In stadiums meant for physical sports are thousands of fans gathered to see their idols play more virtual kinds of games. Foto: Bago Games

In 2016 reports showed that over one billion people are aware of eSports the industry brought in around one billion dollars the same year. Both analysts and experts see 2017 as a year this growth continues, and that in a fast pace, as this will be the year eSports goes mainstream.

Pol Ruiz is the co-founder and CEO of Playfulbet, one of the biggest social betting platforms in Europe with over seven million users. They were one of the first startups that saw the eSports wave coming:

I have to say that eSports have evolved a lot since we started Playfulbet four years ago. At the time we were the only ones offering betting on eSports (though not with real money). Today all the betting sites lets you bet on eSports and it’s growing rapidly month over month.

Pol Ruiz, CEO and co-founder of Playfulbet.

Talking about sports, the only thing growing faster than eSports itself, is betting on eSports. According to the market analyst SuperData the eSports market will be worth 1.8 billion by the end of 2018. The sum is small compared to the betting market says Pol:

What many analysts doesn’t take account for is the betting industry around eSports which is also growing exponentially, and is anticipated to generate around $20 billion in turnover by 2020.

https://upscri.be/285782-2

Gamers are more loyal than football supporters

Stadiums used for traditional sports, are filling up with energetic audiences hungry for eSports live tournaments. It’s important to note that there are several key differences between the normal sports fan and the eSports enthusiasts.

The things that are special with eSports fans is that they support, interact and are much active than normal sports fans. They identify themselves with the game in a bigger degree than with other sports fans, and this makes the eSports sector both so interesting and valuable.

Pol and his team at Playfulbet are monitoring both sports sectors, and see trends emerging.

The industry is exploding, and especially after many traditional football and basketball teams got associated with the online sports games, and even formed professional eSports teams.

Mainstream means money

Until now eSports has been associated with one particular kind of demography, but that is changing rapidly, according to Pol:

As traditional TV and mass media companies are entering, this is becoming a mainstream thing. In Spain there’s TV channels dedicated to eSports and Mediapro is covering the LVP (the national eSports league in Spain).

He continues:

As most experts predict, the eSports sector will continue to grow fast the next couple of years, particularly with the entry of mainstream brands and additional famous profiles from the traditional sports world.

Also read:

https://blog.itnig.net/how-playfulbet-grew-to-400k-followers-on-facebook-and-300k-on-twitter-c207cb286559

Focused on eSports because no one else did

To strengthen their focus on eSports, Pol and Playfulbet is adding more gaming streams to the platform:

we’re integrating streaming of eSport matches so you can follow the games you’ve been betting on without leaving the platform, and you can also chat with your community watching the same games. But there’s still much more to be done for the eSports community using the platform.

Playfulbet moved over the offering bets on eSports fairly early because of one main reason:

We added eSports mostly because no one else did it, so for us it was a competitive advantage. We’re still not more focused on eSports with respect to other sports, but we’re working on offering even more content and functionality in this niche.


This post was written by media manager itnig Sindre Hopland.

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T.

The reasons why Disney will dominate the media industry

The perception that Disney is only a producer of children’s content is long gone. The company has managed to multiply by 10 its market capitalization in 10 years and I believe it will do it again in the next 10 years based on 3 factors: content, the entry in new businesses and spillover effects on current businesses.

CONTENT

Disney has been making movies for almost a hundred years. They have been movies for all the family but targeted to kids, which are the ultimate decision-makers when going to the movies. This is an example of the classical content they were producing up until the last 10 years.

Found in Pinterest https://www.pinterest.es/pin/129548926755761740/

Despite having a powerful content library, Disney has amassed the most impressive collection of content in the world via acquisitions:

  • 21st Century Fox: 71B
  • Lucasfilm (2012): 4B
  • Marvel (2009): 4B
  • Pixar (2006): 7B
  • Hulu (2009): ??. They acquired 30% and an additional 30% with the acquisition of Fox

With the recent acquisition of Fox, there are only big four other movie studios left in the market: SonyWarner BrosUniversal, and Paramount.

Just to give perspective. This is the list of the top 3 grossing movies for the last 3 years. Spoiler, they are all from Disney:

  • 2017: Star Wars The Last Jedi (rubbish if you ask me), Guardians of the Galaxy 2 (not great) and Beauty and the Beast.
  • 2018: Black Panther, Avengers: Infinity War and Incredibles 2.
  • 2019: Avengers: Endgame, Captain Marvel and Aladdin (Still not counting with Toy Story 4, Spiderman, The Lion King, Frozen 2 and Star Wars: The rise of Skywalker)

Having content as an asset in the movie industry is relevant because of the fact that over 90% of every year’s Top Box Office Hits are not original. Notice that the 9 hits mentioned above are not original content, including Captain Marvel which is a character well known despite debuting in theaters. Moviegoers are risk-averse and showing characters the public is familiar with is synonymous of success in a market where the production of a movie can cost hundreds of millions of dollars.

Another essential part of the content are the actors. They give credibility to a movie and top talent can’t wait to appear on a superhero movie. Just look at the roster of Avengers Endgame with cameos from the likes of Robert Redford, Rene Russo, Michelle Pfeiffer, Michael Douglas, Natalie Portman, William Hurt, Samuel L Jackson or Ken Jeong, the Asian character on The Hangover. All of this without accounting for the main characters. Where else can you see this?

Source: https://www.editorchoice.com/avengers-endgame-cast/

NEW BUSINESS

One of the acquisitions mentioned is Hulu, a streaming platform in the US which also allows watching live content. I believe this is the future. Cable TV operators are doomed. The number of subscriber to Cable TV in the US has declined over the past years.

Source https://www.statista.com/statistics/536356/cable-shopping-networks-revenue-usa/

It’s clear the consumers are opting in to streaming on-demand platforms such as Netflix, HBO, Hulu, and Amazon Prime. That’s why Disney is launching Disney +.

This is a global trend. People across the world may not own a TV, but they have smartphones and internet connection. Netflix has launched a 3$ monthly cell-only subscription in India. Check this relentless growth of subscribers by Netflix.

Take a look at the last Shareholders report by Netflix, a public company that is burning billions every year -3,5B$ in 2019- and is expected to invest 15B$ in 2019 alone in new content. In my humble opinion, Netflix has by far the best streaming platform and the content is remarkably good, just look at the masterpiece Stranger Things season 3.

Source: https://s22.q4cdn.com/959853165/files/doc_financials/quarterly_reports/2019/q2/Q2-19-Shareholder-Letter-FINAL.pdf

Netflix will be the main competitor of Disney, who will claw back its content from other platforms over the next years, reducing the earnings of licensing rights, but attracting customers to their platform. I believe there will be a time where platforms won’t share much content, but eventually, this will rise opportunities for multiplatform viewing apps and some years from now, platforms will reshare content once they settled a loyal customer base. Users will be subscribed to multiple platforms and they would still like to watch what’s best in every one of them. It’s not a winner take it all market.

My final bet is that there’s another big piece of content that is currently slipping away from streaming platforms, live sports. This is the last resort of traditional TV and cable TV operators who have been able to tell customers when and where to watch TV. This is no more, TV is dead.

SPILLOVER EFFECTS

Let’s get some perspective here. Disney is a corporation that currently (2019) has annual revenues of around 70B$ and a net income of around 13B$ (15–20%). Where do they make money from? This is a comparison YoY between the fiscal years ended on September 30th. of 2018 vs 2017. All areas grow except for merchandising. Figures in B$.

Source: company reports

MEDIA

The main source of income is Media Network, which comes from ESPN, Disney Channel, ABC… Here’s the evolution of this revenue stream fro the last decade.

Source: https://www.statista.com/statistics/193211/revenue-of-walt-disneys-media-network-business-since-2008/

With the acquisition of Fox, this chart is going to experience a huge vertical shift.

PARKS AND RESORTS

Parks and resorts are the second biggest revenue stream of the Mickey Mouse company.

Walt Disney World Resort (Flick: Atiq Nazri)

This is a chart with the number (in millions) of yearly by visitors by each park. Around 150 million people go to a venue managed by Disney somewhere on the planet. This can only be achieved by a great hospitality experience and the best content:

Source: https://www.statista.com/statistics/194247/worldwide-attendance-at-theme-and-amusement-parks-since-2010/

STUDIO

This is the revenue that comes from the distribution of movies and music.

The chart below displays the Box Office market share evolution. Disney has managed to multiply by 2,5 in ten years, and now with the inclusion of Fox, the market share could get just shy of 50%, which is ridiculous. This is a major spillover effect from the massive content acquisition.

Source: https://www.cnbc.com/2019/06/14/disney-on-pace-to-earn-9-billion-at-the-global-box-office-in-2019.html

DIRECT TO CONSUMER

This is where the new platform Disney + will come into play. Disney + is a SVOD (Subscription Video on Demand) as far as we know. Other alternatives are AVOD (Advertising Video on Demand) where the users access for free but get adds (Youtube) and TVOD (Transactional Video on Demand) which is what Google is doing among others.

One of the first screenshots Disney shared for Disney +

So far they have had Hulu in this category, but with the introduction of Disney +, this will become of the main revenue streams for Disney. Eventually, the main one if you ask me. My guess is that in one year, Disney + can produce revenues of about 20B$ and grow from there. This is what Netflix is doing right now.

The advantage of Disney + is that they already have the content and they would only need to produce specific content for the platform such as The Mandalorian or the Marvel spinoff series with Black Widow and more. That would imply big operating profits since most content has already been amortized. The downside, however, will be the loss of the licensing revenue they get from streaming onto other platforms included in the Studio section. I’m betting this will be a money-printing machine.

CONCLUSION

Disney is a company that has endured through decades and over the last years has taken on a path of content acquisition and generation that pays off very well. This is why I am “hodling” on its stock.

Disney’s stock price evolution over the years