An interview with EIG's Co-Founder Michael Broda
I was a former investment banker, I was doing business my whole life building up companies, restructuring companies, doing CEO, CFO positions. After investments I did in the past, I discovered the esports industry a couple of years ago. I joined through investments I made and later I continued as CEO of esports.com, built up Esports Players League (ESPL) and made some footprints in the industry.
I like technology, I like all the disruption that happened in the early 2000s with Amazon, Facebook, etc. Technology gave us a lot of industry changes in the past. I think that looking at the next wave of changes coming via AI, blockchain and all of that, I think that the esports industry is the perfect place to apply it. We are still at the very beginning of the esports industry, we will see a lot of growth and the only thing we are waiting for is the infrastructure to be built. That’s what Esports Innovation Group (EIG) is focusing on.
The common denominator is that in the investment banking industry, I did financial derivatives, stock trading and all that… is you’re basically dealing with Zeros and Ones. You build up algorithms, and if you have the right underlying information, you can analyse it properly and execute on it, then you’re gonna win. In the investment banking industry it’s very easy, you buy or sell shares, then you see the result. In esports it’s more complicated, but the underlying information is the same. You have data, the Zeros and Ones, and you’re moving these kinds of data back and forth.
I’m fascinated by the speed of information, you need to be very careful how you set up your business, how you work with the community and how you build up a community in the industry. It’s really difficult, the industry has its own rules, the community is the industry, these are the clients and why you are developing products and services. They are extremely good with technology, and that means they are extremely good when it comes to information, usually the gamers can develop new things, new ideas, they can execute on them, they could potentially develop their own games really fast. I think this is a challenge for every company to work with such an exciting target group.
We are not building 1 company with 1 topic, we are focused on building an entire ecosystem. That’s not because we have such huge ambitions, but rather because we think it is necessary. We don’t think it’s easy to build 1 tech stack or 1 tech solution and win the market, because the market is still fragmented. You can’t have 1 state of the art AI module and the rest of the industry is left unserved. So we decided to build the full value chain through our investments and putting them together as an outstanding B2B and market service. This is the difference, we have the market access already, we have launched a couple of B2C projects, and then we can buy, acquire and build tech, to test it out in the market so we can develop it further.
If we look at end-to-end solutions that serve B2B services such as Shopify for example, when you want to set up your shop in the ecommerce sector and you have a really good idea for a product, or want to connect your marketplace, you can go to Shopify to get your end-to-end solution. Imagine if you just want to sell your products but you need to deal with data warehousing, tech development, payment services, go to market solutions and many more really difficult things when it comes to technology. That’s why Shopify offers a great solution to this kind of target group.
This is exactly what we are doing in the esports industry. Many companies who want to get in touch with their clients and audience like Traditional Sports Clubs, Brands and Telcos end up having to do much more than they should. This isn’t their core business, just like how it is not their core business to run an esports event. So we identified that these end-to-end solutions are needed by these industries so they can focus on their core business and achieve their goal of reaching this audience, increasing their visibility and collecting data about this target group. This is what we deliver.
We are working really closely with our portfolio company TwoG Nation, which builds tech platforms, tournament engines, and the full tech stack behind esports platforms. We also have investments in Znipe.tv which delivers premium streaming technology with products such as ProView for League of Legends esports. Another company is Fantasy AI which is a dedicated AI team connecting the dots in the industry. We built up ESPL, which is a tournament platform running especially in Southeast Asia. We are also invested in esportsido, building the metaverse, there’s Vibadou which is a social media platform for teams and a couple of others that you can check out on our website esportsinnovation.group.
When selecting a company, we are always thinking about the whole value chain of the esports industry. There are several stakeholders like the community, the publishers and the brands. We aren’t only thinking about the value chain of today but also the value chain of the future. As we continue to assess the value chain, we see that tech plays a very important role in it. With this general understanding, we try to find the right startups and tech solutions that fit within the value chain. It can be in the area of audio, streaming, match making, or many others. We either look for these companies or incubate them ourselves to fill the role within the value chain we aim to create. From time to time, we see very interesting companies that have ideas of how to solve a specific industry problem. When this company fits, we are keen to invest.
One of our most recent investments was in Five Vectors, a company on the West Coast of the USA. They focus very much on the audio part of the experience. By analysing what is happening in the game as it happens, they are able layer audio solutions on top which are powered by AI. We didn’t have anything like that in our portfolio, we were very impressed by the tech, the team and we think that part of the sales process of this company can be delivered via EIG in larger B2B solutions. This was the reason why we invested in Five Vectors.
We are very proud of the success we had at ESPL. The company we built up as a really good tournament organiser especially in Asia and Latin America caught the attention of investors Warner Music, Genting Ventures and companies close to the industry. They invested into the industry through us and also created products with us. From that perspective, we are very proud of that accomplishment. We have also invested alongside BITKRAFT Ventures, the biggest esports VC fund in the world from what we’ve seen so far.
We’re already working with huge brands in the industry as well. Such as VSPN, the biggest esports company in the world. Also, Paytm International, as their exclusive esports partner to deliver esports solutions. Paytm is one of the biggest fintech companies in the world backed by Softbank and Alibaba. On top of that, we have done big campaigns for companies in the US like Uber.
Our offices are basically all over the world now. Our company is mostly working digitally, we have part of our team in the US, in Los Angeles and New York, we have companies all over Europe like Sweden, Germany, Prague, Belgrade, Serbia and our team in Asia such as India, and in Southeast Asia in places like Kuala Lumpur and Singapore. We are really global, and I think we are showing that you can build companies in the digital space remotely. The COVID situation forced us to work online, and I think we are utilising all the benefits of it.
For brands, it is extremely important to be in the esports industry. To do pilots, to test the industry and reach their customers. Because it will get more difficult to connect with this target group. You need to be authentic, esports and gaming is a really important way to connect with your customers. The question isn’t if a brand should enter the industry, but how, when and how much.
When it comes to startups, I think it is not easy to make money in the esports industry. Maybe it isn’t the right time, because there isn’t a lot of money in the industry yet. If we look at the games industry being over $200 billion, while esports just has $1 billion, so compared to that it’s really small. But there is a huge potential for it to go up significantly. That’s why it’s important to work with companies like ours or other VCs who help you to get traction and revenues fast. Because if you start with an industry that has a small cheque in the beginning, while you get access to publishers, place your product on the market and you think it will take you 6 months, suddenly it takes you 18 months, at which point you run out of cash.
So, I think it’s not that easy. Sometimes if you have a unique idea you might still succeed, but the rate of companies not succeeding in this industry is much higher than in other industries. I think companies like ours help to bring startups successfully through the ‘valley of death’ which everyone is familiar with from the startup world, as well as get better and faster access into the industry with ultimately faster execution.
I think we should also start to think about what really is the esports industry. When we look at the generic esports industry numbers, we are often just talking about big tournaments, ticketing, merchandise and sponsorships. But there are many more things that are happening within the esports industry that are not part of the calculation. So we are very optimistic about the market size in the future.
When it comes to marketing, we know that digital ad spend is about $440 billion USD, and we know that esports will definitely be a percentage of it. It won’t be 50%, but it can be 5%. There is a huge potential to go above and beyond the current estimates. One of the reasons esports and the infrastructure was not successful yet was also due to connection, new technology like 5G, cheap access to technology and computing power. This has all changed recently, there will be computing power hosted on the cloud in the future. In India, 5 years ago, not many people had internet access, and now almost everyone does. Everyone can now become a gamer easily. That’s why all these changes turn all the gamer customers into esports customers as well, because it is becoming a lot easier to compete with anyone online in the world than it was 5 years ago. So it’s hard to estimate what will happen in the next 5 years, we are very bullish, we could say it’s $5 billion when it’s actually $20 billion or the inverse is also possible. There are many factors at play, but we see the potential, it might not be in 5 years but in 7 years or it may even come faster.
Success comes from our products and services being successful. When we see our clients and the community using it and it’s getting traction. For example, we come up with algorithms that make matchmaking a lot easier for the gamer to help them find tournaments easier and have fun. We are customer centric, we want to have a good solution. Like I said in the beginning, the industry is really fast in communication, you need to have the best product. No one really cares about the brand name of the product itself, they care about UX/UI and really giving value to them. For us it’s really important to give the best products and value to them. When we do all of that, success will come with it.
Anyone who wants to discover the esports industry, it can be startups or intrapreneurs who want to achieve something and have an idea who wants to build something that fits in our value chain. Especially brands who are looking for interesting ways to engage with the community using the tech available. As well as our potential B2B partners like Traditional Sports Clubs, Telcos, Fintechs who really want to use the B2C reach via the esports industry and we can develop solutions for them.
EIG is a SaaS provider and venture corporation, dedicated to helping businesses thrive amongst gamers. With its proprietary technology, industry experts, and strategic partnerships, EIG offers a range of Esports as a Service (EaaS) products and services to help businesses deliver the best possible experiences for gamers everywhere. Headquartered in Switzerland with offices in Europe, Asia and the US, EIG is at the forefront of Gamer-centric technology. — “EIG is on a mission to inspire an entire industry as the architects of active digital entertainment technology.”