Business of Esports Minute 009 – Roblox Growth, Vindex Retail, ESL Dreamhack Losses

A week of news covering the intersection of business and gaming / esports, all in about one minute – everything you need to know from the “profit of esports” himself.

009 – August 2, 2020

From the keyboard to the boardroom, this is the Business of Esports Minute! Every single week, I, Paul Dawalibi, the prophet of esports, will be bringing you my hottest takes from the week, basically everything you need to know about the business of esports all in about one minute. Let’s go.

This week, Roblox announced that it now has more than 150 million monthly active users, up from the 115 million it had in February before the pandemic hit. The company also said its developer community will earn over $250M in 2020, up from $110M last year. These are huge numbers for a platform that is often overlooked as a Minecraft clone. In reality, Roblox has a more robust community of 345,000 developers who are building games and content for the platform. With funding from premiere VCs like Andreessen Horowitz, Roblox is definitely a company to watch.

Vindex, the company that raised a $60M series A last year, has finally made a move with the acquisition of the Belong Gaming Arenas brand and IP. You heard that right. Vindex is not actually acquiring the business itself from Game Digital. Game Digital will still continue to own and operate all arenas in the UK and Spain. According to the Financial Times, Vindex paid about $50M for the Belong brand and IP, which is not far off than the $65M that was paid for the entire company by a UK entrepreneur last year. It’s clear from these numbers that Vindex has overpaid for assets that are relatively easy to replicate, but probably felt pressured sitting on so much Series A cash. Vindex plans to invest $300M over the next 5 years to open 1000 locations globally, including 500 in the US. This means Vindex will have to spend a lot of time raising capital to feed this animal, and are entering in a crowded brick and mortar space at quite possibly the worst moment in history to do so. Call me skeptical. 

Finally, in other live event news, Modern Times Group reported its financial results for Q2 2020, recording a $2.15M loss. Modern Times Group owns the ESL and Dreamhack brands, and while they have tried to move events online, it’s no surprise that this business has suffered during the pandemic. The bigger question for this business is what is the future of third party tournament organizers? The franchised leagues and an increasing number of developers are taking on event production themselves. And while ESL and Dreamhack are known brands, their product has not been innovative in recent years and is relatively easy to replicate, which means it will surely experience margin pressure in the future. The reality is that gamers go to watch CS:GO or Cloud9, and don’t care who the tournament organizer is. 

For far more detailed insight and discussion into the business of esports, as well as the most exceptional line-up of guests, please tune in every week to the Business of Esports podcast and every Wednesday evening into the Business of Esports after-show livestream. Also make sure to follow us on Twitter @bizesports and on YouTube at The Business of Esports.