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WeWork eSports Softbank Takeover

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WeWork Is Getting Into Esports Amid SoftBank Takeover

SoftBank’s takeover doesn’t appear to be hindering the We Company’s continuous strive for world domination. A new report by Bloomberg found that We Work's parent company is getting into the business of esports, applying to trademark “Play by We” as late as last week. Having filed the application with Britain’s Intellectual Property Office, it’s unclear whether the service will be launching stateside anytime soon.

The move is questionable, considering WeWork has been forced to shut down its other “We” subsidiaries, including co-founder Rebekah Neumann’s “conscious entrepreneurial” private school, WeGrow.

According to the trademark application, the esports venture is aimed at “providing online competitive, professional video games,” presumably while utilizing the thousands of WeWork co-working spaces currently trying to stay in operation. While competitive online gaming has grown exponentially to become a major lucrative industry in recent years, WeWork’s timing for getting in on the trend is curious, to say the least.

Play by We is said to have spurred two (now expired) job listings by the struggling We Co., which is currently moving to lay off thousands of its existing workforce as SoftBank attempts to salvage it. One of the listed roles on LinkedIn was for “content and experience manager for Play by We.”

The news comes just days after WeWork employees met with SoftBank’s chief operating officer Marcelo Claure at an all-hands meeting, where he addressed the inevitable firings in order to trim WeWork’s expensive fat.

“It’s not going to be be easy, it’s going to be bumpy roads,” said Claure during the meeting. “This was a race that we were winning and then suddenly, it’s like we’ve lost momentum, and it’s hard to regain that momentum. We gotta regain the trust of those corporate customers who are going to think twice: ‘Do you really have the financial means?’ We gotta make sure that our employees understand that we are never going to go through the existential crisis we just got through.”

Meanwhile, as a majority stakeholder, SoftBank continues to float the tech unicorn billions in funding in order to keep cash flowing in. The Japanese conglomerate’s Vision Fund has spent approximately $18.5 billion backing the We Company in the past two years.

Warner Bros eSports Series

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Warner Bros. developing two scripted esports shows

Studio Warner Bros. Television is developing two scripted television series based on esports, ordered by CBS and NBC. CBS has put out a pilot order for a comedy seemingly based on Echo Fox founder Rick Fox‘s life, NBC is developing esports comedy ‘The Squad’ with Big Bang Theory actor Johnny Galecki.

The Big Bang Theory-inspired series will be executive produced under Alcide Bava, Galecki’s production company. Anthony Del Broccolo, co-executive producer and writer of Big Bang Theory, will join Galecki along with Holly Brown and Cory Wood of Alcide Bava.

Rick Fox’s autobiographical series “follows a recently retired pro basketball star who attempts to reconnect with his estranged son by buying an eSports franchise,” according to Variety. Fox will executive produce the series and will be joined by Dan Kopelman and Kapital Entertainment’s Aaron Kaplan and Dana Honor.

These series will be the first of their kind as esports-dedicated scripted comedies on major television networks, though it’s not the first time esports has featured on the small screen. HBO’s Ballers recently featured a LCS-inspired arc where Fox himself made a cameo appearance.

Release dates for the pilot episodes are yet to be announced.

Esports Insider says: It’s good to see that Fox is looking to bring even more attention to esports with his own show, especially after recent events. We believe ‘The Squad’ will have a harder time in achieving acceptance from the esports audience but the proof is in the pudding. We’ll have to wait and see if the pilots are picked up by the networks before getting ahead of ourselves.

WeWork Is Reportedly Expanding Into Esports

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WeWork Is Reportedly Expanding Into Esports With New ‘Play By We’ Venture

Topline: WeWork, which last week accepted a $9.5 billion bailout offer from Japanese conglomerate SoftBank Group, recently trademarked a new professional gaming arm called Play By We, according to an application published by the U.K.’s Intellectual Property Office last week that was first reported on by Bloomberg.

  • WeWork parent We Co. is in the early stages of quietly building a new electronic-gaming business, Bloomberg first reported on Tuesday.
  • Bloomberg also found that WeWork has already hired several new employees for the venture and additionally found two now-expired job listings for Play By We—one for a content and experience manager and another for a delivery project manager based in New York.
  • Play By We will reportedly be an entertainment services brand focused on professional gaming and esports, as well as hosting various tournaments and contests. The application implies that given its huge real estate footprint, WeWork could rent out office space and provide facilities for video-gaming competitions and events, according to Bloomberg.
  • The besieged startup has already branched into other businesses, like education with WeGrow, fitness with Rise By We and co-living with WeLive, although it has been divesting assets from some of them.
  • WeWork declined Forbes’ request for comment.

Big number : Competitive gaming, or esports, is rapidly gaining popularity and growing into a lucrative industry. The global esports market will be worth over $1 billion in 2019—and almost $2 billion by 2022, according to Newzoo, the leading analytics provider for the industry.

Key background : WeWork has imploded in recent months, following a disastrous IPO attempt and the ouster of CEO and founder Adam Neumann. The startup, which has been bleeding money, was forced to choose between two bailout packages in order to save its business and avoid running out of money. WeWork eventually accepted a $9.5 billion bid from its biggest shareholder, SoftBank Group—a severe discount from WeWork’s $47 billion valuation at the start of the year. Most recently, following the takeover, WeWork was reportedly planning to slash 4,000 jobs—or 30% of its workforce—in an effort to further cut costs.

Space eSports Venue

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Space announces launch of esports and gaming venue

Swedish entertainment and media company Space recently announced the launch of its first contemporary digital culture centre in Stockholm’s central square, Sergels Torg. The venue is due to open in 2021 and claims to be Europe’s largest permanent esports and gaming venue, and will also feature content creation suites for guests.

Space was founded by Gustav Käll, Lars Blomberg, and Per Sundin. The organisation’s main investor is Pop House Sweden, where Conni Jonsson and ABBA star Björn Ulvaeus are majority owners. Labelled ‘Space Stockholm’, the site will offer patrons a place to play their favourite games, experience music in the live arena, meet friends, attend events, and content creation.

The core components of the venue include a gaming centre with over 500 PCs and consoles, a multi-purpose arena for live events, content creation and music studios, restaurants, cafes, and a gym.

The venue’s live events space will look to blend gaming and music interests with live performances in the arena, pop-up gigs and studio sessions, production workshops, and audio engineering classes. Space Stockholm will also look to become an influencer content creation hub offering fully equipped studio spaces for music, audio, and video production.

Käll discussed the venture in a release: “At Space we strive to inspire and uplift communities, motivating the next generation. We aim to create a place for digital culture that connects human beings, a world where everyone can thrive in their creativity and have a stronger sense of belonging.”

Esports Insider says: This new venture holds some promise. Being bang in the centre of Stockholm puts Space in a great spot for both exposure and footfall. It seems that the company has made a point of not putting all their eggs in one basket either. It will be interesting to track the success offering studios and equipment for content creation at a venue like this.

All Star eSports League

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Esports has exploded in recent years, as big brand names continue to invest in the competitive gaming field.

All-Star eSports League is trying to capitalize on the expansion by catering to students, particularly high schoolers.

“A lot of high schools find that link between STEM [science, technology, engineering, and mathematics] interest and eSports. So that's why they're getting interest, at least in the high school scene,” 17-year-old CEO of All-Star eSports League Jordan Zietz tells YFi AM.

Zietz says that exposing kids at this age to eSports can help prepare them for the future.

“Particularly, in STEM, I think what's super interesting about the advance there is that not only are people kind of preparing for jobs, but STEM jobs are more entrepreneurial in nature,” he says.

Zietz says his company has adapted to fit the high school mold, and further differentiates itself from competitors by being the only free high school eSports league. The company also offers “several million dollars in scholarship prizing, peripheral upgrades, grants, and more for our students,” says Zietz.

With technology taking on a larger role in future jobs, Zietz says the importance of eSports is growing, and can be linked to future interest in STEM jobs.

“It's less trying to fit into a role, when you're pursuing a STEM job, and more you're trying to change the world,” he says.

“That's why I think the link between eSports and STEM is incredibly relevant because eSports teams and players are very resourceful, innovative, and they constantly have to think on their feet,” he adds.

Earlier this year, a report by gaming analytics firm Newzoo projected that global esports revenue will hit $1.1 billion this year — a 27% spike since 2018, as Reuters reported.

SKT vs Splyce eSports Event

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SKT vs. Splyce had the highest peak viewership of any esports event

Roughly 2.5 million viewers tuned in to watch the League of Legends World Championship quarterfinals series between SK Telecom T1 and Splyce earlier today, according to ESCharts.

The series toppled the previous League viewership record of the 2017 World finals match between SKT and Samsung Galaxy by about 400,000 viewers. Additionally, it became the most viewed esports event surpassing the Fortnite World Cup 2019 Finals record of 2.3 million in July.

SKT are no stranger to high viewership. This Worlds alone, SKT have already surpassed the 2 million mark twice. Once during their group stage match against Fnatic followed by Royal Never Give Up the next day. Today, the LEC representatives brought SKT to four games, a feat which many fans thought to be a pipe dream. Viewership raised as viewers eagerly watched the underdogs of Splyce attempt to reverse sweep the three-time world champions.

Immediately after Splyce vs. SKT, G2 Esports faced DAMWON Gaming in the last quarter final series this Worlds. This series reached a peak viewership of over 2.1 million and also topped the 2017 Worlds finals by about 16,000 viewers.

Next week, the viewership kings, G2 and SKT, will face each other in the semifinals. SKT alone would bring in millions of League fans, but with G2 beside them we’ll surely see another record smashing series. The series between SKT and G2 will begin Sunday Nov. 3 at 5am CT.

Booming eSports and Video Gaming

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Booming eSports and Video Gaming Already Bigger Than Music and Movie Industries Combined

FN Media Group Presents USA News Group News Commentary

The eSports and video gaming market have already outpaced their contemporaries in the film and music businesses with what is expected to be a $300 billion annual industry by 2025. So, it seems ironic that investors are slow to catch on.

That’s according to portfolio managers who think the industry has plenty of room to run. Especially since it continues to grow in the double digits. Or more simply put, market watchers believe that the growth and success of video gaming and eSports is not just another bubble.

The eSports industry is being dominated by big companies looking to develop the industry’s reach and player interaction such as Allied Esports Entertainment, NetEase and Electronic Arts Inc., alongside other companies that are aggressively building platforms and infrastructure.

Innovative new companies in the industry, like Versus Systems Inc., are adopting changes that are helping to transform the business. Versus Systems has set its mission to offer real-world product prizing for players in-game. The company operates a business-to-business software platform that game developers and publishers use to create prize-based matches to players. The Vancouver-based company is establishing a niche unlike anything in the marketplace.

Just How Big is Big?

It’s hard to get a grip on just how big the eSports and gaming market has become. As an example, the world championship finals for the online battle arena video game League of Legends attracted twice as many viewers as Super Bowl 52 in 2018. Likewise, the fan base is enormous, with the massive gamer audience for the Amazon-owned video streaming service Twitch second only to Netflix, based on minutes per user watched.

It makes sense then that the industry would be attracting all kinds of investors. The thing is, it’s really not – at least it hasn’t been so far. Portfolio managers and analysts have pointed out that investors, like most of us, are “newbs” in this space, and so we have little or none of the experience that would allow us to invest in the growth companies.

“To me, it’s one of the most asymmetrically priced risk profiles in a lot of equities right now. Just because there’s not a lot of attention being paid to it,” states Nick Mersch, a manager of a global investment portfolio heavy into the eSports and gaming space.

“There are so many future monetization possibilities that it just has nowhere to go but up.”, he says.

The pros have pointed to three main areas where investors can position themselves in this dynamic and fluid market; through publishers, through teams and via the technology.

“If you can gauge community interest around the titles and look at the release schedule, you can tie in some of their earnings,” Mersch said.

For most, that would mean backing giants like Chinese juggernaut Tencent. They are the owner of such monster franchises as League of Legends and Fortnite, as well as the mass Chinese messaging, social media and payment app WeChat. Of course, Tencent is already capitalized at over $400 billion, so you are hardly looking at early stage.

On the other hand, investors could seek eSports team play. These are like traditional sports franchises, complete with sponsorship deals, advertising and player contracts, as well as media agreements. Getting a piece of these players is much more complex for the average investor thanks to the significant private ownership that dominates the group.

Technology a Simple Play in Gaming

The technology that drives eSports and gaming may be one of the easy entry points for early investors. Companies like Versus Systems are using new approaches, such as the company’s WINFINITE platform to kick up revenue. Game developers and publishers can now use the Unity engine to offer players in-game contests, as well as sweepstakes. Versus System stands to generate returns on signing licensing deals as the platform continues to elicit strong demand with game publishers and developers.

One of the early adopters is HP, Inc., who just announced they will integrate WINFINITE technology into their products. Versus is powering OMEN Rewards, a real-world prizing platform built into OMEN Command Center and available for download by any Win10 PC via the Windows Store.

Versus Systems has also inked a strategic partnership with Ludare Games Group. In its agreement, Ludare plans to integrate WINFINITE platform on its upcoming games, including popular augmented reality games.

Versus expects to expose WINFINITE to as many developers and publishers as possible. That’s why they entered into a marketing agreement with Los Angeles based Radley Studios. The high-profile marketing partner is responsible for introducing the WINFINITE technology to major entertainment, media and advertising adopters.

Finding Niches May Also Mean Thinking Outside the Box

Portfolio manager Mersch also suggests that investors may have a larger range of options as an influx of gaming properties from the United States follow in the footsteps of U.S. cannabis producers. That group had successfully used reverse takeovers to list on Canada’s junior exchanges with the strategy to up-list to a larger board.

There are also a number of existing companies, like Versus Systems, that originate in Canada and then co-list over the counter in the U.S. This is a great place to seek out competitive new brands and technology companies that have captured the interest of the larger gaming industry.

If eSports and eGaming reach the kind of massive revenue numbers the current data suggests, some of these newcomers may become the future giants of the industry that come to define the future of gaming, game play and monetization models. Companies already seeking to take the active lead in this sector include:

Allied Esports Entertainment, the creator of esports venues and live events for both video games and poker, has gone public in a transaction with Black Ridge Acquisition Corp. Allied Esports International and WPT Enterprises, will become Allied Esports Entertainment. Allied Esports Entertainment is known for creating the Esports Arena at the Luxor Hotel with MGM Resorts International in Las Vegas, and for its World Poker Tour events.

NetEase plans to invest over $ 725 million in building an e-sports park in Shanghai, according to an announcement at the 2019 China Digital Entertainment Congress (CDEC) on Saturday, effectively doubling down on efforts to develop a complete e-sports ecosystem to rival Tencent.

Electronic Arts Inc.’s game portfolio strength has been its major growth driver in recent times. The company has a strong slate of game releases lined up for the fall game rush including the recently unveiled Need for Speed Heat. The latest title in the popular racing franchise is scheduled to be available from November on PC, PlayStation 4 and Xbox One.

Five Below Video Gaming Space

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A new era of retailing? Here's how Five Below is trying to fend off Amazon

It's sounds pretty unusual, though not outright outlandish. Value-oriented "fun" retailer Five Below is introducing esports game-play at a handful of stores beginning next year. If all goes well, more of the company's 850-plus locations will be adding 3,000-square-feet localhost spaces connected to their stores.

Details of the initiative are still scant, like how Five Below's gaming infrastructure partner, Nerd Street Gamers, will staff, manage, and promote these spaces – particularly if the plan is to schedule regularly occurring esports events. It's also unclear where the densely stocked stores will find space for an esports venue without accessing added retail space.

Still, the company deserves kudos for thinking outside the box. Other retailers would be wise to embrace the same idea and offer their own spin on entertainment, even if just to underscore the point that e-commerce giant Amazon.com can't do the same via the internet.

Welcome to the new era of retailing

"The partnership with (esports gaming network) Nerd Street Gamers is a unique opportunity to engage with an important and growing community of gamers in many of our locations across the country," explained Five Below CEO Joel Anderson when the announcement was made earlier this month. He added, "Gaming is a trend our younger customers are actively enjoying, and working with Nerd Street Gamers will help us to provide an exciting gaming experience that appeals to our core customers and beyond."

Five Below sells a variety of smartly curated goods ranging from toys to electronics to books to home furnishings, and more. Most items cost less than $5, making it easy for its customers to "let go & have fun," in turn making it easier for the retailer to deliver its intended "WOW" that rivals like Dollar Tree and Dollar General somehow can't.

Now its customers will have another reason to step foot in a store where they might make a purchase once they do.

It's not a completely unheard-of idea. GameStopis the sponsor of Complexity Gaming's 11,000-square-foot esports facility. Simon Property Group invested $5 million in Allied Esports in the middle of this year as a precursor to the establishment of competitive video gaming venues at some of its properties. And, if you look closely, several malls that are slowly being vacated by retailers are being repopulated by entertainment offerings like virtual reality experiences.

Other initiatives have been more direct and store-specific. The U.K.'s top-tier department store chain Selfridges operates an indoor skate park at one of its locales. The recently revived Toys R Us brand, which still hasn't reopened any stores of its own, is teaming up with Candytopia to create branded, interactive, candy-themed exhibits. The brand's present owners promise its new stores will be more immersive than its predecessors.

The underlying theme is clear – shoppers are increasingly expecting to be entertained.

Easier said than done

While the broad premise makes sense, creating an engaging experience in a retail space is much easier said than done.

"I think the majority of the stores are really still not that great, honestly," said Foot Locker VP of Global Retail Design Kambiz Hemati, speaking earlier this year about the future of retail in general. He went on to tell Retail Dive, "They've fallen behind and they've become complacent. I think a lot of it has to do because they just don't know what to do."

He's right. Many retailers are on the defensive, yet hesitant to steer away from the formula that worked so well through the 1990s.

The advent of the internet (and mobile internet, in particular) is largely responsible for that shift. Hemati goes on to say, "Before, people would come to the store and that was the first time they experienced whatever products and services that you sold. And now, I think one of the very big differences is, even before they come to the store, they already have done their research."

That leaves retailers in a position where they need to build a relationship with the consumers stepping foot in their stores. It hasn't been stores' strong suit, however, and the older the retailer, seemingly the weaker its ability to do so.

The irony: The younger the consumer, the more open they are to such relationships. A CrowdTwist survey from 2017 found that 57% of the generation Z crowd still prefer to shop in a store as opposed to online. Even more, most of those surveyed are members of at least one retail loyalty program.

A strategy worth mimicking

Five Below isn't breaking brand-new ground here, but it's one of the better efforts thus far to meld entertainment and retail aimed at the same basic crowd. Although in this case, it's as much about combating Family Dollar and Dollar Tree as it is about competing with Amazon and its budding online video gaming platform. For other store chains, the idea could be the last means available of standing up to the e-commerce giant.

If that's going to be the case, however, sooner is better than later. While Amazon's 500 Whole Foods grocery stores and planned conventional grocery store chain pose a threat to the grocery segment, it's hands-on bookstores that promote its own electronics and Amazon Go convenience stores are still nascent efforts. There's time for non-grocer retailers to build a moat against an Amazon incursion, but not a ton of it.

Bottom line? A whole slew of store chains have been on the defensive, but only because they weren't thinking creatively enough about how to use their selling space. Five Below's initiative in rethinking what draws foot traffic into a store may be a lesson some struggling retailers embrace as a means to sidestep the Amazon juggernaut or even a bigger brick-and-mortar rival.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Amazon, Five Below, and GameStop. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Five Below wasn't one of them! That's right – they think these 10 stocks are even better buys.

eSports How To Go Pro

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How to be a pro gamer: A glimpse down the esports talent pipeline

High school team. College program. Development league. Pro draft.

It’s a system familiar to sports fans. But if you want to make your living in esports, the path isn’t nearly so defined. Aspiring professional gamers are left to hustle and self-promote their way onto any platform they can find — and hope the right person happens to be looking. Success in the industry can hinge as much on gamers’ social media following as their skills.

As esports grow more established, some see benefits for gamers and the industry in creating a more structured talent pipeline. A few have sprung up, and Blaze Elmore, a 17-year-old Thousand Oaks native, is one of the first gamers through.

Elmore has played games since he was little, and became obsessed with the mobile game “Clash Royale” when it was released in 2016. He was soon haranguing his mother to drive him to tournaments in Los Angeles. “At first I told him, ‘No, absolutely not. I’ve got work and you’ve got school,’” his mother, Tammy Elmore, said. “But he was just so persistent. I finally gave in.”

Elmore won his seventh live competition in April 2018 at the TCL Chinese Theatre in Hollywood and took home a flat-screen TV and $200. The tournament, hosted by Super League Gaming — a Santa Monica start-up that organizes community-focused contests — kicked off Elmore’s rise to the esports big leagues.

The teen spent the next year winning match after match at Super League’s club league tournaments. A scout for Dignitas — an international esports organization owned by the Philadelphia 76ers basketball team — took notice and, at a Super League event this March, recruited him. Founded in 2014, Super League Gaming got its start hosting amateur multiplayer events for the hit game “Minecraft” in local movie theaters. It has spread to hundreds of U.S. cities. The company now organizes 16 city-based club teams for “Minecraft,” “Clash Royale” and esports titan “League of Legends.”

“It’s something akin to the European football club model,” said Super League Chief Executive Ann Hand. “In some ways we are about creating that recreational club space underneath the pros.”

Much of the attention paid to the burgeoning esports industry focuses on the highest professional levels. Last year’s “League of Legends” world tournament garnered more viewers than the Super Bowl. The prize pool at this year’s global championship for “Dota 2,” another massively popular esports title, doled out a prize pool of more than $34 million. But there’s an untapped market lower in the rungs of the competitive gaming scene, Hand says.

This market is where Super League is planting its flag. Most of the company’s revenue comes from brand partnerships and event sponsorships with firms such as Red Bull. It intends to increase its emphasis on selling ads on online videos it produces.

In August, Super League announced the creation of a proprietary digital content network that includes original content on Twitch — a gaming video platform acquired by Amazon for nearly $1 billion in 2014 — as well as YouTube, Facebook, Instagram and Twitter. It offers an esports variety show, gaming news and commentary, and livestreams of Super League’s club team matches.

This year, Super League became the first esports business to go public, raising $25 million in its February IPO. The company posted a net loss of more than $21 million in the first six months of this year, including a cash loss of about $7 million, on revenue of about $470,000.

Hand says that the environments created by her company’s amateur events help players build skills such as teamwork and the ability to perform under pressure — vital skills for the pro ranks.

Elmore’s matches with Super League’s Los Angeles Shockwaves club team let him hone and showcase his abilities as both a gamer and a crowd-pleasing, tournament-ready esports personality. This drew the attention of the Dignitas scout.

“I’d read about Blaze before, that he was one of the winningest of all time,” said Heather Garozzo, vice president of marketing at Dignitas. “Seeing him in person, from a marketing perspective he was just fantastic — good on camera, humble, well-spoken, and his mom was there cheering for him.”

Dignitas offered Elmore a spot on its professional “Clash Royale” team. Garozzo, herself a former esports pro, said that the local competitions where she discovered Elmore broke with her team’s typical recruitment process. “Usually we’re listening to what the conversation is like on Twitter or Reddit,” said Garozzo, “or looking to what our players themselves are saying.”

The typical recruitment approach described by Garozzo shows how the esports talent pipeline has historically taken shape. Teams rely on a combination of online rankings, small third-party tournaments, social media chatter and word of mouth to identify promising new recruits. Elmore supplemented his time at Super League tournaments with hours spent boosting his profile online. “It was definitely hard,” he said. “The Super League events were really big, but I was also tweeting and streaming [on Twitch]. That got me a lot of supporters.”

A few esports titles, most notably Blizzard Entertainment’s “Overwatch” and Riot Games’ “League of Legends,” have built their own talent pipelines. Blizzard has a Path to Pro program designed to funnel aspiring competitive “Overwatch” players into professional teams.

The track begins with an open division, which allows anyone who has achieved a sufficient in-game level to compete for the chance to take part in the annual Overwatch Contenders tournament series. Although winners are not guaranteed pro team appointments, talent scouts from many of the world’s top “Overwatch” teams attend to identify and recruit promising players.

Riot Games employs a similarly regimented system to ensure a supply of fresh talent for its esports powerhouse, “League of Legends.” Its North American League Championship Series is based on a franchise model, with 10 teams. Any franchised team is also required to run an “Academy” team, which serves as a training ground and farm team for up-and-coming players.

Meanwhile, high school and college esports scenes are being built and supported by a plethora of tournament organizers, consultants and school faculty. Santa Monica start-up PlayVS, for example, partnered with the National Federation of State High School Assns. — the regulatory body for high school sports — last year to develop esports teams at American high schools. At the college level, the National Assn. of Collegiate Esports — a nonprofit group that regulates and promotes the college scenes for some esports titles — is one of several organizations that consult with school staff on best practices for esports programs and intercollegiate tournaments.

The focus of most of these groups is recreational, but some players also use the scholastic leagues as an opportunity to hone their skills and gain attention in hopes of going pro. The line between amateur and pro is clear for Elmore.

In August, he moved into Dignitas’ Playa Vista gaming house, living and training with his teammates and manager. Now that his final year of high school has started, Elmore divides his time between school, family and practice for his new career. Andrew Barton, Dignitas’ general manager, said that Elmore has quickly adjusted. “He’s balancing his time with schoolwork and as a professional very well,” Barton said. “It’s very impressive.”

Barton attributes some of Elmore’s success to the things he learned going through the pipeline. “Super League definitely prepared him very well,” he said.

Investing In eSports

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Investing in eSports: 5 Things Investors Should Know

Happy birthday to VanEck Vectors Video Gaming and eSports ETF (ESPO)! Over the past year, we have watched the continued rise of video gaming and esports, and learned more about what’s shaping the industry and what’s to come. Here are five key points that we believe are crucial to helping investors understand this growing industry.

1. Video gaming revenues are bigger than what many investors may expect.

Did you know that the video gaming industry as a whole is expected to generate over $150 billion in global revenues in 2019?According to Bloomberg, that is more than what the robotics industry ($89 billion) and the cybersecurity industry ($99 billion) generated in 2018. Not only are industry revenues strong, they have also been growing consistently over the past few years. Since 2015, video game revenues have seen an annualized growth rate of 13%.2 Newzoo estimates that by 2022, video game revenues should hit $196 billion.

Global Video Game Revenues

2. Video game publishers are diversifying their revenue streams.

Video game publishers, with the help of technological innovation, are continuing to push the envelope to find new ways to generate revenues. Twenty years ago, the thought of playing video games against friends around the world through a handheld device was fantasy. Today, mobile gaming represents 36% of global video gaming revenues.

The rise of the “game as service” model is also helping to boost the bottom line of many video game companies. Instead of paying a one-time, upfront cost, many of the most popular games are free to play, with smaller in-game fees for ongoing services like subscriptions and skins for players to personalize their game. These serve to extend the purchasing cycle of a game.

2019 Global Games Market (Projected Revenues)

 

We expect to see further diversification into new areas of potential revenue, including cloud gaming and virtual reality, as publishers and developers continue to explore what is technologically possible. Video games are deeply rooted in scientific, technological progress and research. The first video game created solely for entertainment was invented at a nuclear research facility in New York as part of an open house exhibition for visiting scientists, and that tradition of innovation continues today.

3. Esports and video game streaming are here to stay.

Esports have become a bona fide cultural phenomenon, fueled by public and private investments as well as the proliferation of social media communities centered on specific games and online streaming personalities.

The number of people watching esports and online game streaming around the world is staggering. In 2019, roughly 454 million people are expected to tune in to watch others play video games competitively.4  Nielsen Media Research has developed a new metric for esports viewership numbers—which has been a contested data point within the investment and esports communities—and this new rating is designed to provide an apples-to-apples framework for comparing esports and traditional television events. This is a crucial development for the young industry, helping it gain further legitimacy and earn the trust of potential and current advertising partners.

Competitive video gaming is only a piece of the puzzle. Online social media communities built around gamers and streamers are connecting millions of people around the world. These are active, highly engaged communities where gaming enthusiasts are not only playing games, but also becoming content creators themselves. Online streaming personalities like Ninja and Dr. Disrespect, while not technically esports competitors, have built huge online followings and can reportedly command seven-figure paydays to play new video games (like Apex Legends) on their streams.

4. Private investments drive the media story, but public investments may offer more accessible investment opportunities.

With all the attention on video gaming and esports right now, potential investors may be trying to figure out how to get involved. The opportunity set can be broken down into two broad categories: public and private.

Examples of Private Investments Examples of Public investments
Video Game Publishers (Valve) Video Game Publishers (EA, Activision)
Esports teams (Cloud9, Team Liquid) Console Makers (Nintendo, Microsoft)
Competitions/Community (XY Gaming) Streaming/Community (Amazon, HUYA

The media narrative tends to be driven by private investments, such as high profile coverage of teams securing multi-million dollar sponsorship deals. These investments are not accessible to the majority of people who are reading the articles and are generally less liquid, less diversified and require more capital to participate. Publicly traded stocks are usually more liquid, with a much lower dollar threshold to participate. Additionally, publicly traded companies are historically more diversified because the individual companies tend to have multiple business lines supporting a much larger total market cap.

5. For public investors, publishers and hardware companies present pure-play opportunity.

At VanEck, we are focusing on providing investors access to the publicly-traded companies that are participating in the video gaming and esports industry. We believe video game publishers and related hardware makers are set to benefit the most going forward, in part because video game publishers have been growing their revenues and diversifying successfully, as noted above.

Another factor is that video game publishers have positioned themselves to take over a majority of esports revenues. Esports leagues were originally third-party organizations, unaffiliated with the publishers of the games played in competition. Recently, publishers have launched their own leagues. By developing and owning esports leagues, publishers can maximize their sources of revenues, which may include media rights (TV and internet distributions), franchise fees and league sponsorships.

Hardware makers (such as semiconductor companies) are also set to capitalize on growth in the industry. Advances in semiconductor technology fuel innovation in the video game industry, and certain semiconductor companies generate a majority of their revenues by creating hardware that drives the video gaming experience. When announcing its cloud gaming platform Google Stadia, Google explicitly stated that Advanced Micro Devices (AMD) will be creating custom GPUs that would define the end-user experience.

Investing in Video Gaming and Esports

Predicting which games will become hits is difficult. A diversified basket of stocks may allow investors to express a view on the sector without having to know which specific stock will outperform over the future. The index methodology that guides VanEck Vectors® Video Gaming and eSports ETF (ESPO) provides exposure to companies in the video gaming and esports industries.

Currently, the MVIS® Global Video Gaming and eSports Index is heavily tilted towards video game publishers (including the publicly traded companies that operate the largest esports leagues) and semiconductor companies. As the esports industry matures, smaller esports names, such as streamers like HUYA and Modern Times Group, may grow to become a meaningful part of the Index. In the interim, the index captures the esports phenomenon as part of the broader evolution of video gaming, creating awareness of the industry’s potential to reshape how people spend their time and entertainment dollars.