Tech Companies Move into Streaming Live Sports

We hear a lot about the exploding budgets that tech giants are spending on original content as consumers continue to cut the cord. In the last few years, some of the same players have started to add live sports to their platforms. We wanted to dive into some of these deals and compare them with existing TV contracts for NFL, NBA, and eSports. First, let’s establish the players.

Amazon – Amazon owns Twitch, the leading gaming streaming platform. Twitch started out as an exclusive video game streaming platform but has added traditional sports in the past few years. Twitch offers eSports, the NBA G-League, and beginning in 2018, Thursday Night Football.

Oath – Oath is a subsidiary of Verizon Communications. In June 2017, Verizon completed its acquisition of Yahoo and placed it under the Oath umbrella. Oath offers NFL games streamed on Yahoo Sports and go90. Verizon also manages the streaming of games through the NFL app.

Tencent – Tencent, the Chinese tech giant, has a contract with the NBA to stream games in China.

Twitter – Twitter was one of the first tech companies to stream games, winning the first NFL contract for Thursday Night Football in 2016.

YouTube – YouTube has also been competing in the live sports streaming space. They are taking a different approach, first by launching YouTube TV to stream traditional broadcast networks, and second by partnering with networks to simulcast games as opposed to negotiating exclusive rights.

Disney – Disney owns ESPN on the broadcast TV front, as well as BAMTech, a spinoff of the digital arm of the MLB. Disney recently announced ESPN+, a streaming service for live sports shown on its network channels.

Traditional Broadcast Television – FOX, CBS, and NBC offer a broad range of live sports to their viewers. These parties negotiate streaming contracts with the leagues. Lately, these contracts have included some rights to game streaming.

Methodology. In order to figure out what these companies were paying for, we broke out the contract price by year, looked at the number of games the contract included and found or estimated the number of viewers. This gave us a price per viewer per game for each contract. A few notes about the estimated average number of viewers:

  • For TV viewership, we used Nielsen’s average minute audience when available.
  • For streaming viewership, we used average audience numbers. Total impressions is a much higher number, but not accurate for viewership.
  • We tried to be as accurate as possible for the total number of games in a season. For the NBA, this number can change as the playoffs are a best-of-series, and not a set number of games.
  • Some TV contracts include streaming rights. It’s hard to quantify the exact effect that the additional streaming rights have had on contract negotiations.

It’s also important to realize the average viewership numbers aren’t always an accurate representation of each game, nor what the contract is worth.

  • For example, an average of 14.8M NFL fans tune in to a game. According to Nielsen, 36.5M viewers tuned in to the NFC Championship Game in 2017. The NFL TV contract doesn’t break out regular season and playoff games, and it’s easy to understand that airing playoff games is much more valuable.

First, let’s look at TV contracts for the NFL and NBA.

Looking at the above chart, it’s clear how valuable the NFL has become for broadcast television and ESPN in particular. These contracts are in the billions of dollars annually for the ability to broadcast games. Cost per viewer per game differs based on the contract. Despite including post-season games (and the Super Bowl), the contract for FOX, CBS, and NBC appears to be the most cost-effective, despite ringing in at the highest dollar amount.

When it comes to streaming rights to NFL games, Verizon, Twitter, and Amazon have all been involved.

Verizon has paid a much higher price per year, as well as per viewer per game, than Twitter or Amazon. They have, however, been able to stream all games during the season on either Yahoo Sports, go90, or NFL Mobile. An interesting change to Verizon’s latest contract is that they are opening up streaming to non-Verizon customers. Previously, you had to be a Verizon customer to have access to the stream on any of the apps. Verizon seems more interested in increasing their viewers for selling advertisement spots than it does in earning market share in the carrier space.

Amazon has taken a similar open stream approach to their Thursday Night NFL deal. Last season, Amazon offered Thursday Night Football to its Prime customers only. Beginning this fall, Amazon will stream the games to not only its Prime customers but to anyone on Twitch as well. This move signals Amazon’s confidence that bringing more people to the Twitch site will boost Twitch’s notoriety. According to Streamlabs, Twitch’s average viewership in Q1 was 953K. This puts Twitch in the same ballpark, and by some measures, ahead, of CNN and MSNBC for daily average audience.

While the NFL remains the contract king for professional sports, the NBA has negotiated contracts with Amazon and Tencent for streaming NBA games. While the NBA, like most major professional sports leagues, offers its out streaming service for fans to watch games, they understand the importance of their content reaching different tech platforms.

In an attempt to boost international exposure, the NBA negotiated a contract with Tencent in 2015 to stream games during the season. Despite China being on the other side of the world, an average of 2M fans tune in to each NBA game. During the 2017 NBA Finals, Tencent saw an average of 12.2M unique viewers per game.

We also wanted to look at the first streaming contracts for the three franchise eSports leagues we wrote about in our franchise economics note. While there is no TV comparison, the cost per viewer per game is on par with TV contracts for traditional sports but lags behind streaming contracts for traditional sports.

Who else might attempt to add live sports to their platforms?

Facebook – Facebook recently announced an agreement with the MLB for exclusive rights to 25 games this season on its platform. Last season, they simulcast some Friday afternoon games. Facebook has big ambitions in the live sports space. Adding live sports would be a great way to increase engagement on the Facebook Watch platform.

Netflix – Reed Hastings has stated before that Netflix won’t do live tv, nor live sports. Today, Netflix is focused on continuing to strengthen its original content. With Amazon, Netflix’s biggest rival today, making a big push into live sports, it will be interesting to see if Netflix breaks away from its tradition of original and on-demand content.

Apple – Apple has made an effort to incorporate live sports streaming onto its Apple TV platform, but to this point, has not negotiated any exclusive rights to stream any games. Apple will likely focus on building out its original content offerings in the near future before it explores negotiating streaming contracts.

What does this mean? It’s clear that tech companies are willing to make large investments in original content, and we expect this to extend into professional sports. This is good news for professional sports leagues, as their product will be able to reach more people. While cord cutting continues, more and more people are able to access the internet each day. As professional sports leagues seek to expand internationally, having partners who can reach these parties will be important.

Traditional network television and cable television giants might be in trouble. Live sports are one of the most compelling reasons for cable television subscriptions. as these products are available at a lower cost and through a more easily accessible platform, cord cutting will further accelerate. This is good news for tech companies, who can increase engagement on their platforms and attempt to reach new users by adding more live streaming content.

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Fortnite Launches Ranked Play, Commits $100M to eSports

Fresh off of Fortnite’s first foray into ranked play on May 17th, Epic Games has committed $100M in prize pool money for Fortnite competitions in the 2018-2019 season. The ranked play ‘Solo Showdown’ game mode was available to players from May 17th through May 21st as a limited time mode (LTM). Players were given points in each of their first 50 matches in the game mode, earning 100 points for a win, down to 25 points for finishing in the bottom 25% of a match. Winning 50 games in a row (a near impossible task) would earn a player 5000 points.

At the conclusion of Solo Showdown, vRxthless came out on top, with 4881 points out of a possible 5000. For their performance,vRxthless earned 50,000 V-bucks, Fornite’s in-game currency worth about $500.

Despite Fortnite’s popularity and financial success, there is still not a large eSports presence for Fortnite, or the battle royale game mode itself. NewZoo, a gaming market researcher, tracks hours watched on Twitch and Youtube. Below are the hours for April 2017.

Fortnite and PUBG, the two most popular Battle Royale games, are seeing a lot of success for total hours watched. On the eSports side, however, Fortnite and PUBG are far behind multiplayer online battle arena (MOBA) games, Dota 2 and League of Legends, as well as first-person team-based shooters (FPS) game, Overwatch, and CS:GO. This makes sense, as Battle Royale games are relatively new, and there isn’t much structure in place as it relates to eSports.

Seeing the success that Fortnite has had overall, and their introduction of ranked gameplay, it’s clear that they are gearing up to further develop eSports around the game and the genre. On Monday, Epic Games announced that they will provide $100M in prize money for competitions. We think eSports popularity for Fortnite will help bring eSports more mainstream. The Battle Royale game mode will bring a unique format to eSports competitions, as multiple teams will compete in a single match, which is different than the typically head-to-head team matchups for MOBA and FPS games. Fortnite’s financial commitment reiterates their belief in the long-term outlook for eSports surrounding the Battle Royale game mode.

While other game developers are adding Battle Royale game modes to their existing franchises, we don’t think that they will generate the same authentic interest that Fortnite has. Over the past few months, Fortnite has become a cultural sensation, as demonstrated by its total viewership hours and presence on social media platforms, sports celebrations, and pop culture references. While adding Battle Royale is a positive move for existing developers, it will be hard to replicate the same level of success that Fortnite has achieved.

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Nvidia Posts April Results; Continues to Advance Frontier Tech

  • Nvidia reported April earnings after the close today. Shares of NVDA are down 3% in after-hours trading given the company missed Datacenter revenue by a fraction of a percent. High growth stories have high bars to clear, and the company failed to exceed expectations in the Datacenter segment. Keep in mind, shares of NVDA have appreciated 20% in the past month.
  • That said, the Nvidia story is intact, and remains one of the best-positioned tech names for the next decade, as its products are a foundational part of the future of technology, based on their use in data centers, autonomous vehicles, virtual and augmented reality platforms, cryptocurrency mining, gaming and eSports.

What’s New? First, we’ll start with the bad news. Nvidia’s Datacenter growth has continued to slow, growing at 71% y/y vs. 186% y/y growth a year ago. Analysts expected Nvidia’s Datacenter to reach $703M in Q1, while it only reported $701M in the segment.

In addition, Nvidia offered more clarity around the impact that cryptocurrency mining is having on its business. Nvidia’s OEM and IP business grew 148% y/y due to the addition of cryptocurrency mining specific products. Despite stronger than anticipated impact from cryptocurrency mining, Nvidia does not expect this tailwind to continue. Nvidia shared that it believes OEM and IP to be 1/3 it’s Q1 level going forward.

Our GPU prices are normalizing, allowing gamers who had been priced out of the market to get their hands on one. Cryptocurrency demand was stronger than expected but we were able to fill it with crypto-specific GPUs. – Nvidia CFO Colette Kress

Earnings and model recap. Nvidia reported Apr-18 revenues of $3.21B vs. Street at $2.89B (up 66% y/y), and EPS of $2.05 vs. Street at $1.46. Updated model here.

What’s Next? We are still believers in the Nvidia story and want to reiterate our belief in three key catalysts for Nvidia’s growth.

1. Gaming – Demand for core gaming business products remains strong. Tonight’s call highlighted the impact that the Battle Royale game mode has had on the gaming market.

Bottom line, Fortnite is a home run, PUBG is a home run… Battle Royale is incredibly social and sticky. More gamers play, and more of their friends join. It’s a positive feedback system. – Jensen Huang

Gaming demand remains strong for Nvidia. Jensen shared positive feelings that Nvidia would be able to continue to fill channel inventory of graphics cards, helping normalize the price for gamers.

2. Datacenter – Companies are adopting artificial intelligence in order to remain competitive. Nvidia’s datacenter business saw triple-digit growth for the seven consecutive quarters, and 71% in the April quarter. A big part of this growth is due to the expanding use of artificial intelligence by companies, specifically deep learning. On tonight’s call, Jensen expressed his pleasure with Nvidia’s Volta architecture, with it being the first GPU designed specifically for deep learning. Volta architecture chips shipped to cloud customers in the last quarter. While the Volta chips have been used internally for qualification, for the most part, they are beginning to open up to external cloud customers.

3. Automotive – The market for autonomous vehicles will be bigger than most people think. Nvidia’s opportunity in the automotive space is bigger than many anticipate. As stated in our Auto Outlook 2040, we expect 90% of vehicles on the road in 2040 to have level 4 or 5 automation, which would require a platform such as Nvidia’s DRIVE PX. On tonight’s call, Jensen Huang re-iterated his belief that everything that moves will be autonomous, or have autonomous capabilities. This includes cars, taxis, agriculture, and pizza delivery equipment. Jensen shared that he anticipates driverless taxis to go to market in 2019, with autonomous cars going to market in 2020 or 2021.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

eSports Franchise Economics

We’re bullish on eSports and committed to learning more about the space. The following note is an introductory piece that ‘shows our work’ as we get up to speed.

Given the recent explosion in popularity of eSports leagues, we wanted to take a look at the economics of owning of an eSports franchise. As eSports has grown in popularity, the model for team ownership has begun to change. 2018 marked the first year of competition for two new franchise leagues for Overwatch and League of Legends, both of which now operate similarly to traditional professional sports leagues.

Traditional eSports Organization

Traditionally, teams participating in eSports were self-organized. Teams would find the necessary players to participate and join leagues and tournaments by paying an entry fee. By winning or placing near the top of these tournaments, teams would be compensated from the prize pool. As eSports became more popular, more revenue opportunities presented themselves for teams. These opportunities included: sponsorships, merchandise, branded skins, and advertising opportunities on streaming platforms.

With more revenue opportunities came better ownership organization. Ownership groups began to form, owning teams in multiple games. A team owner helps set up sponsorships, creates merchandise, and helps market the players. A good example of an eSports organization is Team Liquid. Team Liquid was formed in 2000 as a Starcraft news site, before expanding to other games. It signed its first eSports team in 2012 after recruiting a group of Dota 2 players. Since then, Team Liquid has added more players and teams, and now operates unique rosters in the following games:

  • Starcraft II
  • League of Legends
  • Counter-Strike: Global Offensive
  • Dota 2
  • Heroes of the Storm
  • Super Smash Bros. Brawl
  • Street Fighter
  • FIFA
  • PlayerUnknown’s Battlegrounds
  • Quake
  • Rainbow Six: Siege

How do eSports teams make money?

The breakdown of income varies by organization, team, and game. The vast majority of revenue (roughly 70-80%) for eSports organizations comes from sponsorships and advertising. The remaining revenue is split evenly between ticket sales, merchandising, and media rights.

Sponsorships & Advertising

This category includes advertisements shown during televised and live-streamed events, as well as revenue from brands that sponsor individual teams. Companies are flooding eSports players and teams with sponsorship opportunities, and it is only going to continue to grow. In addition, players and teams can earn money from product placement and recommendations. Team jerseys are essentially billboards benefitting from rapidly growing viewership. On Amazon’s live-streaming platform, Twitch, users can scroll down to see discount codes on gaming equipment, clothing, and other products, and streamers get a cut of the sales made using their discount code.

eSports teams don’t earn advertising revenue from an individual player’s live-stream, but rather when the team is participating in an event. eSports is well-positioned as an advertising opportunity for a number of reasons. First, cord-cutters are turning to online platforms, like YouTube and Twitch, for live entertainment. Second, eSports’ younger demographics are valuable to advertisers. Finally, eSports franchising adds stability for teams, their sponsors, and advertisers (more on that below). With more users flocking to online streaming platforms, and the audience becoming more valuable to advertisers, media rights contracts are becoming more valuable, and advertisers are paying more money to eSports leagues, teams, and players. Global brands including Coca-Cola, Mercedes-Benz, and Intel have recently begun sponsoring eSports in various ways because they recognize the value and massive opportunity. This builds an attractive foundation for investment.

Ticket Sales

Traditional eSports events are held at event arenas around the world. The League of Legends World Finals has been held at Staples Center, and a mid-season League of Legends event was held at Wembley Arena. Other venues have included Commerzbank Arena in Frankfurt, San Jose SAP Center (also known as the Shark Tank), and Sang-Am World Cup Stadium in Seoul, South Korea. While the audiences vary in size, large events typically have between 10-15K in attendance, with some events attracting many, many more. Still, the lion’s share of eSports fans watch the events online.

For franchise league eSports teams, one difference when compared to traditional sports franchises is that they lack a home arena to sell tickets and merchandise. Instead, eSports events are held at neutral, league-owned locations. As a result, teams and organizers share ticket revenue. Team-owned stadiums are very much on the mind of team owners, especially with the location-based teams in the Overwatch League.

The Overwatch League currently holds all of their events at Blizzard Stadium in Burbank, CA.

Source: Blizzard Entertainment

NA LCS hosts events its own studio in Los Angeles, CA, across the street from Riot Games headquarters.

Source: Riot Games


A major revenue contributor in the merchandising category are in-game skins. A “skin” is simply different design or color scheme for a playable character or in-game item. Think about giving Mario an astronaut suit instead of his famous red hat and blue overalls. While skins are cosmetic and offer no competitive advantage, they are a major source of revenue for game developers because players enjoy the customization, and are willing to pay for it. In fact, in-game purchases (which skins contribute to) generated more than half of Activision-Blizzard’s revenue in 2017, amounting to $4B. Developers of eSports-compatible games have tapped into this digital goods market and begun to create team-specific skins for major pro teams. Fans can purchase these skins to show support for their favorite team or player. League of Legends and Overwatch are the two major games that have eSports-specific skins, but games with smaller competitive scenes like Halo 5 and Gears of War 4 have them as well. We believe the adoption from the OWL and the LCS is an indication that this is a market future eSports organizations will want to target.

  • League of Legends. Riot also creates skins for their league’s teams. When a world champion is decided at the end of each season, Riot makes a skin for the winning team. These are available for a similar price of about $5 worth of Riot Points, LoL’s in-game currency. The team receives 25% of the revenue from these skin purchases.
  • Overwatch. Blizzard essentially created “jerseys” for each Overwatch League team and made them available for fans to purchase for $5 per skin via in-game tokens. See an example of playable Overwatch heroes wearing the team “jerseys” below. The competing teams also “wear” these skins during each and every OWL match, making it the eSports equivalent of wearing your favorite team’s jersey. The revenue generated from this goes into a communal pot that is split evenly amongst the 12 teams.

Overwatch heroes wearing the Houston Outlaws skins

Similar to other revenue sources, game publishers share revenues for skins with teams and organizations that create and promote them. Fans of specific eSports teams can sport their favorite skins in-game. This is akin to wearing a Stefon Diggs jersey while pretending to catch game-winning touchdowns.

Media Rights

While the concept of watching others play video games may seem foreign to some, there are a surprising number of people that tune into eSports events. Because of this, eSports franchises have recently been able to benefit from broadcasting contracts, just as traditional sports. While some eSports events reach cable television, the vast majority of viewership happens online.

One of the most important players in the eSports market is the Amazon-owned streaming platform Twitch. Acquired for $1B in 2014, Twitch had 355 billion minutes of content viewed and over 15 million unique daily visitors on its platform in 2017 and strong growth continues. More on Twitch’s metrics below:

On Twitch, gamers are able to stream their gameplay to viewers around the world. Believe it or not, one can make a living streaming gameplay on Twitch, and a fairly comfortable one at that. The revenue sources for streaming come from three main sources: advertisements, donations, and subscriptions.

  • Advertisements. Streamers can have video ads play before their actual stream is shown (just like on YouTube), earning money passed on the number of impressions their channel gets. They also often have endorsements and advertisements on their Twitch pages from, for example, companies that make gaming equipment and computer parts. This creates a similar effect to traditional sports equipment endorsements where fans and amateurs want to use the equipment the best does, and having a well-known player use your equipment adds value and drives sales.
  • Donations. Another source of revenue is donations from viewers. The amount and frequency of donations are up to the donor, some as low as $2 but some up into the tens of thousands. Here’s a video of a streamer receiving $62,000 in donations. Spend some time watching a popular streamer and you would be baffled by how often they’re getting donations, whether directly via PayPal or by “cheering” with Bits.
  • Subscriptions. Finally, streamers earn money from viewers subscribing to their channel. A subscription lasts for a month and costs $5.00, and the streamer will usually take about half of that money per subscription. Twitch operates on a revenue sharing model with top streamers on its platform. The more popular the streamer, the higher percentage of revenue they are able to negotiate. Subscribing to a channel offers benefits like ad-free viewing and special chat privileges like emotes and additional features. Note that viewers re-subscribe every month. Some streamers have 0 subscribers and some have managed to amass over 100,000.

eSports teams and organizations are able to stream as well. The structure is exactly the same as explained above for individual streamers, the money is just given to the collective group as opposed to one person. Many times, though, a player on a particular pro team will have a stream more popular than his overall team’s. It’s an example of how important personal brands are in eSports. Teams, however, don’t make much from having a player with a large Twitch following. Sure, they have the team’s logo and name on the page/video and the streamer is clearly representing that organization with merchandise and even the name they go by online, but teams won’t see any money from one of their players’ streams. The popularity, and therefore most of the money, comes from viewers being drawn to the content the individual is producing. Media rights for tournaments, and the revenue shared with the teams from those deals, is where actual eSports teams will be able to cash in on this trend as individuals don’t stream tournaments, organizations do.

When it comes to tournaments themselves, massive audiences tune in to events online. The League of Legends World Championship amassed 60 million unique viewers. To help put that number in perspective, the 2018 Super Bowl reported just over 103 million viewers. While eSports still has a long way to catch-up, it’s not dwarfed to the extent that some may think.

Tournament Winnings

For players, competition is what eSports is all about. Players and teams compete to win tournaments and the associated prize pools. While these pools can be massive, such as the $24M+ pool for Dota 2, few players in the overall eSports community take home winnings. Positively, most winnings are distributed directly to the players. While there are some large tournament pools, the vast majority of eSports players and teams earn most of their income through the other sources we’ve talked about.

eSports Franchise Leagues 

In 2017, three different franchise leagues were put into place, with competition beginning in the 2018 season. While the franchise leagues operate with similar game rules to previous leagues and tournaments, they require teams to pay a franchise fee in order to participate. By paying a franchise fee, leagues benefit from stability of teams and players, and operate the entire league’s advertising, sponsorship, streaming, and merchandising opportunities. This format is similar to the way major professional sports leagues operate. This shift toward franchising is a huge step for the legitimacy of eSports, in both the eyes of the public and investors. Thus far in its young life eSports has been plagued by a lack of stability, making it difficult to land sponsors. Before the franchising announcement last year, teams that placed poorly in the League of Legends Championship Series were relegated – similar to the English Premier League – where the teams that finished at the bottom were sent down and had to had to grind their way back to competing against top teams. The possibility of being dropped to a lower league with far less viewership and no certainty of promotion made companies very hesitant to inject money into something that could very easily lose its relevance. With the stability of franchises in leagues with multi-year broadcasting deals, the investors and sponsors are pouring in.

Today, there are three franchise leagues:

  • League of Legends North American Championship Series – by Riot Games
  • Overwatch League – by Blizzard Entertainment
  • NBA 2K League – operated by the NBA, game developed by Electronic Arts

League of Legends North American Championship Series (NA LCS)

League of Legends, a multiplayer online battle arena (MOBA) game, was released in October 2009 by Riot Games.

While the League of Legends Championship Series has been around since 2012, they organized into a partnership with their 10-teams last fall, requiring owners to pay franchise fees. In order to participate, six existing teams paid a franchise fee of $10M, while four new teams paid $13M.

Many of the prominent eSports teams have received support from professional sports owners or athletes. Of the four new teams to NA LCS, are all wholly- or partially-owned by NBA franchises: the Cleveland Cavaliers (100 Thieves), Houston Rockets (Clutch Gaming), Golden State Warriors (Golden Guardians), and Milwaukee Bucks (OpTic Gaming). The new teams aren’t the only teams with ties to professional sports. Echo Fox was formed by ESports group, led by former NBA player Rick Fox. Team Liquid, one of the original eSports brands, was acquired in 2016 by a group led by Jeff Vinik, owner of the Tampa Bay Lightning.

NA LCS began its season on January 20th, 2018. Games are streamed on its own website, YouTube, and Twitch. The prize pool for the league is $200K.

Overwatch League

Overwatch, a team-based, first-person shooter, was released in May 2016 by Blizzard Entertainment.

Blizzard Entertainment announced the Overwatch League in 2016, and established 12 teams in cities across the world. 9 teams are based in the US, with the other 3 teams based in Seoul, Shanghai, and London. Each team paid a franchise fee of $20M to join the league. There are already rumors of further expansion and increased franchise fees due to the early popularity and success of the league (10m viewers in its first week of matches).

The Overwatch League began its season on January 10th, 2018. Matches were initially streamed on the OWL website as well as MLG’s, but in January Blizzard reached a two-year, $90m deal with Twitch to broadcast Overwatch League matches on the streaming platform. The prize pool for the league is $3.5M.

NBA 2K League

The NBA 2K league is the first eSports league to be operated by one of the four major pro sports leagues in the United States. The 2K league hosted open tryouts for hopeful participants in February, and has scheduled a draft to be held on April 4th at Madison Square Garden. 17 NBA teams will have a team in the 2K league. Players drafted to each franchise will live in the city they represent. For the first season, all games will be played at one or two central locations.

An interesting part of this league, is that viewers will not see current NBA players in the game. Instead, NBA 2K League participants will have their own created players that they will represent in the league.

The NBA 2K League begins competition in May. The NBA is currently in media rights negotiations to determine where the games will be broadcast.

What Does the Future of eSports Look Like?

We are big believers in the future of eSports and gaming. While we are excited to see where the industry goes, the concept of owning a team in a franchise-based league poses a unique challenge.

Major professional sports have all been around for 100 years or more. If you ask fans of these sports, they believe that the games will exist in some form or another 100 years from now. Specific eSports games on the other hand, eventually give way to newer options. On top of that, in eSports there is an entity that owns the game and has complete control over it, something traditional sports don’t have to deal with (no single entity “owns” the sport of basketball).

While there are some outliers that have remained in the spotlight for a long-time, there are concerns about long-term interest in games from a competition standpoint. 10 years ago, some of the most popular eSports games were Starcraft: Brood War, Halo 3, and Counter-Strike: Source. While some of these franchises are still seeing success with new releases of the games, there are new games that have dominated the scene as of late. League of Legends was released in October 2009, Overwatch was released in May 2016, and our office-favorite, Fortnite, was released early access in July 2017. There will always be new games to come along, which poses a unique challenge for eSports owners of franchise fee paying teams. The owner of the Toronto Maple Leafs doesn’t need to worry about whether fans will want to watch the team play in 50 years. There is confidence in the long-term interest of the game. For eSports, the question about long-term interest is harder to answer.

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.