Gaming and esports are losing popularity with investors as well as end users.
Key Details
- Concerns that esports isn’t profitable have caused many investors to place money elsewhere.
- In the first nine months of 2022, just 33 deals of 695 private gaming investments involved esports, according to Michael Metzger at Drake Star Partners.
- Of 718 private financings in gaming in 2021, 138 were esports deals marking a significant downturn for the sector.
- Many of the largest gaming firms are pulling money out of esports and putting it into blockchain deals.
Why it’s news
Leading to the pandemic, competition-style electronic sports was a redhot sector in gaming, receiving significant funding for years, but now esports is cooling down, and the blockchain is heating up.
Concerned with esports not turning enough profits, many investors are deciding to turn away from the esports games and put money into crypto-based gaming.
Esports still garner millions of fans, but it is hard to monetize. The most popular esports games are owned by big companies that receive most of the profits, so investors aren’t getting the money they want, causing them to put the money elsewhere.
Out of 695 private gaming investments in the first nine months of 2022, just 33 deals were esports marking a significant downturn from the 138 esports deals in 2021, according to Michael Metzger at Drake Star Partners.
“Esports has become anti-sexy to VCs who had been burned by the hype and sky-high valuations esports startups enjoyed a few years earlier,” says esports veteran Ben Goldhaber.
Some remain confident that the esports sector could take off again in the future. Considering it still has an extensive fan base, it needs to pull investors back in.
“I think anyone who thinks esports won’t be much bigger than it is now in 10 years is wrong,” says esports reporter Jacob Wolf.