The esports industry has experienced, and is projected to experience substantial growth. As it continues to develop at a rapid pace, we are starting to see risks that are specific to the industry. In assessing whether a target is worth its price tag and whether its projections are attainable, there are a few unique characteristics pertaining to the esports industry that should be considered.
- Knowing the game and the third parties involved is crucial in the esports industry, as the goals of the game developers may not always align with the owners of esports teams. Unexpected announcements (such as a game developer deciding to focus its resources elsewhere) have the potential to cripple the future revenue of a company that generates a portion of its revenue through prize money, sponsorships and streaming for that particular game.
- The esports industry is subject to the trends of what’s cool and popular at the time. Given the growth of the industry, it is no surprise that new games are hitting the market at record speeds. This immense popularity directly takes away from play time, viewership and advertising exposure of the previously established games. Therefore, in esports acquisitions, it’s more important than ever to focus on gaming trends and product life cycles.
- An important consideration for every team is choosing their name and associated brand. It’s crucial to know your branding rights and the parties that can affect those rights before you pour resources into building your brand.
Jenny Ng (Toronto) considers these factors in more in depth in this article on Deal Law Wire. Click here to read the full article: