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Roger Lee, Courtney Chow  |  September 18, 2019
Bringing the Benefits of Athletics to More Kids—Through Esports

Over 40 million players from 200 countries participated in the event–drawing 19,000 fans to a sold-out stadium in New York City over the course of three days. The gathering drew 2.3 million concurrent online viewers across YouTube and Twitch. The organizers awarded $30 million in prize money, with the crowned champ taking home a cool $3 million.

This wasn’t a golf, boxing, basketball, football, soccer or even a tennis tournament. This was the 2019 Fortnite World Cup, and the world champion in the popular online game was a tenth-grader from Pottsgrove, PA.

As we described earlier this year, the convergence of interactive gameplay, streaming and social networking has made esports and online gaming an increasingly accepted form of entertainment. Esports fandom already rivals that of traditional sports: In 2019, the League of Legends World Championship Finals (100 million unique viewers) eclipsed Super Bowl 53 (98 million viewers) in terms of total viewership!

More broadly, online gaming and esports has become the new social space for younger generations – a way to hang out with friends and connect with new ones. Clearly videogames are no substitute for real, human interaction, and should be consumed in moderation. But 54% percent of American teens say gaming is a way to enjoy time with friends, while 45% say they’ve made friends through online games.  People aren’t just interested playing; they’re showing a strong desire to watch other players game as well.  On average, young gamers (players aged 18-25) globally spend more than three hours per week watching other people play video games, nearly an hour more than they spend watching traditional sports.

There’s clearly a shift in how teens and young adults spend their time. And as viewership and gameplay participation grows, esports and online gaming will continue to put pressure on other forms of entertainment – TV, movies, music, traditional sports, etc. To put this in perspective, 2019 will be the year that esports-related revenue should surpass $1 billion (+26% year-over-year growth). This impressive, rapid growth in revenue is fueled by the rising global esports audience, which is projected to grow to 454 million this year and 645 million by 2022.

And we believe this is just the tip of the iceberg.

For the last several years, Battery has been actively pursuing an investment thesis around online gaming and esports. We see gaming as a dominant, yet accessible, pastime for today’s generation – a place to socialize, sharpen cognitive skills and participate in competitive team-oriented play. Online gaming’s inclusive nature (i.e. acceptance of all genders, ethnicities, income levels, physical abilities, etc.); online-centric play (i.e. not geographically-constrained); and limitless participation (players can play multiple games and for various teams) will continue to propel esports into the mainstream, as well as create market value on a number of fronts.

As of now, most investments in the esports sector–by venture capitalists, game publishers and brands–have been concentrated at the professional level and targeted at supporting the formation of teams, leagues, and physical, offline experiences. All of this has spawned dozens of high-profile, competitive events that draw millions of fans and generate real revenue. Top gamers are now earning millions each year (“Ninja” reportedly earned ~$10 million in 2018) and leading esport tournament prize pools are reaching the size of those offered in traditional sports. It is clear that esports has become a “real” industry and career path for players.

But we think it’s also worth focusing on the amateur market, which is currently underserved. Few platforms exist today to support competition, training, development and coaching for amateur players. That is why we jumped at the opportunity to get to know Delane Parnell and his team at PlayVS*, an online gaming and esports company focusing on amateur players, and are thrilled to announce our investment into the company’s $50 million Series C fundraising round today.

PlayVS is creating the technological backbone to support amateur esports–enabling players to form teams, compete in an array of competition (seasons, leagues, championships, tournaments) and track their performance and statistics postgame.

The company has initially targeted the high school market, which we think is currently an overlooked and sometimes hard-to-reach segment of the esports market. In the US, there are 16 million high school students, and according to market estimates, the average 13-18 year old in the US spends an average of 9.5 hours per week playing video games. By comparison, high school students spend ~5 hours per week playing traditional sports and 8 million students participate in a sanctioned sport in high school.

Focused on building out a platform for this particular demographic, PlayVS last year entered an exclusive partnership with the National Federation of State High School Associations (NFHS), a 100 year-old organization that governs and writes the playing rules for high school sports. The NFHS spans over 19,000 high schools and more than 12 million high school activity participants. Through its partnership with the NFHS and its member states, PlayVS is now officially partnered with 15 states across the country as the official provider of esports competition infrastructure for high school, while all 50 states and Washington, D.C. can still access and compete regionally via PlayVS.

By leveraging PlayVS technology, players are now able to represent their school and compete for state championships, just like basketball, football, or soccer players can. It has created a safe, organized, and collaborative environment for players to get together and compete as a team. Requiring only minimal setup and low upfront costs, PlayVS opens the door for many students who might not have participated in high school activities previously. It allows students of all backgrounds to experience the same camaraderie, teamwork and excitement of traditional sports. This fall, student athletes have the chance to win League of Legends (created by Riot Games), SMITE (Hi-Rez Studios), and Rocket League (Psyonix) state championships.

Schools are excited by the benefits that PlayVS provides as well. As a school sport, student participants are held to the same educational requirements as other NFHS sports and activities. It also increases student involvement and broadens the pool of students participating in school activities. This is particularly relevant at a time where participation in traditional sports is actually in decline: Last school year, for the first time, the number of boys and girls playing traditional high-school sports declined for the first time in 30 years, according to the NFHS.

Much of our excitement around PlayVS is driven by the company’s seasoned executive team. Delane, CEO of PlayVS, has been an entrepreneur since he was in high school and started a professional Call of Duty team in 2015. Entering its third season, the company recently added Neel Palrecha, formerly of Snapdocs and Headspace, as CTO and Gabi Loeb, formerly at NationBuilder and ZEFR, as CFO. The trio and their extended team are hyper-focused on growing adoption, further developing the platform, and adding more game titles.

We believe PlayVS has the opportunity to create a new category in esports, becoming the de facto medium for amateur esports competition—and helping many teens finally realize the benefits of participating on a school sports team. We’re delighted to be partnering with PlayVS and excited to embark on this journey with Delane and his team!

This material is provided for informational purposes, and it is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle managed by Battery Ventures or any other Battery entity. 

The information and data are as of the publication date unless otherwise noted.

Content obtained from third-party sources, although believed to be reliable, has not been independently verified as to its accuracy or completeness and cannot be guaranteed. Battery Ventures has no obligation to update, modify or amend the content of this post nor notify its readers in the event that any information, opinion, projection, forecast or estimate included, changes or subsequently becomes inaccurate.

The information above may contain projections or other forward-looking statements regarding future events or expectations. Predictions, opinions and other information discussed in this video are subject to change continually and without notice of any kind and may no longer be true after the date indicated. Battery Ventures assumes no duty to and does not undertake to update forward-looking statements.

*Denotes a Battery portfolio company. For a full list of all Battery investments, please click here.

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