Skillz is taking mobile esports to a new milestone, announcing today that its revenue run-rate has doubled in the past eight months to more than $100 million.
The San Francisco startup provides a platform to turn any mobile game on iOS and Android into a game you can play with friends or strangers for cash, prizes, or points. And it enables esports tournaments for games that integrate the Skillz platform.
It took skills more than 36 months to generate its first $50 million annual run rate, and it took just eight to bring in the additional $50 million. That shows how fast the platform is growing. In the first quarter, the company had 3 million new users and higher player engagement, said Andrew Paradise, CEO of Skillz, in an interview with GamesBeat. (Paradise is speaking on an esports panel today at GamesBeat Summit 2017).
“The technology and concept of esports on mobile devices is shifting in the market,” said Paradise. “Mobile gaming keeps growing at crazy rates. It is now half of the total gaming market, but it was less than a fifth in 2012 when we started.”
Skillz reported revenue of $54 million in 2016, up 170 percent from $20 million in 2015. The esports economy will grow 41.3 percent to $696 million in 2017, according to market researcher Newzoo. The total market is expected to nearly triple to $1.5 billion by 2020.
“Every six months or so, the projections are growing,” Paradise said. “The speed with which esports is growing in mind-blowing.”
In 2014, Skillz awarded 8 percent of all esports prizes, with that figure increasing to over 21 percent in 2015. After initially projecting that the company would account for over 30 percent in 2016, Skillz exceeded expectations, finishing the year at over 46 percent of all esports prizes.
Skillz wants to bring esports to the mass market by expanding the category beyond an audience that is currently 85 percent male, according to SuperData Research. Since June 2016, the Skillz user base has grown by more than 32 percent to 11.9 million. While acquiring almost 3 million additional players, Skillz also increased its number of female players from 49 percent of the company’s user base in June 2016 to 53 percent today. This marks the first time that the majority of the Skillz user base has been female.
The company has also seen its average player spend an increasing number of minutes competing in mobile esports tournaments on the Skillz platform. In June 2016, Skillz said its average player competed for over 50 minutes per day. By October 2016, that average increased to 58 minutes a day. As of March, engagement increased again to over 61 minutes a day, a gain of over 5 percent, which pushes Skillz past the coveted one-hour daily engagement mark. By comparison, people spend 40 minutes a day on YouTube, 35 minutes a day on Facebook and 25 minutes a day on Snapchat.
“You see more casual games adding esports,” said Paradise. “People compete in higher levels, and they are spectated. It’s like the birth of television or the NFL launching in 1919. You see some of the same kind of changes in content.”
One of the customers is Tether Studios, a two-person studio that had trouble getting organic growth for its Solitaire Cube game. The company had incorporated ads, but it had disappointing results of average revenue per daily active user (ARPDAU) at 2 cents. Then Tether integrated the Skillz platform into the game so that players could compete head-to-head in competitions for prizes. Each player has five minutes to solve a solitaire puzzles, and the winner gets bragging rights on leaderboards.
The result was a big boost in retention. The percentage of players who came back after the first day was 64 percent. It was 50 percent at day seven, and 33 percent after 30 days. The number of daily active users increased, and, with hundreds of cash tournaments running daily, the ARPDAU rose to 45 cents, or 20 times better.
“With the Skillz platform, we were easily able to add a competitive spin to Solitaire Cube that, in turn, increased our monetization and provided an ad-free experience for our users,” said Tim and Ether O’Neil of Tether Studios.
Another customer is Game Masons, which made the game Mini Golf Stars. Game Masons had a hard time getting players to come back. It partnered with Skillz to add tournaments and leaderboards. Not only was Game Masons able to increase ARPDAU, retention, and new installations, it said day seven retention is 27 percent, and ARPDAU is 40 cents, up 1,400 percent from before Skillz.
Before it added Skillz, the Mini Golf Stars! Retro Golf Game ranked No. 136 among all U.S. sports apps. After the Skillz integration, the game reached rank No. 12 at its highest.
Skillz provides the esports platform for more than 3,000 game studios. The company was founded in 2012, and it has 68 employees. Its investors include the owners of the New England Patriots, Milwaukee Bucks and New York Mets.
“The Skillz platform has increased the depth of Mini Golf Stars, and the leaderboards and player matching have been instrumental for my players,” said Matt Fossati, CEO of Game Masons.