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Made with 🍺 by Franco
AUGUST 7 | EDITION #63
Good morning fam! This week:
  • COVID-19, Esports and the Future of Ganming.
  • Tencent about to go crazy with Huya and DouYu.
  • Half a year of Twitter Gaming stats.
  • Nintendo's digital rise.
  • Gem of the Week: FaZe x Beats by Dre.
 
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🔥 Good Stuff

BEER TALK

COVID-19, Esports and The Future of Gaming

We got a packed beer talk today folks. I wrote a piece about COVID and gaming for Seedtable, a weekly newsletter on European tech by Gonz. Let's dive in.



Fnatic, arguably one of the most successful esports teams of the past decade, launched a report on the impact of COVID-19 on esports. 

It’s impossible to deny that the pandemic brought long lasting effects. Today, I want to focus on some of these insights to help sneaky investors with severe cases of FOMO.

Let’s put things into perspective.


COVID’s Negative Effect

Bad news always goes first – a part of esports got hit. 

  • Franchised business models like the Overwatch League and Call of Duty League were betting hard on 2020’s home/away events, venues’ tickets and merch sales, media rights and the hype around acquiring new fans. 

  • Independent tournament organizers like ESL and DreamHack cancelled all events and went completely online, which led to a drop of their operations vertical and people losing their jobs.


This means that the estimated esports revenue streams went from $1.1 billion to $1.06 billion for 2020 (still up YoY vs 2019 though) reported by Newzoo.


COVID’s Positive Effects

I know there’s nothing positive about COVID, so don’t cancel me, but reality is that gaming thrived during lockdowns. 

There’s no doubt that, eventually, the industry was going to reach the numbers we see today since the growth rate has been impressive for years, but Coronavirus worked as an enhancer to get there faster. 

Esports quickly adapted to the situation and moved everything online in a few weeks, something sports weren’t able to do. Instead, sport organizations like NASCAR, Formula 1, the UFC and the Premier League launched esports tournaments.

This is, probably, the most underrated impact of the entire pandemic.

Examples like Kun Aguero playing FIFA on Twitch and Max Verstappen driving on a virtual version of the Azerbaijan Grand Prix led to millions to create a Twitch account for the first time to watch their favorite athlete.

Besides sports athletes, musicians, artists and Hollywood in general quickly jumped into streaming platforms like Twitch and Youtube to create content due to lack of offline activations.

And traditional media didn’t stay behind. The last time they picked up on gaming was in 2019 when a 16 year old won $3M in prize money for the Fortnite World Cup, and that’s because the headline was good clickbait for a revenue-hungry industry.

Because of the pandemic, traditional media (partially) understood that there’s a world of possibilities happening behind the prize money label, quickly turning gaming into something positive, before seen as a mental problem.

These factors increased the acceptance of gaming and esports, it’s progression in all corners of culture made people talk about it like never before. Add all that to the mix and you get some juicy viewership. 
 

  • Most watched game developers (publishers) in Q1-20: Riot Games with 500M watch hours, Valve with 350M and Epic Games with 290M.

  • Streaming platforms in Q1-20: Twitch got 3.1B watch hours (67.6%), Youtube Gaming with 1.1B (20%) and Facebook Gaming 0.5B (11%).

  • Most watched esports teams from March 1st - June 30th: Fnatic 27.7M, G2 Esports 26.1M and Team Liquid 24.7M.
     

The key factor will be retention. Can Max Verstappen fans become Rekkles fans and transition into League of Legends, CS:GO, Call of Duty or Rocket League?


IP ownership as the future

Esports’ direction is still a bit uncertain since publishers own the game and the rules on how it should be played which leaves teams in a vulnerable position. 

Not long ago, esports was seen as a marketing strategy for gaming but now we know for a fact that there’s a lot more to it. If publishers properly align with teams, the future should be exciting. 

The awareness focal point is still gaming and streaming though, and if you’re interested in opening the gaming book, your first page should be on technology and intellectual property.


What excites me the most?

I was obsessed with Spiderman as a kid. I wanted to be that mother fucker so bad. Got the toys, the costume and the movies but my imagination had a limit. 

IP owners couldn’t squeeze more money out of me as a customer other than partnering with Lego so they could sell me a square-shaped version of Peter Parker.

Gaming created the possibility of not only expanding today's kids’ imagination but also monetize it every step of the way.

Publishers have been selling their games for $60 for years. Just like cocaine in the USA – 1g stayed at $100 for 25 years – that one time fee that never changed. 

Why? 

Because fixed prices gave them revenue predictability and control. But now publishers are starting to realize that games should be introduced as free to play platforms with extended opportunities for revenue channels instead of a $60 one time payment. The best example is Epic Games with Fortnite.

The most promising side of IP in gaming right now is the idea of an immersive virtual experience. A world where besides competing and playing the game, it will have an ecosystem to watch concerts and movies, travel and explore, dress with branded dope clothing and finally be able to jump like Spiderman in the movies.

Every month, gaming technology deletes obstacles we thought were unmovable, opening an almost unlimited sense of opportunity.

Small gaming studios are hungry, and they know that creating the next Fortnite is right in front of their eyes. So write that check.
 

 

 🔍 What else is there?

🎧  In August, Twitch will be featuring a new music streamer every day.

✅  Xbox Game Pass Ultimate delivering +100 games to mobile devices, will be available on September 15th. 

📺  This week was VENN's launch. I need to watch more of it before opening my mouth about it, but from what I saw so far I think it's pretty cool.

💸  Remember the Analogue Pocket from last week? Well... pre-order sold out in 8 minutes.

🥢  Ninja is playing buddies with Youtube and Twitch to see who pulls their pants down first for an exclusive tasty deal. Two weeks ago, his stream-return on Youtube peaked at 167K viewers and this week on Twitch at 100K. 

🎞  DrDisrespect had his comeback on Youtube peaking at 335K viewers, but he never showed his face. He doubled Ninja's numbers without even appearing. This level of teasing is unprecedented. The Doc's official stream is today.

🚙  Fornite had a huge update. You can drive now.

🔥  Tencent is in talks to combine China's biggest streaming platforms Huya and DouYu into a $10B juggernaut. Tencent literally owns gaming at this point.

⭐️  July was a big month for VR.


🏆  League of Legends 10th Worlds Championship will be in Shanghai. 2021 will also be in China and North America got pushed to 2022.

 

💎 Gem of the Week

New content on FaZe x Beats by Dre.
Video promo + article on Faze Temperrr.
 

 💰 VC Land & Partnerships

  • Epic Games unveils $1.78 billion funding round at $17.3B valuation.
  • Riot Games and Red Bull Gaming partner for LoL amateur tournament.
  • Crown Esports Nutrition is MAD Lion's new sponsor.
  • Reebok partners with esports analytics platform, Athlane. 
  • Blackout Blitz, creator of Big Run Studios, raises $5.25M.
  • EA gains AC Milan and Inter Milan to exclusive rights for FIFA21.
  • Bilibili secures Chinese broadcasting rights for international LoL events.
  • Dapper Labs raises $12M for customer-focused Flow blockchain.
  • T1 signs exclusive multi-year streaming deal with Twitch.
  • SK Gaming announces Krombacher as new beverage partner.
  • Resolve Esports secures funding lead by Dave Martin and Chester King.
  • Zynga is acquiring mobile game firm Rollic for $168 aprox.
  • Western Union x ESL Australia sponsor content.

📈 Stats


First half of 2020: Twitter Insights

More than a billion tweets in six months peaking with Animal Crossing and the PS5 Showcase. Check the article for full report, quick summary:
Most tweets p/country
  1. 🇯🇵
  2. 🇺🇸
  3. 🇰🇷
  4. 🇧🇷
  5. 🇹🇭
Most followed topics
  1. Gaming
  2. Esports
  3. Animal Corssing
  4. Call of Duty
  5. Playstation
Top gaming titles
  1. Animal Corssing
  2. Fate/Grand Order
  3. Final Fantasy
  4. Disney: Twisted-Wonderland
  5. Fortnite
Top esports teams
  1. FaZe Clan
  2. MIBR
  3. G2 Esports
  4. pAIN Gaming
  5. FNATIC

Nintendo's Digital Rise

In the quarter, Nintendo sales hit $3.39B, up 108.1% from the same quarter a year ago. Software sales were up 23%. During the quarter, they sold 5.68M Switch consoles, with all time sales reaching $61.4M. Nintendo keeps breaking records as if they are tiny karate boards for kids. 

Daniel Ahmad highlighted a couple interesting points:
  • "43.5% of Nintendo Switch owners have purchased Mario Kart 8 Deluxe. After less than 5 months on the market, over 36% of Nintendo Switch owners have a copy of Animal Crossing: New Horizons."
  • "Comparing Sony vs Nintendo digital software / add on content / services. Yes, Nintendo is behind, but they're where Sony were at the end of 2014 after one year of PS4. Potential for future growth in the digital space for Nintendo".

We can't ignore July's hype

 🍿 Esports Highlights

League of Legends

Week 9 LCS / Rank #1 🔺Team Liquid
Week 8 LEC / Rank #1 ➖Rogue
 
Call of Duty League

Regular Season Rank #1 ➖Atlanta FaZe

Playoffs: Aug 19-23

 
Valorant

Valorant Mandatory.gg Cup
🥇G2 Esports | 3 - 0 | Bonk / HLs
 
Overwatch League

Week 27 Pacific / Rank #1 ➖Shanghai Dragons
Week 27 Atlantic / Rank #1 ➖Philadelphia Fusion
 
NBA 2K League

Week 13 / Rank #1 ➖Raptors Uprising GC

 

😂 F^ckery of the Week 


We trained for this day.
Via Reddit
 

 🗓 Upcoming Events

Aug 6-10 / Xbox Big Gaming Weekend
Aug 8-16 / DreamHack Open Summer NA/EU
Aug 10-16 / Play NYC
Aug 11 / eNASCAR Coca-Cola Series, Daytona Round 12
Aug 13-15 / THE TICKET - NBA 2K
Aug 18-30 / ESL One Cologne NA/EU
Aug 19 / eNASCAR Heat Championship Finale
Aug 19-23 / CDL Playoffs
Aug 25-30 / ESL One Cologne Asia/Oceania
Aug 27-30 / Gamescom 2020


These are all online events.
 

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