Jun 7, 2019 · 36m · a16z
What's Next for Esports Startups
Andrew Chen · 16m spoken Darcy Kulikin · 8m spoken Frank Chen · 4m spoken Bennett Carrocchio · 4m spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this Andreessen Horowitz (a16z) presentation and panel discussion, partners analyze the rapid rise of esports, exploring demographic shifts, streamable game design, and the monetization gap compared to traditional sports. The team highlights key venture capital strategies across esports infrastructure, developer platforms, and multi-game team franchises.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 3.5 Guest teaching 2.8 Guest disagreement 0.5 The host pushing back 1.0
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 25:12 Andrew reframes publisher power thesis
Andrew politely but firmly rejects Frank's premise that publishers hold all the cards by demonstrating how rapid hit cycles like Apex Legends create publisher fragmentation.
Hardest push from the host ▶ 10:34 Frank pushes back on linear growth thesisFrank refuses Darcy's framing that current growth is merely a continuation of past generational trends, asserting that spectator dynamics mark a qualitatively different inflection.
Biggest teaching moment ▶ 12:14 Andrew explains video platform engagement and unboxing dynamicsAndrew educates the host on spectator psychology, explaining how watching others yields a fraction of actual play enjoyment and why streamability must be designed into modern games.
The host holds their own ▶ 17:37 Frank synthesizes new game publisher core competenciesFrank demonstrates deep domain expertise by articulating how game developers must now natively integrate third-party streaming platforms and community discovery into core game architecture.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Opening Title and Legal Disclosures | 0 | 0 | 0 | 0 | Bennett Carrocchio presents an introductory monologue detailing global esports audience growth statistics and disclosures. As this is a solo introductory presentation without host-guest interaction, host expertise and pushback are scored at 0. | |
| Overview Presentation: Esports Monetization and Revenue Breakdown | 0 | 0 | 0 | 0 | Bennett continues his solo presentation focusing on esports revenue breakdown and per-fan monetization metrics. Host-side scores remain at 0 for this monologue section. | |
| Esports as Part of the Cultural Zeitgeist | 3 | 2 | 0 | 0 | Frank Chen opens the discussion by citing historical gaming revenue figures and asking Darcy Kulikin what makes esports culturally unique. Darcy responds collaboratively, framing gaming as modern cultural connective tissue without any tension. | |
| Demographic Shifts and Generational Engagement | 2 | 3 | 0 | 0 | Andrew Chen contrasts the aging demographic of traditional sports with the young, lifelong engagement of gamers. Frank offers brief supportive interjections, keeping the dynamic highly agreeable. | |
| What's Driving Growth: Generational Tipping Point and Spectator Dynamics | 5 | 4 | 1 | 4 | Frank Chen challenges Darcy's thesis that growth is just a linear generational snowball, arguing that spectator dynamics represent a qualitative shift. Andrew Chen then explains the psychology of streamability and unboxing mechanics. | |
| Esports Infrastructure, Professionalization, and Developer Feedback Loops | 2 | 4 | 0 | 0 | Darcy and Andrew detail developer feedback loops and the contrast between grassroots tournaments and publisher-backed leagues. Frank listens attentively without offering resistance. | |
| New Core Competencies in Game Design and Publisher Operations | 6 | 4 | 0 | 1 | Frank Chen demonstrates strong domain knowledge by defining new core competencies for game designers in the streaming era. Andrew Chen expands on this by walking through the historical evolution of game mechanics from arcades to mobile. | |
| The Business of Esports: Monetization Gap and Value Accrual | 5 | 5 | 2 | 3 | Frank asks whether publishers hold all the leverage in the monetization value chain. Andrew gently reframes the premise, arguing that game fragmentation and rapid hit cycles give team organizations increasing bargaining power. | |
| What's Investable: "Picks and Shovels" Infrastructure Startups | 6 | 5 | 2 | 2 | Frank presents the classic venture argument for investing in picks-and-shovels infrastructure to avoid hit-driven game risk. Andrew offers a polite alternative view, explaining why content studios with embedded network effects are also highly investable. | |
| Conclusion, Cultural Permanence, and Overcoming Skeptics | 6 | 1 | 0 | 0 | Frank Chen summarizes the economic potential of closing the per-fan monetization gap and systematically refutes historical gaming skeptics. Darcy enthusiastically agrees on the generational persistence of gaming. |
Statements from this episode (23)
Carrocchio: Global esports viewership surpassed 450 million in 2019
“In 2017, there were three hundred thirty five million known viewers of esports content around the world. One year later, that number grew 18% to just shy of four hundred million views, and in 2019, the global esports audience base grew another 15% and surpasse…”
Carrocchio: Global esports audience will reach 650 million viewers by 2022
“Assuming a 14% annual growth rate beginning in 2017, which is conservative, by the way, we can expect around six hundred fifty million global esports viewers by 2022.”
Carrocchio: Esports audience size surpassed MLB and NHL in 2017
“If you compare each league's audience size with esports, esport leagues had a larger audience base than both Major League Baseball and the National Hockey League in 2017.”
Carrocchio: 2017 League of Legends finals beat World Series viewership
“The League of Legends Championship alone drew in more total viewers than baseball's World Series, basketball's finals, and hockey's Stanley Cup in 2017, second only to the Super Bowl.”
Carrocchio: Traditional sports generate $54 per fan versus esports' $4
“On average, the top four North American sports leagues drove in 54 dollars of revenue per each individual fan in 2017. Esports today is about seven percent of that, or four dollars in revenue per fan.”
Carrocchio: Global esports revenue will surpass $1 billion in 2019
“This year, global revenue will surpass one billion dollars, having been less than half a billion a mere three years ago.”
Carrocchio: Twitch paid Activision Blizzard $90 million for Overwatch broadcast rights
“Twitch paid Activision Blizzard ninety million dollars to broadcast the Overwatch League's first two seasons.”
Chen: 2014 global gaming revenue reached $80 billion, doubling box office
“By 2014 gaming revenue was at eighty billion dollars, twice the worldwide global box office take.”
Kulikin: Top esports events hit 100 million concurrent viewers, outpacing Wimbledon
“There is a hundred million, you know, a hundred million concurrence in, you know, certain eSports events. There's like ten million concurrence for Wimbledon. You know, the viewership of eSports more broadly rivals that of the big four sports.”
Chen: Average MLB viewer is late 50s; NBA average is 42
“Baseball, it's like you have the audience that is, you know, now in their kind of like late fifties you know, NFL, you know, NBA is, I think, like, you know, really young at, you know, 42 or something like that.”
Chen: Gaming will be the primary entertainment medium for new adults
“You're gonna start getting you know, a really interesting group of adults who, ah, they, their primary form of entertainment by hours through their, the, you know, all of growing up, all of, you know, getting into their twenties is gonna be gaming, not all, al…”
Chen: Watching others play games delivers 20% of direct enjoyment
“It turns out that watching somebody enjoy something, it gives you like, I don't know, 20% of the same enjoyment as like actually getting it yourself, and then it just turns out that then watching people, you know, play you know, games you know, also kind of is…”
Chen: Game developers must design for streamability, not just playability
“Now that this has, is very clearly a you know, major sort of like growth hack to be able to generate to make things that are streamable, now I think you have to, you know, almost work backwards, right? If you're working on a new you know, if you're working on …”
Kulikin: Esports has a blank slate advantage over traditional sports
“E-sports and gaming just has such a huge advantage because they're coming from a blank slate, right? And they're coming from an audience that, that they can define how that consumption happens.”
Chen: Talent is migrating from traditional sports into esports
“A lot of the talent is sort of moving from traditional sports into eSports in order to sort of supercharge the IQ, you know, within all of this, which is super fascinating.”
Chen: Mobile games require high monetization to sustain paid user acquisition
“Mobile games, you know, all the iOS games have been about, well, it's always going to be sort of, you know, paid install driven, so the monetization needs to be incredible, right? Needs to be free, and then monetization needs to, you know, you sort of are tryi…”
Kulikin: Esports holds structural advantage over traditional sports in audience participation
“Gaming and eSports has like such a huge advantage over traditional sports, right? Like the idea of like the version you hear of this in the kind of traditional sports media ecosystem is like, oh, we're going to let gambling happen, right? And it's like, that's…”
Chen: Streamable games will cause market-wide game fragmentation
“As all of the publishers all move towards building, you know, sort of this flavor of streamable game, that actually there are more and more, there's more and more fragmentation of games, right? And the overall market will be growing, but there's more fragmenta…”
Chen: Esports talent and team owners will gain power over publishers
“And so, I think over time, if that, if you get to that level, you'll get to a point where you know, the talent ends up holding, you know, the cards in the whole thing.”
Kulikin: Esports monetization needs infrastructure like Shopify or Patreon
“On the monetization side, because it's so early there you know, I think there's a lot of opportunities for companies to figure out how to exist in that space, and whether that, you know, there's a number of different ways, whether it's like analytics, you know…”
Chen: Game studios build network effects via competition, streaming, and UGC
“E-sports and sort of this tournament play and, you know, the competitive aspect, that's one version of this. Being able to create a streamable thing, which then, you know, has a community around you know, your whole product, that's another version of this. And…”
Chen: Major gaming genres like Battle Royale originated as mods
“League of Legends was, you know, sort of a derivative of you know, Dota originally, like more polished, which was a mod on top of Warcraft III, and, you know, and there's many, many games that sort of have this, you know, flavor. To it and also all, now all th…”