The Hype Around Esports Is Fading as Investors and Sponsors Dry Up
The ad market is shrinking, crypto is in freefall and venture capitalists want to see profits
Article talking about how esports (ie video game tournaments) are significantly contracting. This seemed to be the model to justify Zwift’s high valuation and investment in competition.
I wonder how much these same factors will affect zwift? People will ride on zwift just like they still play games, but the question if is there real money in the public display of zwift competitions?
Are they they next cycling company to hit hard times?
Of course the general contraction could affect Zwift also.
But I think Zwifts business model is very different to what we see in (regular) esport. The problem in esport is that it seems to be hard or impossible to convert enough interest into revenue by selling tickets, merchandise, sponsor deals etc.
The basic business model for Zwift is selling subscriptions. All the tournaments / races, selling hometrainers etc. seems to be aimed at driving demand for subscriptions. It’s not their primary source of monetization.
That being said, I think everyone is heading for difficult times.
Or rather somethings have to return to “normal” levels, because there was a lot of absurds and things backed by nothing. The issue is that this will also affect the things that were not part of insanities.
This is going to be the case with all SAAS companies, including likely TR.
As budgets are squeezed all of these subscription services that previously were just auto-renewed without thinking are going to be scrutinized and people will cancel what is not essential.
When you look at a cyclist who might have TR, Strava, and Zwift, you are looking at ~$40/mth in cycling app related subscription fees. Thats close to $500/yr after tax.
I’d argue that competitive pro-level esports costs Zwift much more than it gains them. I don’t want to see Zwift pull back from eSports, but they could probably cut their eSports budget to near zero (aside from what they do to support community racing) and not lose a single subscription. As of now they don’t get any funding from advertisers/event sponsors as far as I know, so they’re not in danger of losing that slice of the pie in the same way that other big eSports organizations are.
I would tend to agree. My understanding is that they raised capital with the plan that expanding into the competitive pro-level esports would be a major driver of their growth and set their valuation based on this being a lucrative opportunity. It does not seem like that is panning out for them.
eSports for bike racing is the crypto of the training platform world.
Honestly, it was not much different than the line of BS that Peloton was spinning to their investors…the idea that they were a “software” or a “tech” company. There was no basis in reality for the claim.
Anyone with half a brain cell could see that the idea of eSports for bike racing was not realistic. eSports that are successful are fast-paced, action-packed and frenetic. Bike racing can be dull enough in real life….trying to create something where people tune in on YoiTube to watch people race on trainers virtually? Pfffft…