Business of Esports TV: Sony Esports Betting

(Livestream #132)

In this segment, we discuss Sony entering the esports betting space by their purchase and patenting of Evo.

The Business Of Esports brings you news, debates, and all the information you need to know about the gaming sector, the world’s fastest-growing market. With Paul “The Profit” Dawalibi leading the charge, and a variety of special guests, BoE TV is the only place to find insider information on the esports industry!

Check out the full livestream here:

Paul Dawalibi 21:21
Guys, let’s talk about Sony, because this was big news. And, and a little bit scary news because I was worried when I see patent news like this. Sony has been actually in the news for a couple of patents in the last two weeks, like we talked about one week ago. And the headline here is, Sony has patented an Esports betting system. It looks like Sony is serious about breaking into eSports after its purchase of Evo and let me just read you the substance of the patent. Basically, it covers the following odds for various propositions concerning the play of a computer simulation are determined and presented to a viewer for pecuniary or non pecuniary wagering purposes, the odds may be determined using past Game Analytics or maybe determined parrot para mutually. The translation here is eSports fans can bet on matches. And at the same time, they can advertise to them and host a way to bet on the results, which I think everyone is sort of thinking about doing eSports betting this way, right. Like you’re watching and in real time, you can place bets and it’s all kind of in one screen. You know, Jeff, I’m curious. Like, is this is is this patent worrisome for the betting space? Is it something that?

Jeff Cohen 22:56
Well, it’s, it’s not something we sort of know enough about it looks at the patent was filed, you know, a few years ago, and now it’s just come to light. So we don’t know exactly what Sony has planned. I mean, it’s the first time we’ve really seen either a publisher or a platform, kind of get deeper into betting, which I think is is Yeah, a little scary, but also exciting, because it kind of shows, okay, they see this big opportunity. So I view that, you know, it’s kind of like, the TAM is there if they are kind of going after it. Yep. And it’s also interesting that they did this right after acquiring Evo, like a tournament platform. So it kind of validates the model of, you know, owning the content, having the tournaments and, you know, the, the gambling aspect of it. And the way it’s it’s a little hazy. And there are some words in that description that I literally didn’t know actually what they meant, sadly, but so it’s not clear exactly what they’re doing with this, whether it’s betting on professional matches, whether it’s peer to peer, it sounds like they’re gonna analyze players past performance. So maybe there will be an aspect of kind of you can bet on yourself or you can bet on, you know, me versus you, Paul or something like that. I think it’s interesting. I think it’s certainly where the industry is heading. And, you know, we’ll see what Sony does to actually productize this if, if anything, I mean they’re they’re currently fighting, you know, a number of different battles with especially with the console is just launching game. You know, they’re they’re battling pretty fierce and embolden competitor and Microsoft’s they have a lot going on. It’ll be interesting to see what they’re looking to do to get deeper within eSports and betting. Certainly excited to see that.

Paul Dawalibi 24:32
Lindsay, do you feel like this validates, like, Jeff mentioned this point, but I want to sort of press on it. Do you feel like this validates betting as a primary way to monetize eSports content like eSports proper, right, competitive gaming?

Lindsay Poss 24:47
Right, it certainly helps. I do think that and I hate to always compare traditional sports, but I do think that the traditional sports industry is even moving towards this just because there’s a lot more like Amazon’s next gen stats By the cloud, whatever they they’re incorporating a lot more of that kind of stuff into their overlays as well, which to me suggests that they’re probably I mean, if Sony followed this path a couple of years ago, then, on surprisingly, professional sports are still a little bit behind in their creativity department when it comes to fan engagement. But I think it certainly helps solidify the idea that betting is a way of better engagement and a way to drive money, or to drive revenue and to monetize and all of that this, this definitely is a check in the win column for betting being part of the esports. Future, it

Paul Dawalibi 25:33
makes a lot of sense. Right. And, Jeff, again, you alluded to this and Lindsey, I think you’ve confirmed it. It’s like, this idea of vertical integration just makes so much sense in, in, I would argue, in sports, any sports, right? Where you have, you have the content itself, right? Then you have the monetization and the extra information and data and ability to engage around the content, right, like, and you have all this stuff under one roof seems to be the way at least the top players in the industry are all sort of organizing themselves. Right, that it’s not, it’s not sort of disparate pieces that are all trying to work together. It’s it seems to be coming in under one roof and vertical integration seems to be the way to make all of this work. I don’t know if you guys feel. Is it too early to call that? Or is there enough evidence out there that this is this is what’s happening now and eSports? Right? Like you need content, you need tournaments, you need, you know, you need games, you need bedding, you need all this stuff under one roof, for to really have a interesting business.

Jeff Cohen 26:42
I’m not entirely convinced that the you know, the bedding sponsor has to own the tournament, and certainly not that they have to own the game or the platform. I think there’s, you know, same way I don’t think, again, like Lindsay said, I hate to use the tortured example of traditional sports. But I don’t think DraftKings and fanduel needs to necessarily go out and own the NFL, or, you know,

Paul Dawalibi 27:03
put on the game publisher, I meant, like, the actual game that’s being played like the

Jeff Cohen 27:12
same analogy. It’s just eSports. I guess it doesn’t always work one to one. Like, I think that there is a you know, there’s a robust enough ecosystem and value chain, where that there can be tournaments platform, there can be sorry, tournament providers, and there can be leagues that then sell the data to sports books, or just sports book aggregators who sell the data to b2c consumer sports books, and then it goes down the value chain that way, like, I don’t necessarily think that, you know, in this example, Sony needs to own the league, the sports book, the, you know, the actual platform, there’s some value in specialization, like do I think Sony is gonna go out and get, you know, a number of different sports betting licenses like that is a whole separate company that takes expertise takes regulatory know how capital, like that is not an easy process. I mean, look how hard it’s been just for the minor players in the US. I mean, I know from our experience, just getting one license in New Jersey has taken some time and a ton of capital and a ton of management focus, you know, is that Sony really wants something Sony really wants to do to get, you know, 40 states or however many states there’s gonna be in the US, and then a ton of different jurisdictions over in Europe, US, Canada, Latin America, it’s just why why go through that hassle.

Paul Dawalibi 28:36
Because maybe they’re looking at what’s happening with their business. Right. And, and you have console’s that being are being sold at a loss basically, right? You have maybe margins being squeezed as the cost of game development goes up, right? And, and you’re looking at the now they’re all trying to create services, you know, like game pass, and all these other things, to to generate revenue, you don’t think they will ever look at betting in house as one of those potential paths. Given all the other forces at work,

Jeff Cohen 29:11
it’s a pretty long term play. I mean, they’re gonna have to spend a lot of money before really getting, you know, strong profitability in that space. And I think the console model is one that’s pretty, pretty tried and true. You know, even though everyone wanted to bury the console, like it’s been probably the last 15 years, everyone’s talking about the death of console, even as recently as a couple of years ago. You know, the S word and the C word. Be, you know, cloud and stadia people could go

Paul Dawalibi 29:43
Hold on, hold on hold on. Google stadia says they’re alive and well. Okay.

Guys, we’re not dead.

Jeff Cohen 29:59
Even Despite that the console launches have been phenomenal. And that razor razor blade model works like you to your point they do sell the console at a loss but they’re making so much money on the services between PlayStation now, in xboxes case, Xbox Live Xbox game pass is selling at a loss. Yeah, I’ll do epic for the

Lindsay Poss 30:22
day sort of confirmed it was very loose.