Canaccord Genuity Capital Markets produced two reports pertaining to the esports investment landscape in 2019, The Esports Investment Landscape 2019 and The State of Play in Esports. Rather than size-up the marketplace, the reports focused on the opportunity for investment and the sectors and topics that are not as widely publicised.
The Esports Investment Landscape 2019 report surmises that the current esports investment landscape is dominated by three broad groups: corporate & institutional, traditional sports franchises, and entertainment and athletes. It also acknowledges that while data around valuations remains elusive due to the private nature of the space, reported esports investment appears only to be growing. What it misses is that it states most of the investment is in teams. Whilst this may be true from a value standpoint (which is indicative of the move to franchise models across some of the biggest leagues), it isn’t from the volume of deals being done.
Furthermore, the report shares charts from research and consulting firm Activate which are misleading for those who aren’t familiar with the esports industry. These charts compare esports viewership against traditional US sports. The problem with them is that they compare a whole industry’s viewership (i.e. esports) with individual sports. That would be like comparing NFL viewership to the whole of the sports industry. A fairer comparison would be to either compare esports viewership to sports viewership as a whole or far more useful, individual esports title (e.g. League of Legends, Overwatch etc) viewership against individual sports viewership. Mixing the two is a recipe for inflated esports expectations and can lead to poor investment decision making.
However there are some other useful charts aggregated from third parties and the report makes an interesting observation, stating that they “believe that the steady growth in prize pools is an important leading indicator for the esports sector because the deep-pocketed publishers are highly motivated to increase esports engagement. Holding all other factors constant, we believe larger prize pools are an indirect sign of bigger and more engaged events and, more broadly, audience growth.”
The Esports Investment Landscape 2019 report addresses the following topics:
- Sector summary and update
- Investment in the sector in 2018
- Comparison to traditional sports
- Refresher on the traditional revenue streams
- Esports leagues and teams
- Leagues and franchising
- Esports teams: deep dive
- Framing our thoughts around valuation
- Media, promotion, and entertainment
- Prize pool growth serves as a leading indicator for the sector
- Esports betting market
- An overview
- Esports gambling 101
- Appendix 1: Featured esports companies
- Appendix 2: Industry primer
- Appendix 3: Public company valuation
The State of Play in Esports report estimates the size and outlook for various segments of the esports market and alerts investors to key operators on the landscape. Canaccord Genuity Capital Markets “expect the next several years to be a dynamic, developmental time, with the industry learning a great deal around important issues such as league structures, player contracts, audience engagement, and promotion.” Overall they believe there to be a lot of proof points to the growth and success of the esports industry as a whole.
The State of Play in Esports report addresses the following topics:
- Executive summary
- The growing esports opportunity
- Esports 101: What is esports?
- Viewership is large, growing, and extending into more games
- Leading streaming platforms dominate viewership
- Media Rights
- Esports industry: Key questions
- Five key questions for the next twelve months
- Five key questions for the next five years
- Esports forecast: Our proprietary model
- Four revenue opportunities
- Sponsorship + advertising
- Media rights
- Events + merchandise
- Prize pools
- Esports teams and leagues
- Thoughts on the future: Looking out five years
- League Structure: localized versus digital
- League Format: relegation versus franchise
- Player representation: self-representing versus third party agents
- Recent capital markets activity and private company valuations
- Esports betting market
- Esports viewership data
- Appendix 1: Private esports companies
Click here to download The Esports Investment Landscape 2019 report and click here to download The State of Play in Esports report.
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