eSports landscape taking form

The eSports landscape is starting to gain more structure, and as things formalize, two logical stakeholders – game developers and sports ownership groups – are affirming their roles.

Developer Activision Blizzard officially announced the ownership groups for the first seven teams in its Activision Overwatch league where, like pro sports, the teams will be city based (5 in US, 2 in Asia). Among the initial owners are Patriot’s owner Bob Kraft, the Met’s Jeff Wilpon, and Andy Miller of the Kings. Sports ownership groups like these have distinct advantages to maximize the investment in an eSports team: existing live venues, fan bases, media distribution, and team management expertise.

Additionally, Chinese giant Tencent has recently made its eSports ambitions clear by announcing a $15B five-year plan for eSports ventures that includes leagues, organizations, theme parks, events, and even an ‘eSports town’. Tencent owns Riot Games (League of Legends) and the majority of SuperCell (mobile games like Clash of Clans). They are extremely well positioned with these assets, deep pockets, and access to the largest eSports market.

Game developers and sports ownership groups have always made sense as leaders in the development of eSports. Now, as they create infrastructure, more money flows in, and ‘mainstream’ attention is paid – there continues to be opportunities to build and invest in emerging technology companies across the participatory, media, and monetization elements of the industry.

Sports betting and the Supreme Court

Sports betting is on the Supreme Court docket, and that’s a big deal for many sports technology companies. On the surface, the case is around New Jersey’s appeal to legalize sports betting – which could bring significant revenue to the state – as part of a drawn out legal battle that has involved the four majors and the NCAA. More broadly, the case could set wheels in motion for sports betting throughout the US and impact tech companies in the fantasy, live statistics, and gambling markets.

Now, we’re not stating that daily or ‘real-time’ fantasy are gambling. Rather, that argument becomes moot with widespread legalized sports betting.

There’s considerable momentum from sports stakeholders to legalize betting – and for good reason, it’s a potentially massive new revenue stream. Adam Silver famously wrote his op-ed in defense of sports betting three years ago, Rob Manfred is ‘reconsidering’ the issue, the NHL and NFL are moving teams to Vegas, live data has become increasingly important (see Sportradar below), and some of the major leagues have backed DraftKings and FanDuel. And from an investment perspective, we certainly see many pitch decks that highlight the large size of a potential sports gambling market.

While we wait for next steps later this year, it’s worth noting that the sports gambling debate is an old one – older than the Supreme Court. Thomas Jefferson was barred from horse races and betting as a student. Happy Fourth everyone.

Top sports tech geographies

What are the biggest sports tech markets? When asked that yesterday, it was a quick answer: Boston, San Francisco, New York, Los Angeles. To be clear, we’re seeing an increase in activity and quality companies across the map (in US and globally) – but like sports there need to be leaders at the top of the table.

While these markets mirror the overall tech industry trends in terms of financings, activity, buzz, etc., there are complementary reasons that make each a strong community for building a sports-enabled tech company.

  • Boston– Sports permeate day-day life; unofficial sneaker capital (New Balance, Reebok, Converse, Saucony); DraftKings set stage.
  • San Francisco– Sports embracing tech isn’t a new concept; still the de facto place sports stakeholders look to engage with new technologies.
  • New York– Home to all the leagues; media hub and largest market; most pro teams.
  • Los Angeles– Entertainment epicenter; as e-sports grow and institutionalize, LA has emerged as the leader.

These four markets also have the most sports tech startups according to AngelList (Chicago is 5th), developing some critical mass.

Challenging times in retail

It’s no secret that times are tough in retail. This week, a few sports-related items out of Amazon (that likely went unnoticed amidst the WF-acquisition), highlight how sports retail is shifting, and gives additional cause for manufacturers and retailers to invest in technology to compete.

First, Amazon beta launched Prime Wardrobe, which will let customers pick up to 15 items to try on before buying. Adidas is one of the initial brands available in the program, which – while not yet dramatically different from the traditional returns model – still displays a growing consumer desire for flexibility.

Second, Nike agreed to sell products directly to Amazon for the first time. This is unwelcome news for retailers like DSG and Foot Locker and shows that the changing tides in retail are even more powerful than Nike’s fear of diluting its brand. It’s not a coincidence that this comes a week after Nike made cuts to staff and products to focus on reaching customers more quickly.

Lastly, Amazon is now represented on the Sports & Fitness Industry Assoc. board, joining a list of league, retailer, and manufacturer representatives. When you look at the list, it obvious one of these is not like the others.

Defining the sports technology market

As active venture investors focused on helping accelerate technology companies that are (or can be) empowered by sports, we’re often asked how we define the sports tech market. Words like ‘small’, and ‘niche’, sometimes come up – but that thinking ignores the bigger picture…

At the risk of sounding like a 30 for 30 tagline…what if I told you there were more than 4 billion sports fans in the world? That there are more than 6.7 billion live event viewers annually. That 200+ million Americans are active in sports and fitness. That major tech companies have, and are continuing to, create tremendous enterprise value on the back of the sports industry.

When it comes to customer loyalty and engagement at a massive scale, the sports industry is unrivaled. And leveraging sports as a platform to help grow quality early stage tech startups is a powerful recipe. The brief chart below outlines how we assess the technology application and investment opportunities in sports.

  1. Traditional Sports/Entertainment- The initial layer; what first comes to mind when thinking about sports industry.
  2. Complementary Sectors– Major industries dependent on sports for growth.
  3. Target technologies- The most exciting layer; every major technology focus can benefit from sports platform.


As you can see, the application and opportunity for sports enabled businesses is massive.