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.
027 – December 13, 2020
In this week’s business of esports minute, the most valuable esports companies, 8 year-old Fortnite pro, and Microsoft acquiring Smash.gg.
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, Forbes announced their yearly list of the most valuable esports companies. TSM topped the charts this year with a $410M valuation. Others on the list included Cloud9, Team Liquid, FaZe Clan, 100 Thieves, and more. Let’s be clear. This list is completely arbitrary, the methodology is highly questionable, and the valuations are easily debated. For example, Enthusiast Gaming is on the list, but only 6% of their revenue comes from esports, and their listed valuation is completely incorrect based on their public market cap. Thus, the Forbes list serves only one purpose – to drive clicks.
In more unfortunate news, esports organization Team 33 signed an 8-year old Fortnite player. According to the announcement, he was paid a $33,000 signing bonus, and has been training with the team’s Fortnite group since he was six. This one makes no sense. First, Fortnite esports are essentially dead. Second, signing such a young player can only cause problems and headaches for all involved. At 8, this kid can’t even legally use just about every online platform like Twitch, YouTube, Twitter, etc because of COPPA rules. There’s also no guarantee he will be competitive by the time he reaches 16 which is the typical minimum age for most professional tournament play. The sad conclusion is that no one has heard of Team 33, and this is a pure marketing stunt – a distasteful one at that.
Finally, Microsoft acquired esports tournament platform Smash.gg. This is a puzzling move given they recently shut down their streaming platform Mixer. Maybe they saw synergies with Xbox going forward, or potentially with their newly announced MSN Esports Hub. Smash had previously raised about $14M in venture capital. Financial terms of the acquisition were not disclosed, but given all the context, my guess is that this was someone at Microsoft doing a favor for a venture capitalist friend by pushing a somewhat defensible acqui-hire.
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.