The global gaming industry has seen significant changes over the last few decades. Ever since the first computer game called Nim was designed by American physicist Edward Condon in 1940, there’s no looking back for the industry.
The video game console was introduced in the 1970’s and this evolution was rapid over the next few years. As video game graphics improved, companies such as Electronic Arts [EA] and Activision Blizzard [ATVI] were found.
Heavyweights such as Sony [SNE] and Microsoft [MSFT] soon wanted a piece of the gaming pie and introduced popular consoles such as the PlayStation and Xbox. The global gaming market has grown at a spectacular pace and is expected to reach $137.9B by the end of this year, according to Newzoo.
The growth of eSports
The latest growing trend in the gaming space is eSports. eSports is a multiplayer video game played competitively by professional gamers.
While video games were traditionally played for recreation, it has now become a viable career option for gamers. The inflow of funds into eSports is set to drive prize money and sponsorship deals higher.
Gaming research company, Newzoo expects eSports to reach $905.6M by the end of 2018, a rise of 38% year-over-year. Newzoo estimates brand contribution alone to account for 77% of the eSports market or $694M this year. Better yet, the global eSports audience is expected to cross 380 million this year.
Major video game companies have entered the eSports space
The eSports segment has attracted the attention of top gaming companies. Activision Blizzard is already a market leader with its hugely successful launch of the Overwatch League.
The first season of the Overwatch League garnered attention from sponsors as well as spectators. The global audience spent 160 million hours watching matches of this league.
Activision recently announced the sale of eight new franchise teams bringing the total number of teams to 20. The gaming giant aims to have a total of 28 teams for the Overwatch League. While the first 12 teams were sold for $20M each, the next round of franchise sales was between $30M and $60M, according to ESPN.
Activision signed broadcasting deals with Amazon’s [AMZN] Twitch to stream live matches. It has a content partnership with Twitter [TWTR]. The company also bagged sponsorship deals with Intel [INTC], HP [HPQ] and T-Mobile [TMUS]. The broadcast rights and sponsorship deals have generated over $100M for Activision.
The worldwide eSports audience is estimated to reach 580 million by 2021 and this will lead to an increase in eSports tournaments.
Gaming firm’s such as Electronic Arts [EA] organized The FIFA Interactive World Cup, an annual video gaming competition. Companies including MLG, AHQ and Denial have multiple sports leagues as well.
Key drivers for eSports growth
Research company Newzoo expects the eSports market to touch $1.65B in 2021.
The company estimates that the growing industry will bring in contributions from sponsors and advertisers. Companies such as Twitch and YouTube [GOOG] will also eye media rights and broadcasting deals. Gaming publishers are paid ‘Game Publisher Fees’ to host tournaments.
There are also tickets and merchandise revenue generated via ticket sales for eSports events. The industry’s sponsorship revenue rose 55% to $250M last year while Twitch paid $90M this year to broadcast the Overwatch League.
Increase in viewership data and prize money
Twitch is an online streaming platform and primarily focuses on broadcasting eSports competitions from around the world. It has managed to grow its viewership base at a compounded rate of 21.3% in the last three years.
In 2017, viewers tuned in to watch 6 billion hours of content on Twitch. Earlier this year, YouTube made its largest eSports investment to date and signed a multi-year broadcasting deal with Faceit.
These partnerships and deals have resulted in a substantial increase in prize money. The total prize pool for the Dota 2 tournament exceeded $20M.
The above chart shows the earnings of top gaming players. Japan’s Kuro Takhasomi leads the eSports earnings with a prize money of $3.74M to date.
Tencent expects China to lead the eSports market
Tencent is the leading global gaming company in terms of revenue. The company estimates China’s eSports sector to reach 350 million users by 2020 and generate annual revenue of $1.5B. If this happens, the country will account for 59% of total viewers.
What’s more, the total number of eSports viewers might exceed Tennis viewership in the United States. As per Newzoo estimates the most popular eSports team will have a Twitter following exceeding that of Golden State Warriors.
With the game-streaming content set to exceed 10B hours across major platforms, the world’s 10 biggest cities might just invest in a dedicated eSports stadium.
How Mark Cuban Invested $640k In A Company That Started…As A Prank
In what turned out to be a ruse, a startup disguised their business as a prank to raise over $640k from investor Mark Cuban on Shark Tank.
Minneapolis-based entrepreneurs, Ryan Walther and Arik Nordby, founded Prank-O, a business that was built around amusing their friends with bizarre and fake products.
In their pitch to the Sharks, they introduced a string of products in gift boxes — ranging from coffee-maker shower heads to snack hats — only to reveal later that the novel products were fake.
The duo looked to snag an investment of $640k for an 8% stake in the business, before revealing their declining sales — from $10M five years ago to an estimated $2.8M this year.
The dip in sales came after the team tried to branch into creating the prank products, stringing together debt worth nearly $1M.
Despite the numbers, Mark Cuban bit. “I’ll make you an offer, but you’re going to have to listen,” Cuban said.
“You’ve got a great product, you’ve got great comedy minds, but your track record speaks for itself, and I don’t mean that in any disrespect, but all entrepreneurs go through this,” he said, offering $640k for 25%, more than three times what the company initially pitched.
This Mogul Became America’s 1st Black Billion-Dollar Businesswoman
Where to start?
She’s the first black billion-dollar businesswoman. Before Oprah Winfrey.
She started as a TV executive, founding Black Entertainment Television (BET), the first TV network targeting African Americans. She then became a real estate mogul.
Oh, she also owns a stake in three major sports franchises, the NBA Wizards, NHL Capitals and the WNBA Mystics, the African American, period, to boast that claim.
In honor of Black History Month, let’s dive into her remarkable career.
- Born Sheila Crump in McKeesport, Pennsylvania, Johnson co-founded BET in 1979 with then-husband Robert Johnson. The couple sold it to Viacom in 2000 for $2.9B
- Sheila Crump Johnson became the first African American woman on the Forbes’ Billionaire list in 2000—beating Oprah Winfrey to the distinction.
- Per Forbes, Johnson has an $820M net worth as of 2019
Foray into real estate…
After closing the sale to Viacom, Robert and Sheila pocketed around $1.5B each. Johnson used that windfall as seed money to build a hospitality real estate empire in 2005.
“There’s a disparity in paychecks between whites and blacks,” she told the Wall Street Journal. “I will never forget that.”
As CEO of Salamander Hotels and Resorts, Sheila controls a spectacular portfolio of six luxury hotels in Florida, Virginia and South Carolina. And she’s built it from the ground up—literally—in her own spirit.
“I’ve been to many hotels, not only in the US, but all over the world,” she told Forbes last year. “And I wanted to find something that was going to really make Salamander stand out beyond all of these hotels.”
So what does that mean?
“You have to understand, there are a lot of people, investment companies, with very deep pockets,” she says. “They can do it, but they don’t have the experiences that we’re able to bring. I am constantly trying to find a way to help Salamander Resort & Spa stand out head over heels above any other hotel — not only in the area, but in the nation.
“I want them to leave that resort wanting to come back and not just say, ‘I’ll be back in six months.’ I want them to come back all the time.”
And so far it’s worked. In fact, on Forbes Travel Guide’s 61st list of Star-Rated hotels, Johnson’s Salamander Resort & Spa outside of Washington, DC earned a Five-Star distinction.
Forbes: “Everything [she] touches turns to gold.”
That’s a real quote. From Forbes. Last year. It’s also true.
BET? Billion-dollar exit. Washington Capitals? Stanley Cup.
And Roma. Won 10 Oscars. Who showed it before a single soul started caring? Johnson’s Middleburg Film Festival. (Which, by the way, has 32 films and counting in Academy Award contention.)
Remember her golf resort at Innisbrook? Oh, yeah. Hosts the Valspar Championship, one of the PGA calendar’s most-anticipated tournaments.
Becoming a billionaire comes with a new level of clout as well. “When you don’t have money, you’re not invited to special events; you really don’t matter,” she told WSJ. “It’s a society thing.”
So instead, she’s turned to giving back. Her Sheila Johnson Fellowship’s paid for more then 40 scholarships at Harvard University for students who otherwise wouldn’t afford to attend.
Breaking glass ceilings.
There’s an alarming statistic in business and diversity—especially as it pertains to women. According to research by investor Richard Kerby, 18% of all VCs are women—and only 3% are black. In addition, less than 50 black women ever have raised $1M in funding.
“When I got started,” Johnson says, “I couldn’t get a loan. I had to use my own money to get Salamander Resort and Spa.”
She explained to WSJ last year that men can go to any bank with a bank proposal. And no matter how “wacky” the idea is, she said, “they’re going to get the financing. Women do not have that ability.”
Johnson’s taken it upon herself to do something about that, becoming one of the founding partners of WE Capital, an investment firm that invests in female entrepreneurs.
“I started out in a very unique position where I had my own capital to be able to get started,” she says. “But there have got to be banks and investors that believe in helping women who want to be entrepreneurs in the hospitality business.
“And it’s just really, really important that they really take a look at this.”
(WTF?!) Is The MBA Dead?
Well, well, well, what do we have here.
So according to a (totally non-biased) press release from the Graduate Management Admission Council (GMAC) earlier this year, MBA grads are making more money than ever.
(Just for clarity, the GMAC is a “global association of leading graduate business schools.”)
Apparently, US employers plan to offer new MBA hires a starting salary of $115,000, the highest ever recorded in the US when adjusted for inflation.
Key words: PLAN. TO.
In spite of these lofty, non-scientific projections, the number of MBA applications—as a whole—is on the downslide. Here’s a chart from the otherwise very optimistic GMAC.
(Yes, the entire WealthLAB crew is MBAs, too. Jury’s still out whether that makes us marks or smart. 🙄)
And according to Forbes, this makes it the best time ever to pursue an Ivy League MBA.
So what does this all mean? Let’s unpack it for a second.
Top 10 programs are letting everyone in…
According to the various reports, some programs across the country have seen double-digit drops, with the top 10 business schools seeing serious declines.
At the highly selective Yale University, the acceptance rate jumped by nearly 44%. Dartmouth College’s Tuck School of Business, another Top 10 program, admitted more than one in three of its applicants, a 48% increase in a single year.
Meanwhile its applications dropped by 22.5%.
“The joke among deans is that ‘flat is the new up,'” Andrew Ainslie, the dean of the University of Rochester’s Simon School of Business. “If we can just hold our numbers, that is an incredible achievement.”
Other Ivy League schools have dropped also, with Harvard measuring a fall of 4.5%. Meanwhile, big names like Stanford saw a bit more at 4.6% and UC-Berkeley Haas at a shaking 7.5%.
And outside the Top 10?
When these numbers are narrowed down to individual schools, like University of Michigan Ross School of Business, the picture gets worse. This university saw the biggest reduction, noting an 8.5% decline with just over 3,000 candidates applying.
There are only a few reported exceptions to this overall decline, but the biggest business schools in the nation agree that there is a serious reduction in MBA interest.
Ainslie says up to 20% of the top 100 MBA programs in the country are likely to close in the next few years.
Uncertainty over work visas for international students, the strong US economy with decreasing job loss, and the rising costs of degrees are all noted as potential causes.
The positive side to the story, as Ainslie pointed out, is that it’s going to spark new development in the design of existing MBA programs. One particular program has been built around entrepreneurship.
In addition, the prestigious post-MBA job paths—think investment banking and management consulting—have been replaced by jobs in the tech world and Silicon Valley.
“Tech has displaced consulting and finance as the preferred career path for top-tier college students,” says David Minnick, founder and CEO of Camino Data, and former president of beverage company, Purity Organic.
“When I started Princeton in 2003, it was still a big deal to get a MBA or JD/MBA after college,” he tells Forbes. “That was the thing to do.
“Four years later, when I graduated, we wanted to be more entrepreneurial. We saw people who had started successful tech businesses. We saw there were low barriers to entry, and that it was okay to fail.”
Student debt vs. MVP?
There’s also the whole cost thing. Business school can run you $200,000, making it a cringe option for 20-somethings already riddled with debt. For founders, this is money better spent building an MVP.
(No, not Most Valuable Player. Minimum Viable Product.)
Not to mention the experience it brings.
“When I interviewed people with an MBA, or experience at a big beverage company like Coke or Pepsi,” says Minnick, :I was concerned that their personality type wouldn’t be the right fit for a young and growing company like ours.”
In his view, hustle, skills and culture fit are far better predictors of performance than a degree.
Ivy League MBA fire sale…🗑
Apparently this all means that IF you are one who’s always dreamed of an MBA from a prestigious school, there’s no better time than now.
“With an unprecedented decline in MBA application volume at many business schools – including iconic, top-tier programs – there’s definitely a ‘perfect storm’ happening for prospective applicants,” Alex Min, CEO of The MBA Exchange, a top admissions consulting firm, says.
“Deans and admissions committees are feeling strong pressure to fill available seats with qualified candidates, even if some of these individuals might not have been admitted in previous years when application volume was growing.”
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