THE ACCELERATING BUSINESS OF ESPORTS

Tej Kohli writes that esports is one of the sectors which has seen a rapid ‘Coronavirus’ acceleration in the trends that are driving the fundamentals of its underlying business growth.

Tej Kohli | 1 MARCH 2021

That 2020 separated business sectors into the ‘haves’ and ‘have nots’ depending on whether the rigid limitations of lockdown were an opportunity or a mortal threat for a given sector, is no secret. Whilst the hospitality and physical retail sectors have been widely routed, other sectors have thrived. A common – and seemingly correct - trope is that Coronavirus lockdowns accelerated trends that were already occurring. Amazon for example enjoyed its best every quarter during the months of the first lockdown, doubling its profits and increasing its sales by 40%. The share price of Amazon is currently 50% higher than it was one year ago. Another example of this acceleration of existing trends was in telecommuting. Using Zoom-style video calls for business had long been heralded as the future, but it took mandatory cessations of travel to drive widespread adoption of this trend amongst users who has proved resilient in remaining attached to the value of in-person meetings. The share price of Zoom is currently three times higher than what it was one year ago.

Esports is another sector which has seen a rapid ‘Coronavirus’ acceleration in the trends that drive the fundamentals of its underlying growth. With online competition still going strong and most traditional sporting events cancelled, a lot of major ‘traditional’ sporting leagues focused more on their esports activities. Formula 1 was the big winner, with many fans tuning into the online F1 races. FIFA also saw a big boost, with many professional footballers spending their lockdown playing and streaming the game online. With many people at home and inside due to lockdowns, viewership of esports on Twitch skyrocketed. Twitch saw an increase of 17% in hours watched , with almost every other metric skyrocketing as well. The League of Legends competition also recorded record viewing figures. Player numbers for most of the major esports are also up significantly over the past few months, with Rocket League seeing a new concurrent player record on the Steam platform. Thanks to my €50m investment into the Rewired.GG Esports Venture Fund, my optimism in the future growth prospects of esports is on record. Eighteen months ago, I sat down for an interview about esports with Esports Insider and, given recent accelerations in esports, March 2021 seems like an appropriate time to reshare and re-visit an (abridged and edited) transcript of that interview:

Esports Insider

My name's Sam Cook and I'm the managing director and co-founder of Esports Insider. I'm here today to catch up with Tej Kohli. Tej back in November 2018 you invested €20m into esports, which is the largest European esports organization investment to date. Can you tell us why you did that?

Tej Kohli

It's very simple Sam. Esports is in my opinion one of the largest, if not the largest, growing industries in the world today. Yes, it has been around for a while, but it has now become a very big thing. It's a lot of young people who are involved. There are figures floating from 300 million to 700 million youngsters who are involved in esports, that's a big number considering there’s only six and a half billion people who live in the world. And I think that number is going to grow rapidly, and I think we will hot the one billion mark in the next few years, and that was one of the reasons.

The other reason is that we saw the success of what happened in in the US and China. In two short years people like Robert Kraft and the owner of Houston Rockets and all of the owners of conventional sports team bought into esports teams and, with very small investments, they have managed to multiply their value many times over. So if that model is to be followed, I would suggest to you that, notwithstanding some success that esports teams have had in this part of the world (Europe), it is miniscule compared to what the American and the Chinese teams have experienced. For me it is only a matter of time before European esports teams that have good backing and good corporate governance, and with a little bit more globalization, I think it's just a matter of time before they will be at least as big if not bigger than the esports teams in the USA and Asia. So that is an attractive thing. I have also invested in esports because I believe in doing things ahead of time. I believe in exponential growth - I'm quite well known for that - I believe in disruption, I believe in all of these things and I believe in demonetisation. So, I'm not afraid if my esports investments are not profitable overnight, it's a long-term plan and it is a big deal and it's capturing a lot of eyeballs. It’s a formula that has been tested to some extent in other parts of the world already. So, I'm a natural person to get involved in this.

Esports Insider

Which areas of eSports are the most of interest to you right now?

Tej Kohli

There are many advantages to esports. Baseball for example is a massive sport with great income streams and it has been around forever. But Baseball is only played in the US and a little bit in Japan. This is not the case with esports. The games are played everywhere. League of Legends is played everywhere. Fortnite is played everywhere. Counter Strike has spread everywhere. PubG is played in most places. So esports is something that transcends geography and that is the most exciting part about the eSports in my opinion.

Esports Insider

There's been speculation recently over the fact that maybe some of the numbers in esports are overinflated - that there's too much hype - and I would just like to know what your thoughts are on that?

Tej Kohli

The numbers could be inflated. It's only natural because there's a lot of hype around esports. But I have to tell you that I own a lot of businesses, and I don't get anywhere near the number of phone calls or inquiries into any of my other businesses than I do about my esports investments. So, the hype is there, but there's also a real and tangible interest too, and I think that more and more people are coming into esports. I think the pendulum is swinging somewhat in our direction when there's 300 to 700 million people watching esports. I have no doubt that in three years you should have 1 billion people watching it, and that's good enough for me.

Esports Insider

I think people will want to know a bit more about yourself and your own background?

Tej Kohli

I'm essentially a technologist. I’m 60 years old and I have had many businesses, many successes, and also a few failures of course. I envision myself as a person who is interested in forward-leaning projects where there are new concepts. When I got into e-commerce very few people were doing it. We did it and we did it well. I think esports is another example. This is the time when esports is just taking off, at least in Europe, and we have entered it early. So as a technologist for me to be involved in esports is only natural because it has all the elements that I look for: I look for eyeballs, I look for a trends that are forward-leaning and I look for technologies. Esports is about as technologically oriented as things can be and I fully expect a VR to come in and I expect actual simulation where the esports stadiums will be full of virtual landscapes.

This is all in the future, so to me this is a natural fit to what I have done in my life already. I'm very deeply involved in artificial intelligence and esports has a strong element of that; I'm involved in robotics and I'm in genomics. All of these are forward looking and forward leaning ideas that are happening in the world which are also game-changing for esports.

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