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Rocket DAO ecosystem

Bridge to esports: How the ecosystem for gamers Beyond Esports is developing

Tuesday, May 18, 2021

Today the computer games market is much larger than the movie market ($159.3B versus $91.83B according to data for 2020). It is not a big surprise that young people want to join the esports elite as much as they want to become movie stars. Only here there are much more acting schools than places of training in professional gaming.

An experienced team of IT entrepreneurs decided to correct this gap and created the Beyond Esports platform — a convenient bridge to esports. CEO Dmitry Machulin told us where to get cheap traffic, which games have more money, and why esports is such an awesome niche.

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Beyond Esports: what it offers and how it is monetized

We are building a clear and understandable way for players to enter the esports world. Our platform gives the opportunity to play in tournaments, learn from cool coaches and monetize your skills. Its “feature” is the ability to compete (we have closed the need for this in a number of popular games). The competitions are held in the Battle Royale format, with about a hundred players participating in the battles at the same time — so much more fun than playing one-on-one.

Hardcore players come to our tournaments to find partners and build a strong team for the competition. For other users, the tournament is an opportunity to have a good time and find new friends. Valuable prizes are provided for the first-place winners.

For those who want to improve their level of play, we have developed online courses consisting of video tutorials that we conduct together with top players. After each lesson, the student must complete their “homework” — complete a game mission on our platform to test their mastery of the material. Users are also offered personal online classes with professional coaches: for this purpose, we specifically train the best players on how to teach others. At such classes, those who wish can bring their skills to the sports level.

Our platform gives players the opportunity to monetize their skills by ordering some players from others to complete certain game tasks for money. In general, all parts of the platform lead the gamer to the doors of big esports: found a team at a tournament — pumped skills on an online course, and then with a personal trainer — start playing in professional competitions, and earn some extra money along the way.

Beyond Esports
Click on the image to oprn Beyond Esports' profile on the Rocket DAO platform

We monetize the service by subscription: for money, the player can get access to the advanced features of the platform (more competition functionality, ratings with more valuable prizes, educational services, and many other privileges). The subscription costs from $5 to $15 depending on the tariff. The most popular one costs $9. Individual coaching sessions in addition to those included in the tariff are paid separately, the average check for an hour-long personal coaching session is about $27 with a margin of 35%.

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First months results

First months results

The Beyond Esports platform began functioning in its current form in December 2020. Today, it has more than 62 000 registered users: every tenth is trained, the rest are competitive league players, and 2 700 people buy our subscription. As a result, we have already passed the break-even point in the educational sector, and the competitive league is at a visible break-even point in its operational activities, so we can direct our investments to growth and development.

We register from 1 000 to 2 000 new users per day, and we do not include “full” advertising and the referral program. Another two to three thousand registrations are brought to us by one advertising integration with a top streamer.

35% of our users are from the Northern European countries — it just happened by itself, despite the fact of no personal advertising for them, except for a partnership with several Russian-language streamers. The remaining 65% are from the countries of the Eurasian Economic Union.

We also received the status of an official partner of Riot Games (publisher of “League of Legends”) and the approval of Epic Games (publisher of “Fortnite”), and now we can hold competitions in these disciplines, use the developer API, as well as many other features. And at the same time, streamers and players do not worry that they can get blocked for playing in the league or when monetizing their passion.

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Growth drivers

The cost of attracting users from Europe and the CIS is very low and is $0.35 — this is how much one user who came to us from paid channels and registered on the platform costs. We were able to achieve this figure due to several circumstances.

First, partnership with streamers — they have a large audience and a huge desire to monetize it, but not so many opportunities. We also provide the streamer with the infrastructure for free, where he can conduct special games with his audience, but statistics and everything else (processing demo records, creating a lobby for a hundred people, automatically adding all players to the lobby without adding the streamer to friends, starting and ending the game, giving out rewards) is done automatically. Such games increase the popularity of streamers by an average of 15–20%, so they are willing to cooperate with us, and for us, it is a source of almost free users.

There are also a lot of young players who want to upgrade their level and become esports players — for them, we are building a ladder from gaming to esports and giving them all the necessary tools. There are more and more people who want to try to become esports players — and we plan to increase this.

Another trend is the declining popularity of single-player games. All publishers today make multiplayer projects because people are more and more like to compete with other players. Accordingly, there is a desire to play with someone famous and attractive to them, and we provide this opportunity.

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Model narrowness

Professional training in esports disciplines is only about five years old — this is a very young field and the lack of people with teaching skills is very sharp.

Imagine a person who has earned $200 000 from playing Fortnite — this is great money, and he is most probably under 18 years old. At this age, it’s hard to be a good teacher: patience, diligence, consistency come with work experience. And we have to spend a lot of time and effort to make a good training program out of the experience of such players because they can not independently assemble a training course from their skills.

It is also very difficult to find a methodologist with experience in developing esports training materials: as a rule, people who understand something about esports do not know how to teach. Therefore, training of trainers and methodologists is one of our areas of work. We “pump” people, teach them the specifics of the game, pedagogy, communication skills, explain the difference between the audience of different games and the features of communication with each, their needs and dislikes.

Almost all team members (coaches, developers, content managers, designers) have to be additionally trained — onboarding takes one and a half to two months. For a long time, but as a result, we get cool shots: here we have a “bottleneck”.

The pandemic has become a kind of “brake” for development, especially in dealing with investors and partners: previously, you could come and talk personally with the right people and quickly find out the answers to important questions. Now the borders are closed, you have to do everything remotely, and this slows down the process, but on the other hand, the number of players has increased.

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Games that we earn money from

Games that we earn money from

The main games are Fortnite and League of Legends, we also work with Call of Duty, CS: GO and Dota2 — this choice is based on an unobvious feature of demand in the gaming industry. Dota2 has 300 000–400 000 online players per unit of time, while Fortnite has 5–6M. Another interesting fact: in CS:GO and Dota are played by young people between the ages of 18 and 22, while Fortnite is played by children between the ages of 9 and 14.

At the age of 20, the user pays for himself, but pays a little, since earnings at this age are usually small. And schoolchildren are paid for by their parents, who are not so straitened in funds. Selling services in this category is much easier, and the average check is significantly higher than in more “adult” games.

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Where users come from

Our main sources are Twitch and YouTube. Since 80% of the game live content is consumed on Twitch, it is enough for us to use the top streamers in the broadcasts of our platform: people are interested, find us and stay. YouTube works in a similar way: there we post already mounted recordings of broadcasts.

Periodically, we “warm” the audience with Instagram: for example, before integrating with a European streamer, we simply show our logo or creativity associated with our brand. This works exclusively for brand awareness, and no actions are required from users. And since people trust familiar things more, after such” artillery preparation”, the conversion rate from integration becomes higher.

It is very essential for us to gain the trust of our users. For gamers, linking their gaming account on an unfamiliar platform is a very difficult decision, like linking a salary card on an incomprehensible site.

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From the idea to the first investment

From the idea to the first investment

Esports has always been present in my life and in the lives of co-founders since childhood: playing computer games, following the development of esports, rooting for your favorite teams-but as a hobby. We decided to turn it into a job and launched a startup in September 2018.

Our first option for entering esports was the “Academy”, which operates in an offline format — it was a pilot project together with the University” Synergy”, where we taught students aged 9–13 years to be esports players.

The project turned out to be profitable, but not scalable. Since gaming is a very young field and there are only a few dozen good coaches in the Russian-speaking space, it turned out to be an impossible task to find a sufficient number of them to build a large project. It was a fairer decision to sell their time in the form of personal training for a lot of money. For those who wanted to get an affordable training option, we made a video course. And for gifted children and children from low-income families, free places were provided.

After making such decisions, we launched the Academy in an online format, and in two months of work, we found several guys who stand out from the rest. Subsequently, one of our students was bought by the Gambit Esports club, owned by MTS. It was our first official transfer, we received several thousand dollars and the understanding that we are training well. The catalyst for further growth was the combination of practice and theory in one place: we decided to launch a game league and add training to it. In early 2020, the league appeared on the basis of a Discord server — a startup version of “sticks and blood” to test the hypothesis. Access to the server was sold by subscription.

When the number of users approached three thousand, and it became clear that the audience was growing steadily, we decided that we had found our niche. We raised angel investments and began to develop MVP: our own gaming platform, the first version of which was launched in December 2020.

We raised investments due to our network in the amount of about $100 000. After the pivot towards combining practice and theory, we showed good growth, and 2 weeks before the lockdown in March, we closed a deal for $250 000 at a favorable valuation for us.

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Development plans

Now we are developing a mobile application to enter the US market with it. We have already registered a company and a trademark there. This decision was made because a maximum of 30% of American gamers play on personal computers, while the rest prefer consoles. Making your own application for consoles is very expensive and very long. Therefore, a mobile app is the only way for us to enter this market.

For the US market, we want to add the ability to more easily search for a team and a partner — this will make it easier for many gamers to enter esports. A suitable team is important both for gamers who are going to high esports achievements, and for fans of just playing well with friends.

Almost finished parsing (automated data collection process) of in-game statistics. A gamer will see their statistics in their profile on our platform, and we will be able to make recommendations on changing the style and strategy of a particular player based on this data.

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Competitors

Everything related to gaming and esports is a young market, and all its players are on different sides of the ocean. So far, everyone is smiling at each other, but it is already clear that in a couple of years it will not be up to smiles. We plan to grow so much that we will compete fiercely with most of them.

Our competitors provide services either for gamers or for esports players, but do not provide a bridge between these areas — namely, there is a very high demand for it from customers. We offer a transparent, clear, and working way to esports — this is our unique trading offer.

Of course, we closely monitor our competitors and adopt their best practices. Among our “sources of inspiration” are Legionfarm (accelerated in Y Combinator and raised more than $6M in three rounds), ProGuides (raised $7.4M in two rounds), FaceIt (raised $12M in Round B). We monitor their updates, change of vision, and if something important happens to them, we will be able to quickly adjust our strategy.

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Team

Team 

Previously, I was engaged in a regular operational IT business with the head office in the Czech Republic, and developers in Russia: we developed applications and software for banks and crypto banks. In this area, for several years of work, everything became so clear and predictable that the fuse to work completely disappeared, and I wanted something new. I came to Russia and met with one of our developers, Danila Ryndin — the future technical director, with whom we launched Beyond Esports.

Now we have three co-founders: me, Evgeny Vasilyev and Dmitry Smilyanets, and one adviser, Artem Smirnov.

Zhenya was a regional tournament operator in the CIS and for 4 years organized many thousands of Fortnite tournaments. We bought his company in 2019, when we were already actively developing our startup. This merger was necessary to gain the support of the game’s publisher and a large audience. After the merger, Zhenya is engaged in the operational management of Beyond Esports.

The second co-founder Dmitry — the god of esports, founded his first team more than 20 years ago. He created several star teams that became world champions.

We are also assisted by adviser Artem Smirnov, head of the game studio Come on Games and Managing partner of NVO Capital, partner of GVA (Global Venture Alliance).

When working with us, Artem uses, among other things, his experience as an adviser of acceleration programsStartech.vc: Global Pilots, Game Innovators, and HSE Ink accelerator of the Higher School of Economics.

Our permanent team consists of 25 people: engineers, designers, product managers, and several content managers. Periodically, we attract additional people to project tasks.

We have a very small burn rate (a measure of the speed at which a company uses its cash reserves to finance existing expenses, also called spending dynamics or negative cash flow — Startup Jedi) because we have optimized the staff and hired specialists from the regions. We also have a well-developed option program: for each employee, the progress on salary and options is clearly outlined. The team sees that the company is growing and understands that the value of their option increases every year.

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Investment

The ideal investor for us in the next round is a specialist from the gaming industry. Any gaming is selling a story, and a person who knows how to sell such stories on the American market would really help us in this.

We are now communicating more and collecting feedback on the product. We have enough money to work with. Slowly we collect bridge financing (The main form of debt financing for startups, used when the company has spent all the funds received in the previous round, and expects the next round to be held in the near future. As a rule, startups receive bridge loans from those investors who financed them in the previous stages. There are also special venture funds that specialize only in providing loans in the form of bridge financing. — Startup Jedi) from people from the world of media, entertainment, and the gaming industry who had experience in launching and localizing a product in the United States.

The funds are needed to enter the US market: to recruit an audience in a new market and localize the product there. Half of the funds have already been raised, so we will be happy to talk to an experienced specialist in our field.
 

18 May 2021

 

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