CTRL + Athlete

Today our focus is an examination of two seemingly distinct realms that have converged to create a powerhouse of innovation and engagement: sports and video games. The intersection of these two worlds is not merely a coincidence but a symbiotic relationship that has reshaped both industries, offering unique opportunities for investors.

This blog will explore a couple of ways that sports have influenced gaming and vice versa. It will also look at examples of several successful startup companies that exemplify the sportification of gaming.

Watch our on-demand webinar to explore this topic further.

Physical Sports as an Analog

First, we’d want to examine why this convergence makes sense. Sports play a central role in many societies as we elevate our most compelling athletes and create rallying points for fans and supporters. Because of this, an entire industry has been built around the cultivation of talent, participation in competition, dissemination of media, and other auxiliary services. All of this to say, the traditional sports model as we know it is well established.

Gaming was once seen as the anti-sport, a hobby for people who preferred to be sitting in front of a screen rather than playing outside. But at the core of both sports and gaming is a sense of competition and a drive to demonstrate skill. With that comes the cultivation of talent, participation in competition, and the sharing of that experience with fans and viewers. Sound familiar? As counterintuitive as it may have seemed initially, the sportification of gaming looks almost inevitable in hindsight.

The Sportification of Gaming

Traditional sports economies are well established with structures for leagues and teams, best practices in developing talent, and ways to capitalize on viewership. We see the sportification of gaming taking place as many of these practices are applied to the growing world of video games. Below are just a few examples of where sports are influencing the gaming world.

• Simulating Reality: Sports video games have come a long way from simple pixelated graphics. Advancements in technology now allow gamers to experience the thrill of sports with stunning realism, from lifelike player movements to realistic stadium environments.
• Esports Explosion: Competitive gaming — or esports — has surged in popularity, drawing inspiration from traditional sports structures. Esports leagues, teams, and tournaments have become a global phenomenon, mirroring the competitive spirit of traditional sports.
• Athlete Involvement: Professional athletes are increasingly becoming part of the gaming world. From esports competitions to collaborations with game developers, athletes are leveraging their brand beyond the playing field.

The Gamification of Sports

As established as traditional sports are, they have benefited from the rapid innovation taking place in gaming. Now more than ever, the relationship between sports and games is a two-way street. Here are some examples of ways that we see sports becoming more gamified.

• Virtual Training: Sports teams are incorporating virtual reality and gaming technology for training purposes. Virtual simulations allow athletes to practice and strategize in a controlled environment, enhancing their skills and decision-making.
• Fan Engagement: Augmented reality experiences and interactive apps are changing how fans experience live events. From virtual crowd interactions to personalized game-day experiences, technology is reshaping the relationship between sports teams and their fanbase.
• Analytics Revolution: The statistic-driven paradigm in popular sports games has become commonplace in traditional sports. Today, sports teams scout based on advanced analytics, and gamblers analyze betting lines with similar data. People are using new data to break down sports in ways that were impossible previous to digitization.

Startups at the Nexus

At this intersection of sports and gaming, multiple investment opportunities have emerged. Below is a list of companies that illustrate how startups are creating value where sports and gaming meet.

• Twitch: Twitch is the most prominent streaming platform for gamers. The company has enabled hundreds of thousands of viewers to tune into live gamers and eSports tournaments for the most popular games. Twitch was acquired by Amazon in 2014 for ~$850 million. Draper Associates, Bessemer, and Felicis Ventures all invested in Twitch.
• 100 Thieves: 100 Thieves has emerged as a leading eSports organization. The company manages teams across several popular games and is now expanding into a larger lifestyle business. 100 Thieves was last valued at $460 million and counts Sequoia and Courtside Ventures as early investors.
• Frameplay: Frameplay facilitates the dynamic placement of in-game ad campaigns. This has the potential to unlock increasing sponsorship opportunities for gaming and eSports as more viewers flock to this medium. The company was most recently valued at ~$450 million.
• Mobalytics: Mobalytics is a leader in helping gamers improve their play through coaching. The platform helps players strategize before a game, provides real-time insights during gameplay, and delivers post-game stats and feedback. The company has helped millions of gamers level up and been supported by General Catalyst, Founders Fund, and GGV.
• StatusPRO: StatusPRO was founded as a VR practice technology for football players to practice full speed decision-making without contact. The founders, both former NFL players, found that their technology-enabled realistic gameplay for a general audience, allowing them to simulate the feeling of being in an NFL game. The company has launched its game, NFL Pro Era, in partnership with the NFL. Some of our AV funds have invested in this company.

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As the sportification of gaming continues, and the gamification of sports does the same, we believe AV Sports Fund will see a number of companies that will make up the future of the sports economy. By diversifying our portfolio with startups at the forefront of this convergence, as well as other sports sectors, we plan to benefit from the continued growth of both industries.

For more on this convergence, please watch our on-demand webinar.

This communication is from Alumni Ventures, a for-profit venture capital company that is not affiliated with or endorsed by any school. It is not personalized advice, and AV only provides advice to its client funds. This communication includes forward-looking statements, generally consisting of any statement pertaining to any issue other than historical fact, including without limitation predictions, financial projections, the anticipated results of the execution of any plan or strategy, the expectation or belief of the speaker, or other events or circumstances to exist in the future. Forward-looking statements are not representations of actual fact, depend on certain assumptions that may not be realized, and are not guaranteed to occur. Any forward-looking statements included in this communication speak only as of the date of the communication. AV and its affiliates disclaim any obligation to update, amend, or alter such forward-looking statements, whether due to subsequent events, new information, or otherwise.