Market Watch: Is online gambling primed for an esports-style streaming revolution?

Tyler Blevins is a name that’s opaque to most of the gambling community. Unless of course you happen to be in esports, or more specifically, streaming. A few weeks ago, ‘Ninja’ was poached by Microsoft to move away from Twitch and become an evangelist for the competing Mixer platform.

The signing figures have not been disclosed, but several sources have pegged the transfer amount to be in the region of $15m per year for a five-year contract. This for a player aged 28, but now largely considered to be past his prime and in the twilight years of his career. The stats seem to corroborate this; Blevins peaked two years ago with 200,000 subscribers and 14 million followers on Twitch. So, all in all, not a bad way to retire slowly and still justify the opportunity cost in playing Fortnite and (if Microsoft has any influence on content) the entire Halo series.

This is not an outlier, but another data point on the existential rise of streamers, and their influence on the products they promote. Outside of gambling, streamers have been steadily trending for more than a decade, but this industry has only really started to witness the impact in the last couple of years. In some nostalgic way, these trends are vaguely reminiscent of the pre-streamer era nosebleed limit games from the Full Tilt Poker dynasty. At the time, few streams captured railbirds’ attention like when Tom Dwan offered a worldwide challenge to anyone on a four-tabling high-stakes No Limit – even if, in the end, the challenge never really lived up to the hype. Contrast that with the payoff on any pro-endorsed Fortnite or LoL-challenge today, and the mass potential for gambling streamers really becomes apparent.

While we might not have our own Ninja yet, there are already some well-established streamers such as MontanaBlack88 and Roshtein, together with promising rising stars, such as Jambi and Craig. On a local community level, it’s even more entrenched; witness the ongoing engagement levels of the Swedish streaming market for example. And while gambling streaming stats may still be puny in comparison with esports, they will gather momentum at a much faster rate, at least until regulation inevitably shows up. That’s mainly because affiliate marketing is still responsible for generating up to 70% of revenues in this industry (more when lifetime rev share is factored into the earnings), and indeed savvy marketers have already been keen to spot rising streamers and repurpose them for their own brands.

The next chapter,https://t.co/lvn9KBjEYq pic.twitter.com/tljVgyM3bG

— Ninja (@Ninja) August 1, 2019

This strategy seems to be paying off with 2019 a record year for stream-based gambling. Even a cursory analysis of the main streaming sites shows an explosion in slots and (to a lesser extent) sportsbook-based action. What’s more compelling is that the number of followers per streamer, and crucially, active minutes per viewer, is also steadily increasing; a measure of how influencers are also gaining breadth as well as depth across their viewing communities.

While official conversion stats can’t be directly tracked (at least not externally); it’s a given that the rate of sign-ups and first-time depositors will be significantly higher with streamers than other acquisition channels; video has always captivated audiences better than any other medium. That’s mainly why Twitch commanded such a high multiple on earnings when Amazon came knocking.

Is this growth sustainable?

In the short term, it would certainly appear so. Gambling streamer momentum shows no signs of relenting, and it’s only a matter of time before one of the savvier media agencies conjures up a persona that dominates eyeballs as well as sign-ups, charming viewers through the journey of a ‘lucky’ player seduced by fate, and slots. And that’s probably when local regulatory agencies will start to have a very binary view on this medium. It might happen sooner with the rise of so-called scammers (players using operator funds to play), especially if they are called out early in the feed comments. There are a few blatant examples out there and, just like in the early days of affiliate marketing, serve no beneficial purpose other than to create a fast buck for operators and (to a lesser extent now, given lower/no CPA bonus) affiliates. Germany has already blocked all affiliate links from streamers, and it’s only a matter of time before a few notorious examples help to expedite lockdown elsewhere.

Notwithstanding, especially from an investor’s perspective, this is mostly good viewing for now. Not least because of the widely varied content on display, but also the occasional (and sometimes unintentional) Easter eggs that pop up, together with surprisingly good insight into product development and game mechanics.

Looking further ahead, the success of gambling streamers will be dependent on well-balanced relationships between vendor and streamer and, if properly managed, will benefit all stakeholders in the ecosystem. Especially the viewers, whose endorsements will make heroes out of this current generation of streamers, making them the most important part of this process. Viewers want to watch others win, take risks, cheer/flame with a community and – more pertinently – gamble on their streamer’s outcome.

Properly managed, streamers will continue to build an ecosystem of viewers that will engage with other players in their communities and take on the challenge of emulating their idols and, in turn, maybe even become streamers. Who knows, maybe we’ll get our own Ninja after all…

Julian Buhagiar is an investor, CEO and board director to multiple ventures in gaming, fintech and media markets. He has led investments, M&As and exits to date in excess of $370m.