SAN FRANCISCO — Esports is a growing market that’s marching toward $1 billion in revenue, but some of the top investors in the space don’t think the opportunity is with funding game developers or video platforms.
When venture capitalists look at professional gaming, they see most of the chance to earn cash from gambling and fantasy esports. Onstage at our GamesBeat 2015 conference today, Academy of Interactive Arts & Sciences president Martin Rae spoke with a panel of VCs. IDG Ventures managing director Phil Sanderson, Signia Venture Partners principal Sunny Dhillon, and AID Partners’ Jason Kay all agreed that gambling has the biggest upside.
“There are a lot of different investment opportunities,” said Sanderson. “People want to play these fantasy teams because they’re already watching so much esports.”
The panel pointed to established companies in the traditional sport space like DraftKings and FanDuel as great examples of how to approach the esports real-money wagering space. And it noted that both have already entered pro-gaming fantasy competitions, which already has companies like Vulcun working to capture that market.
But at the same time, wagering on esports is obviously volatile due to the potential for governments around the world to implement new rules.
“Regulation is inevitable,” said Kay.
And for if that scares off some startups, the panel suggested that other opportunities include advertising, creator tools, and designing new kinds of competitive games.
“There’s an opportunity [in making games], although hard to execute, to work as esports vehicles,” said Kay.
But while that opportunity exists, Dhillon suggested a reason why most developers are afraid to try that.
“Manufacturing a game for esports from the start is not as easy as it sounds,” said Dhillon.”[Which is why] a lot of people are using esports as a marketing tool.”