to the ballpark. Today’s monetization methods have grown organically but without involvement from the rights owners (the publishers). Imagine if the tangential opportunities—skins, gambling, interactivity, better broadcasts, sponsorships—were handled as professionally for viewers as how products are made for players?
  2. Collegiate gaming will continue to grow in prevalence and further drive professionalization of esports as a sport helping to groom the next generation of fans and deepening societal approval.
  3. Esports infrastructure (broadcaster tools, analytics, league infrastructure etc) is still undeveloped – risk of ruining the experience and alienating fans if try to do too much before creating a stable infrastructure.
  4. Applying traditional linear models and advertising to digitally native phenomenon will fail.
  5. Esports and casual spectating are about much more than just eyeball views, it’s the engagement that is blowing everything out of the water.
  6. Traditional advertising methods are not optimal. Engagement is through the roof but average revenue per fan is still minuscule.
  7. Gaming is inherently global in nature, yet most marketers want regional campaigns. Very few global brands that can benefit from this reach with the current technology.
  8. Advertising dollars are still coming out of experimental budgets, lack of scale and tech tools prevents more capital from being deployed.
  9. Viewers are more loyal to a specific player or players than to teams. Fans will follow select players who, in turn, are building their own brands.
  10. Tying a team to specific location won’t create regional affinity as in traditional sports. Fans care about characters, not stadiums.
  11. Investing in esports teams largely driven by ego or as a hedge by professional teams.
  12. More tournaments will be streamed by publishers, Facebook and YouTube continuing to draw people away from Twitch.
  13. Game publishers will continue to increase their power in the ecosystem.
  14. Publishers will seek to capture more of the value chain in gaming and esports.
  15. Investments into traditional ad-supported platforms will continue, but will prove very difficult to monetize profitably as tech savvy viewers skirt ads.
  16. Vertical integration will continue to proliferate.
  17. Interactivity and microtransactions will be key to monetizing the industry.
  18. Big opportunities in developing infrastructure and publisher tools.
  19. Esports betting is huge, legal betting will slowly continue to develop in Europe but will have to keep a keen eye on underage gambling.
  20. The flow of money into esports is just beginning to accelerate but need to be very careful where to invest time and money.

Agree? Disagree? Questions? Comments? Coffee? Lunch? Ping me.

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