Billionaires and technology behemoths see something in e-Sports. Now Facebook is taking a harder look, too.
Recently The Information reported the social media giant firm has been in talks about streaming rights for Vainglory, a popular mobile e-sport title. You can’t blame them. Consulting firm Deloitte forecasts e-sports will generate $500 million in sales in 2016 with more than 150 million viewers. That’s up from $400 million in 2015. And Facebook already hooked up with Activision Blizzard (ATVI) subsidiary Major League Gaming back in May to stream esports tournaments. Clearly, Facebook sees a new business opportunity that meshes well with its core strengths.
“Esports is an exciting space and continues to be a growing priority for us,” said Dan Reed, the head of global sports partnerships at Facebook. “With over 1.6 billion people on the platform and a growing suite of VOD and live-streaming products that partners can use to increase engagement, Facebook is uniquely positioned to help esports fans connect around exciting moments and great esports content.”
It is not alone in recognizing the opportunity. In 2014 Amazon entered a bidding war with Google to buy the live game-play streaming network Twitch for $970 million. Undaunted, Google immediately revamped YouTube Live. By 2015 it launched a stand-alone gaming network. A year later Microsoft (MSFT) acquired the live-streaming site Beam.
Billionaires Peter Gruber (Golden State Warriors) and Ted Leonis (Washington Wizards) partnered to buy Team Liquid, a renowned e-sport franchise. That followed the Philadelphia 76’ers’ purchase of Dignitas and Apex Gaming.
What they all see is the undeniable trends. Viewers, especially younger people are shunning traditional television viewership and spending more time online. When Amazon bought Twitch it accounted for 2% of all Internet traffic. Only Netflix (NFLX), Google and Apple were bigger. And it accomplished this incredible growth in just three years.
A big part of the growth was the result of the shift away from traditional large screens like televisions, toward second and third screens like laptops, tablets and smart phones.
Facebook lives on second and third screens. Facebook Live has already seen large scale adoption. It has the streaming technology in place and its social reach is without equal. While e-sports as a business now represents just a tiny fraction of European and NFL football, it is growing faster and attracting the type of viewer advertisers covet. Deloitte reports 75% are millennials 18-34 and 82% are male.
Facebook shares have faltered since the company announced it would step up investment in new technologies. Growth is not accidental. What keeps Facebook one step ahead of competitors is vision. It is constantly looking for the next thing that will keep users engaged. Right now, that is esports.