Only a few years ago, the idea of thousands of people paying good money to watch somebody else play a video game would’ve raised a few eyebrows.
Audience numbers soaring
In an era when the likes of Sky PLC (LON:SKY) are seeing traditional sports viewership numbers fall, esports is one of the few ‘sports’ that is growing (and pretty quickly, too) its fan base.
In fact, analytics firm Newzoo reckon esports will generate more than £1bn in global revenue by 2020, while the audience is expected to almost double to 600mln people in the same time-frame.
Like traditional sports fans do with their football or rugby teams, people – generally the younger generations – are paying money to watch their favourite video games being played by their favourite esports teams.
Publishers aren’t naïve when it comes to the opportunities that this surging demand has created, neither is Gfinity.
The company – founded and led by Neville Upton – has only been around for a handful of years, but in that time, it has already built up a strong reputation in the industry as the ‘go-to’ esports competition promoter and host.
Big name partners on board
Several big names have hired Gfinity to be its event partner and to look after the logistics of running a successful tournament, including none other than Microsoft.
The tech giant has partnered with Gfinity on numerous occasions, including for its Halo and Forza Racing championships.
More recently, Formula 1 has dipped its toe into the esports market as it looks to connect with a younger fan base. As you’ve probably guessed, it’s also using Gfinity to deliver the competition which hopes to find the best virtual racer in the world.
As Upton points out, there is a lot more that goes into running an esports event than you might initially think.
“Don’t underestimate the expertise and knowing how to run an esports competition,” he tells Proactive.
“You’ve got to have the right rule book, the right tournament system, you’ve got to have the right code of conduct, and you’ve got to have good relationships with the players.
“You’ve also got to understand the game and know how to convert it into a sport. You’ve got to then have an online technical platform as well as know how to broadcast it.”
Gfinity Elite Series
It’s not just a partner though; Gfinity also has its own competition: the Elite Series which kicked off earlier this summer and ran through until September.
Season two is just about to finish (on 9 December) and a third is planned to begin in March.
The flagship event sees 160 gamers in eight professional teams compete at three different games: Street Fighter V, Counter-Strike: Global Offensive and Rocket League.
The globally popular FIFA 18 football game has also been added to the line-up for the third season.
“The Elite Series is getting a lot of publicity and a lot of popularity. People under 30 they really love it, they get it and get excited about it and the Elite Series has really struck a chord,” says Upton.
There’s also the Gfinity Challenger Series which is for amateur gamers and acts like a feeder to the professional teams in the Elite Series.
Even though it only launched a few months ago, Gfinity has seen enough to know that the competition could be successfully recreated elsewhere.
Global ambitions …
That’s why the group is taking it to the other side of the world; Australia to be precise.
Oz will be the second territory to host the flagship tournament after Gfinity inked a joint venture agreement with HT&E and IKON Media & Entertainment.
Gfinity has agreed to license its proprietary format and brand as well as the technology that underpins it to the new JV, Gfinity Esports Australia, for an initial five-year period.
Understandably, the US is high on Gfinity’s priorities, given the potential size of the market over there and back in July the company shelled out US$2.7mln to snap up esports services provider CEVO Inc.
The Maryland-based company has been supplying its technology – such as its tournament management system, its anti-cheat system and broadcast software – to Gfinity for a few years now.
As well as furthering its interests stateside, Upton reckons the tie-up creates a global powerhouse that is “one of the most experienced esports operators in the industry”.
Broadcasters jumping on the bandwagon
The main way of monetising events such as the Elite Series is through advertising, and to get a company to pay a whack to sponsor or advertise, you need a big audience reach.
BT Sport and BBC Three – the online, ‘hip’ channel – have both signed deals to broadcast the Elite Series in London, which will bring in potentially millions of new viewers.
As well as those household names, the tournament is getting worldwide exposure through a deal signed with Eleven Sports which broadcasts live and on-demand coverage to more than 70mln homes in the US, Belgium, Luxembourg, Italy, Poland and Taiwan.
That can only be a good thing when Gfinity next comes to sit round the table with potential advertisers and sponsors.
What’s the competition like?
Rather than partnering up, you would assume that the big-name publishers would be more than capable of hosting their own events and act more as competition to Gfinity.
But that’s not quite how it pans out though, according to Upton.
“Some will probably try and say, ‘let’s do this ourselves’ but others will say ‘this is not our core skill, it is quite complicated so we want someone else to run it for us’.
“Making games is very different to running competitions and creating content. I think as we raise the bar, what you’ll find is that more and more companies will think ‘actually we shouldn’t be doing this ourselves’.”
Upton adds that there will always be some who opt to go it alone but is confident that the market is big enough for it to not really matter.
“The market is so big there are enough quality publishers out there who are looking for esports operators like ourselves to partner with.”
Revenues soared last year
Gfinity saw revenues soar last year in what it called a “pivotal” period as it expanded its horizons and launched its first Elite Series.
In the 12 months ended June 30, revenues rose 64% to £2.37mln (2016: £1.45mln), which Gfinity said was primarily driven by tie-ups with the likes of Microsoft Corp (NASDAQ:MSFT) and Activision Blizzard.
Launching a flagship tournament requires investment and this was partly responsible for pre-tax losses creeping up to £5.3mln (£3.1mln), although this was in line with what management had expected.
The company also invested heavily in adding more expertise and experience to its executive team, as well as in the refurbishment of its Gfinity Esports Arena in London and its technology.
Loss per share actually fell to 3p (2016: 4p a share), while it had £4.5mln cash in the bank at the end of the period (2016: £0.83mln) thanks to almost £10mln of fundraises during the year.