Years ago, when the idea of esports being considered as a potential Olympic sport was being floated around, especially at a time when rumours of the time-honoured traditions of wrestling and boxing being pulled were also abound, was sacrilege to most non-gamers.

‘It’s not even a sport,’ was a common retort whenever the subject was brought up, but now it all just seems so trivial.

But that has mostly subsided. People accept that there is nothing countercultural about the internet any longer. It now exists only to be packaged and commodified like your breakfast cereal.

Speaking of, Pringles, a subsidiary of the Kellog Company (K.NYSE) announced it would be sponsoring the League of Legends European Championship this year.

Offset, contemporary rap-icon and member of Migos, announced he was a proud new co-owner of FaZe Clan, a North American gaming team earlier this week.

And last year, Activision Blizzard (AVTI.Q) announced it had signed Johanna Faries, a former NFL executive, to oversee Call of Duty esports as its new head of product.

This isn’t your dad’s LAN party we’re talking about here: The International, an enormous PC gaming tournament, is now underway and offers a prize pool in excess of $33M.

And, as a former gamer, I don’t find this inherently harmful. Now that ‘Woke CapitalismTM‘ has gotten involved, there is a certain push towards inclusivity and diversity and all the other ‘itys’ which the space has been sorely needing.

Yesterday, it was announced that Echo Fox, a prominent esports team competing in the League of Legends championship series (LCS), was selling its tournament slot and releasing a number of its players among allegations of racism.

“Following the departure of Echo Fox from the LCS, we’ve had to take the unfortunate step of terminating our contracts with our current League of Legends players,” Echo Fox’s statement reads. “We will…be working to support them as they enter the next phase of their careers, whether that be with another esports organization or whatever path they may choose. We are deeply grateful for our players for what they have given to Echo Fox during our time in League of Legends.”

Racism and misogyny are issues within the gaming community, as they are nearly everywhere else, and a push to clear out bad actors within the space is a welcome change.

PewDiePie, a prominent YouTuber and video gamer, posted a video of himself using a racial slur (yes, that one) in 2017 video. Twitch streamers, moE and Destiny, were also given lengthy bans for using homophobic language during 2018 play sessions.

These are good starts. If esports is going to come out of the shadows and become a respectable industry, it’ll have to be more like the NFL–with its strict policies for anti-social behaviour.

Gaming still has a lot of cultural pushback: ESPN and ABC pulled out from broadcasting the Apex Legends EXP invitational tournament after claims that violent video games cause mass shootings.

Conversely, if it wishes to languish on the margins like the, and let’s call a spade a spade here, state-fair sideshow that is MMA, then it has every right to do so.

But we want to make money on esports. That’s why we follow financial news, and that’s why you keep coming back to this website. Frankly, if we are to do so, esports will have to keep cleaning up bad actors. That’s the only way sizable investment can be justified in this era, after all.

We want in on the ground floor, no question about that. Activision is currently trading at $48.50 and Q2 revenues were $1.4B, down from $1.64B during the same period last year. That isn’t the ground floor.

So where is it?

Chris Parry, equity.guru head-honcho, wrote a sister piece to this one today listing the currently existing avenues for investment which aren’t Activision Blizzard and Tencent Holdings:

The biggest e-sports plays on the public markets don’t exist yet. Sure, some of them will run (and are running right now), but those are chancers, first movers, the gamblers who hope they’ll get a quick market cap boost while they figure out exactly how to make money out of their business.

Like the early days of weed, sometime you’ve gotta fake it til you make it.

  • TheScore (SCR.C) has pivoted for the 19th time and settled on running a sports betting app as their future, which may have upside but isn’t exactly an e-sports play.
  • Victory Square (VS.C) has some e-sports interest, but is mostly chasing as it was in the blockchain days, making some small investments in mobile games as it waits to see what pokes its head out as a bigger opportunity.
  • ePlay (EPY.C) finally got its Big Shots mobile game on Android, but the year folks have been waiting for that to happen has taken them off most radars.
  • YDX Innovations (formerly yDreams) (YDX.V) has a fat book of interactive products that it hasn’t monetized to client companies because it’s too in love with building new things that it won’t monetize to client companies.
  • Axion Ventures (AXV.C) has a massive market cap it’s midway through falling off, while creating games for Asian partners that North Americans have yet to get excited by.
  • Millennial Gaming (GAME.C) is all-in on a global racing game contest with a top prize of a $1 million racing game rig that will take gamers to a real-life 40-minute race, with Formula 1 drivers judging winners. That might be a real fun event, but I’m not sure where the money comes back.
  • Versus Systems (VS.C) has a contest platform that allows game creators to offer prizes in-game via participating brand partners. That’s not bad, because it doesn’t rely on building something new and getting people to it – it runs on top of the infrastructure already being used. And the market cap is only leaning high, not excruciatingly freaking high, as it is elsewhere.

Until then, we have a number of inaccessible private companies like Twitch to contend with. Going back to Parry’s piece, the future is content rather than simply esports. Whoever can produce the next big piece of content will be king.

The money, right now, is in individual streamers on the daily grind of solo queues on Fortnite. When that changes, we’ll let you know.

 

 

–Ethan Reyes

Written By:

Ethan Reyes

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e-Sports
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Activision-blizzard
AVTI.Q
Dota 2
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League of Legends
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The International
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