Capitalising on the esports Phenomenon Borislav R. Borisov Chief Operating Officer of UltraPlay
2. Agenda for the session What is esports? How big are the esports and esports betting markets? What are the various esports betting models? Is esports betting all hype or a real business opportunity? How can you profit from the industry besides betting? What are the barriers to entering the market?
3. What is esports? esports or electronic sports is a form of sports where the primary aspects of the sport are facilitated by electronic systems (Wikipedia, 2016) Competitive tournaments of video games, especially among professional gamers (Dictionary.com, 2016) Video game competitions which are often played before live audiences and broadcasted over the internet (Colinsdictionary.com, 2016)
4. What is esports? More than a single discipline In 2015, 82 different computer games with combined prize pool of $ 65.1m (e-sports Earnings, 2016) Dota 2 tournaments 47.6% Top 10 games 92.3% ($ 60.1m) of total prize pool 1. Dota 2 2. League of Legends 3. Counter-Strike: GO 4. Smite 5. StarCraft II 6. Call of Duty 7. Heroes of the Storm 8. Hearthstone 9. World of Tanks 10. Heroes of Newerth UltraPlay s data feed covers 15 games all of the above as well as Vainglory, Overwatch and more
5. What is esports? Driven by two broadcasting engines live events and streaming Live events attract massive audiences. The Dota 2 International 2015 sold out Seattle s KeyArena (capacity 17,000) over 6 days. Base ticket price $99 Ticket sold out in 5 minutes Simulcast in 400 theatres 4.6mm peak online viewership Eilers and Krejcik Gaming, 2015
6. How big are the esports and esports betting markets? Game publishers market esports competitive market esports betting market
7. Game industry market size Already a huge market - $91bn (2015) Estimated AAGR (2016-2018) - 7.6% Estimated Mobile AAGR (2016-2018) - 13.8% (Newzoo, 2015)
8. The esports competitive scene
9. The esports Audience Demographic snapshot of the esports audience (Newzoo, 2015) esports enthusiasts are individuals who regularly watch and/or participate in amateur esports tournaments
10. The esports Audience Demographic snapshot of the esports audience (Newzoo, 2015)
11. The esports Audience Demographic snapshot of the esports audience (Newzoo, 2015)
12. esports Betting Market esports betting is already a big market. Currently there are three betting models co-existing in it: Cash betting Skins betting Social and fantasy league betting
13. Cash Betting $300m in cash betting turnover in 2015 (Eilers and Krejcik Gaming, 2015) Pinnacle s 7th biggest sport in terms of turnover. Bigger than established sports, such as Rugby and Golf (Newzoo, 2015) Baseline projections estimate to reach $10bn by 2018 and $24bn by 2020
14. Cash Betting: Digging deeper UltraPlay s own data for Q1 2016 Data snapshot is taken from 3 of our european facing clients It includes 310,614 bets
15. Cash Betting: Digging deeper UltraPlay offers both pre-match and in-play betting opportunities. A total of 50+ different markets are available ranging from industry standard match or map winners to exotic in-play markets for game objectives and statistics such as: Bomb Planted? (CS:GO) Ace in match? (CS:GO) First to kill Rochan (or Baron)? (Dota 2, LoL) First to X number of kills (Dota, LoL)
16. Cash Betting: Digging deeper
17. Cash Betting: Digging deeper
18. Cash Betting: Digging deeper
19. Cash Betting: Digging deeper
20. Cash Betting: Digging deeper
21. Cash Betting: Digging deeper
22. Cash Betting: Digging deeper
23. esports Skins Betting $5bn in turnover in 2015 (Eilers and Krejcik Gaming, 2016) Major Sites: Fanobet, CSGOLounge
24. Social & Fantasy League Betting
25. Social & Fantasy League Betting Turnover estimation and baseline projections (Eilers and Krejcik Gaming, 2015) 2015 $20m 2017 $500m 2020 - $2bn Sites: Alphadraft, Vulcun, Unikrn
26. Strengths and weaknesses of each betting model Fixed odds model strengths Accumulate real money earnings Provides a large variety of markets for betting Rigorous KYC which will facilitate regulation Fixed odds model weaknesses Requires completion of operator verification procedures Relatively low turnover. Trading issues
27. Strengths and weakness of each betting model Skins betting model strengths Skins can be freely awarded through playing the game They are readily available for betting (does not require any additional investment) Does not require any account verification Massive turnover Skins betting model weaknesses Skins fluctuate in value Skins cannot be directly converted into real money Concerns of under-age play. Potential regulation issues
28. Strengths and weakness of each betting model Fantasy league betting strengths Free option participation does not necessarily require money involvement Social in nature competing against other players Fantasy league betting weaknesses May not add any real money as profit Varying popularity across geographic regions Does not offer instant gratification as skins or fixed odds betting models
29. Is esports all hype or a real opportunity? What makes esports popular? Accessibility Free to Play model for most games low barrier to participation Worthy opponent a click away hundreds of thousands concurrent ranked users Follow for free Twitch, Steam, Youtube Spectator mode see the game from the eyes of the player Accessible to handicapped individuals Device accessibility Anyone can be a hero Community involvement
30. Is esports all hype or a real opportunity? In his 1938 book, Homo Ludens, Dutch cultural historian Johan Huizinga argued that games were a primary condition of the generation of human cultures. We are on the bring of a massive cultural shift in society and the ascend of the virtual reality world It is in human DNA to play. Games change through the ages, but the play never stops (Ivanov, 2012). Language is one of the fingerprints of culture esports terms are making their way into Oxford dictionary completionist, permadeath. esports has the potential to become the Soccer of the post-millennial generation. Follows similar growth patterns to soccer, basketball, tennis from the 20 th Century Internet as a communication medium is creating its own sports royalty esports
31. Is esports all hype or a real opportunity? esports tournament scene, same as our universe 2015 16,000 annual tournaments and $65m in prize money 2020 $260m in prize pools (4 times 2015 numbers) Eilers and Krejcik Gaming, 2015 Game publishers strongly support esports growth Riot (LoL) since 2011 when it began to run tournaments, annual revenue has jumped from $85.3m to $1.2b Mobile esports is the next frontier 19% share of esports in 2015 (Superdata, 2015) Build it and they will come esports-only venues are being built round the world esports attracts massive and continuously growing amounts from mainstream advertisers esports enters the mainstream media ESPN will commence televising esports tournaments in 2016 in the US
32. Is esports all hype or a real opportunity? esports audience compared to other sports fan bases (Newzoo, 2015): American football 151m Ice Hockey 94m esports enthusiasts 89m (145m in 2017) John esports-potential-bettor male and 21-35 years old; fits with the target audience of sportsbook operators Better fan conversion potential there is and will always be another ground-breaking game title 33% of esports enthusiasts are already betting (Casino, Sportsbook) esports enthusiasts income will continue to grow as they climb organisational hierarchies
33. How do you make money out of esports beyond sport betting? esports Value Chain Participants Superdata, 2015
34. Barriers to market entry from the perspective of cash betting sites
35. Barrier 1 Established Culture - $150m of capital injected into new platforms such as esports social betting and fantasy sites. (Superdata, 2015) esports enthusiasts remain more comfortable wagering virtual gaming content (skins) over cash
36. Barrier 2 John esportsbettor the double-edge sword Lack of betting awareness esports enthusiasts are not generally conversant with sports betting mechanics. May push early adopters away Extremely knowledgeable living and breathing the game. Will bet any odd, even under-priced, if they believe it is a sure win
37. Barrier 3 A need of a new type of trader existing sports traders will not do the job. A need to recruit esports enthusiasts, turn them into traders and the keep their knowledge of the game up to speed (new metas every few months)
38. Barrier 4 Unprepared Sports betting sites still struggle to understand the esports community culture. End up driving players away. Community may react negatively to attempts to be invaded by external forces.
39. Barrier 5 Game integrity Match fixing is a serious concern, as is the ability of external factors to disrupt major competitions.
40. Barrier 6 Publisher pushback Major developers have a record of resisting ties with gambling. (Eilers and Krejcik Gaming, 2015)
41. Barrier 7 Data reliable statistical data is hard to come by. Slowing down the perfection of mathematical models.
42. Barrier 8 Regulation unclear legislative position of esports betting in regulated markets across the world.
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Thank you for your time! Contact me personally at borislav.borisov@ultraplay.co If you are interested in our product sales@ultraplay.co Meet us @ Booth 919, igaming Zone