Innovating During COVID-19: Esports Spotlight

Following EisnerAmper’s inaugural blog in the “Innovating During COVID-19” series focused on retail, this second installation in the three-part series will discuss esports.

COVID-19 has accelerated some preeminent trends the esports industry, predominantly driven by a global shift to virtual engagement. EisnerAmper sat down with a trio of experts who discussed how the pandemic thus far has accelerated innovation in the industry, including fostering deeper audience engagement; esports serving as a tool for cognitive learning/therapy and a driver of social change; more esports companies and products launching; and finally esports being a more prominent part of university curriculums.

Due to the evolution of esports, it is no surprise that there has been increased investor interest. However, this does not come without challenges and esports companies must continue to find creative ways to keep the audience engaged.

Experts included:

• Steve Garrow, Managing Partner of financial advisory firm Rushmore Associates and Founder of industry conference Esports Tech Invest;
• Wayne Kimmel, Managing Partner of SeventySix Capital, a sports tech venture capital firm; and
• Dan Bravato, President at SeventySix Capital Advisory, SeventySix Capital’s sports consulting group.

ESPORTS INNOVATION

Sports innovation using technology as an enabler may have started with “Money Ball” (advanced analytics on ballplayer trends), improvement in sports multi-player video games, and athlete training technology, but that was only the beginning of the esports phenomenon. In the first few months of the COVID-19 pandemic, following the global shift to virtual activities, the esports industry has become more engaged with its audience, namely professional players using Twitch to interact with fans.

“Gaming and esports had a leg up on how content was being consumed compared to normal sports,” Bravato said. “The way they are providing content and how fans are engaging through Twitch, YouTube and other channels is the way of the future; for example Twitch partnering with European soccer teams like Real Madrid.”

Garrow added: “The overarching theme we have seen since COVID-19, whether esports or gaming, from large to small, is their experience is more inclusive, more interactive, more connected, more social and relevant due to convergence between video gaming,  technology and science. We have also noticed faster convergence with traditional sports.  Dan mentioned Twitch.   We have just started a Twitch Chat channel for Vin Baker, coach of the Milwaukee Bucks.  He is not a gamer and will mainly be talking about the NBA and interviewing NBA current and former players.”

Garrow specified that gaming applications have helped consumers with cognitive learning, brain injuries and hand-eye coordination. He further elaborated that human resources departments have implemented esports for job training. In addition, esports have been used since the pandemic as a method of therapy and to foster social change and inclusiveness.

ESPORTS COMPANY AND PRODUCT LAUNCHES

COVID-19 did not slow down esports company and product launches. Kimmel said that SeventySix Capital sees over 150 sports tech startups a month which includes esports, sport tech and sports betting companies.

“The world of sports has never been more ripe for innovation -- and never been more open to new investment,” he said. “With esports and sports betting, thousands of entrepreneurs are creating companies to find strategic partners.”

During COVID-19, Nerd Street Gamers, a SeventySix Capital esports portfolio company that powers competitive opportunities for all gamers through its national network of esports training centers (Localhost), tournaments, event support, and content, has produced a Madden NFL 20 tournament for ESPN and the FaZe Clan VALORANT Invitational.

In addition, one of SeventySix Capital's newest portfolio companies (in whom it invested during the COVID-19 pandemic), Maestro, is setting a new standard in streaming that allows broadcasters to build more meaningful relationships with their viewers. Maestro’s interactive video platform allows esports streamers and traditional broadcasters to own, engage and monetize audiences. Maestro customers include Epic Games’ Fortnite, Activision Blizzard’s Overwatch League, FIFA, Microsoft, Adobe, WarnerMedia and Coachella.

The esports industry has also seen an evolution of nutrition products. Runtime, a German-based company providing nutritional products to the gaming industry and backed by BitKraft Esports Ventures, is now about to launch into the U.S. market. 

ESPORTS IN HIGHER EDUCATION

Esports is also expected to be a more prominent part of the curriculum at colleges and universities.  Many higher education institutions are working on agreements with large organizations to bring egaming onto campuses as a way to build communities.  

“Universities see gaming as the next big thing to make colleges more competitive and attract applicants,” Garrow said. “In the next few years, we will see esports academies that will teach students gaming AI, leadership, game development, etc.”

INVESTOR INTEREST

The esports industry has garnered increased investor traction, predominantly from family offices, professional athletes and celebrities who are seeking content. Some of the most prominent athletes include Michael Jordan, Shaquille O’Neal, Alex Rodriguez and more who are interested in not only the teams and leagues, but also the infrastructure that supports the esports market.

“The interest in the esports world is incredible. Athletes, media companies, etc. need to know what is happening in sports world,” Bravato said. “They want to understand how they can get involved in esports and the social responsibility and other components of it.”

CHALLENGES

As the esports industry evolves, there is no doubt it will face challenges going forward, including finding creative ways to maintain audience engagement, figuring out what areas of esports will be the most successful, finding companies that don’t rely on a specific title or sport and more. If the industry is able to continue innovating on these fronts, it will naturally garner more investor traction. 

But the industry is here to stay. Athletes are some of the most influential brands in the world, and they are taking advantage of their platform to speak out on social topics – athletics are changed in this pandemic environment and the industry has adopted quickly to provide more interactive and engaging experiences for the fans.