We are, in the main, Esports skeptics. Yes, we know Esports is big. And we even can see how it could be the future of entertainment….in the long-term.
Right now, though, many of the seemingly strong investment opportunities in Esports are largely hype and unlikely to deliver venture-scale returns. They are, when you strip away all the sizzle, hit-driven businesses that we feel will have a hard time holding value and exiting.
However, we see a single seam in Esports and gaming content that has true venture scale. We call it Esports SaaS. Esports SaaS companies have these characteristics:
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Look more like a SaaS company than a game studio but has the DNA of both: iterative, recurring revenue, highly creative, but not hit-driven or organized around a bonded narrative.
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Empower users to express identity (e.g., Fortnight – a blank canvas of IP).
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Facilitate social interactions via voice chat and more.
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Appeal to power users and newbies alike by being easy to learn and hard to master; built with streaming in mind so the casual user can discover it and can become an “expert,” and therefore develop skills and economic advantages that come from this.
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Have an economic engine that grows the pie for all users.
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Rethink traditional publisher/gamer roles via innovative governance methods (e.g., crypto). and involve gamers in the narrative.
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Incorporate specific/novel infrastructure (e.g., CV).
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Include interoperability between virtual worlds and ensures an “open” metaverse (e.g., 3D assets, game engines, crypto).
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The integrity of play becomes higher stakes as virtual economies and Esports grow (e.g., anti-cheat detection, etc.).
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Include community moderation and player matchmaking to ensure user-friendliness.
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Integrate streamers, viewers, and players from the web into an immersive experience.
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Use virtual worlds as testing-grounds and data-inputs for AI applications (real and virtual).
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Include tools to easily personalize assets that will help developers keep users engaged.
As rare as companies like this may be, we are eager to seek them out. Any found have the potential to be enormous wins – they are creating the infrastructure for the future of entertainment. And that, in our opinion, is where the real value can be found in this area today.
