VCs see opportunities for gaming infrastructure startups and incumbents

Published May 8, 2020

As the infrastructure for developing games becomes more advanced, studios have turned to buying best-in-class technology from others instead of building everything from scratch (often with inferior quality).

This shift underpinned Unity’s rise as the most popular game engine. The current focus on games as ever-evolving social hubs that can remain popular for a decade requires investment in “live ops” to keep updating the game with new features and experiences, only adding to a game studio’s responsibilities.

There are big movements in gaming right now to make games cross-platform (not just restricted to mobile or PC or one console), incorporate new types of chat (in-game or outside of it) and to automatically remove bullies and bots among other things. Optimizing games’ virtual economies is only getting more complex as trade of virtual goods becomes increasingly popular.

All this means more opportunity for startups (and large incumbents) that provide new tools and platforms to game developers and gamers. To gauge which opportunities are prime for entrepreneurs, I asked four leading early-stage investors who focus on the gaming sector to share their analysis:

Sam Englebardt, Galaxy Interactive
Gigi Levy Weiss, NFX
Amit Kumar, Accel
Anton Backman, Play Ventures

Sam Englebardt, Galaxy Interactive

Which areas within gaming infrastructure seem firmly dominated by large incumbents, versus open for new startups to rise up?

I’m always rooting for the startup, but some of the really big and expensive infrastructure challenges seem unlikely to be solved by a startup, especially where the incumbents have a lead in time, money and the personnel they’re throwing at the problem. I’m thinking here, for example, about something like cloud computing, storage solutions, etc.

Activision Blizzard has five franchises lined up for its new Call of Duty esports league

Published May 4, 2019

Activision Blizzard said it has lined up five franchises for a new, city-based Call of Duty esports league.

Atlanta, Dallas, New York, Paris and Toronto will all play host to franchise teams that will compete in a professional league based on what is perhaps Activision Blizzard’s most successful title, the company announced after its earnings call earlier today.

Each city is partnering with existing Overwatch League team owners to leverage the existing framework that Activision has labored over for the past few years to lay the groundwork for a global, city-based Call of Duty league, the company said.

The first teams are Atlanta Esports Ventures, the joint venture owned by Cox Enterprises and Province Inc.; the Envy Gaming esports team, which has been active in Call of Duty competitive play since 2007 and with the Dallas Fuel Overwatch league team; New York’s Sterling.VC, a sports media company backed by Sterling Equities (owners of the New York Mets); c0ntact Gaming, which owns the Overwatch League team Paris Eternal and the Paris-based Call of Duty team; and Toronto’s OverActive Media.

“The upcoming launch of our new Call of Duty esports league reaffirms our leadership role in the development of professional esports. We have already sold Call of Duty teams in Atlanta, Dallas, New York, Paris and Toronto to existing Overwatch League team owners, and we will announce additional owners and markets later this year,” said Bobby Kotick, chief executive of Activision Blizzard. “Our owners value our professional, global city-based model, the success we have had with broadcast partners, sponsors and licensees, and the passion with which our players have responded to our events.”

The announcement came on the heels of an earnings announcement that saw the company report earnings of $1.825 billion for the quarter, beating its outlook of $1.715 billion but down slightly from the year ago period when the company brought in almost $2 billion.

The company credited esports and its Overwatch League and the newly announced Call of Duty city-based league (including selling its first five teams to cities) for contributing to the better-than-expected numbers.

Overwatch League strikes a milestone deal with Disney and ESPN

Esports org OverActive Media gets investment from The Weeknd

Published April 10, 2019

OverActive Media, the company that owns the Splyce esports org and the Overwatch League’s Toronto Defiant team, have announced that The Weeknd (real name: Abel Tesfaye) has invested in the company.

In the world of esports, OAM is a big organization — the Toronto-based company, which launched in 2017, has teams in the League of Legends European Championship, Overwatch League, Call of Duty World League, Rocket League, Starcraft and Smite. OAM is one of only five esports orgs in the world with permanent slots both in League of Legends and the Overwatch League.

If you have no idea what I’m talking about, here’s a look at one of the Toronto Defiant’s recent Overwatch League games.

The terms of the investment were not disclosed, but it would appear that The Weeknd will be contributing to some marketing efforts and building brand awareness around Splyce and the Toronto Defiant.

“Abel’s standing in the music industry will provide our Toronto Defiant and Splyce brands the opportunity to reach more fans and engage new audiences,” said OAM CEO and president Chris Overholt.

The release also mentions that Toronto Defiant fans will see “unique joint efforts” with The Weeknd throughout the 2019 Overwatch League seasons.

Here’s what The Weeknd had to say, via the release:

As a big esports fan, I am really excited to be involved in this project. I am looking forward to collaborating with OverActive Media in unique and innovative ways.

The Weeknd is not the first musical artist to invest in an esports org. Drake and Scooter Braun invested in esports company 100 Thieves in October of 2018.