Esports On Your Phone Are Worth Real Money

Esports On Your Phone Are Worth Real Money

For much of the past six years, Andrew Paradise felt like an outsider in esports—a new revenue source in the video game industry, built around enormous multiplayer competitions. Skillz, his mobile esports platform, was small in comparison and deemed fringe by his peers. They were focused on PC games with dazzling, hardware-hungry visuals. Not phones.

But things are different now. At the annual Game Developers Conference held each March in San Francisco, on the day dedicated to esports, one of the first panels focused on mobile game competitions. More than 200 developers visited the Skillz Inc. booth. “Mobile esports was the hottest thing at GDC,” Paradise says. “The industry is shifting very quickly.”

Esports contests have gone from peripheral affairs to massive spectacles, with investment from billion-dollar game publishers, broadcast TV networks, and venture capitalists pouring into teams adept at PC games. Mobile games such as and attract more players—2.2 billion worldwide, according to researcher Newzoo—but generally not the kind who’ll train for tournaments. Now that phone hardware is good enough to run more complex games, even hard-core players are shifting their attention to phones. Six-year-old Skillz, the mobile esports leader, says it hosts more than 1 million tournaments a day and has doubled its monthly revenue, to $16 million, in the last nine months, putting it on pace to blow past $200 million in the next year.

Skillz is a central hub that can turn any game into a contest among friends or strangers, either by pitting players against one another or by ranking their scores. The company works with more than 8,000 developers to tweak their games for its 15 million players, who enter tournaments of as few as two people or as many as 10,000 and win prizes based on their results. (Average entry fee: about $2.) Skillz says it matches players based on ability. Cash prizes are paid via check or PayPal, and occasionally a new car or paid vacation is up for grabs. There are also free contests without cash-value prizes.

Newzoo predicts mobile games will account for a majority of game industry revenue, roughly $65 billion, by 2020. Paradise says he expects the $900 million esports business to do the same. “Software follows hardware,” he says, “and mobile is the dominant hardware.” The average Skillz gamer spends about an hour a day on the platform.

Unlike in traditional esports, most Skillz players are women, Paradise says, including 7 of last year’s 10 biggest winners, who each collected more than $200,000. The No. 1 player in 2017, who goes by the handle “yutourmaline,” won just shy of $421,000; that would rank her among the top 25 in the better-financed PC esports.

Skillz’s players include a diverse group of obsessives, many of whom drip candle wax onto their phones and scrape it off before each match, hoping the remaining residue will improve their grip on the screen. One member of last year’s top 10, Harvard sophomore Jennifer Tu, estimates that she spends about 10 hours a week on Skillz as a study break or on the shuttle between classes. Her go-to game is . “You have to be crazy good to make it big on a popular PC game,” says Tu, who also plays . “Skillz is more low-key.”

The son of two tech entrepreneurs, Paradise started coding when he was 6 years old. The following year he built his first video game from scratch in Pascal, an early programming language. He kept playing and thinking about games through the end of his 20s, when he sold mobile checkout startup AisleBuyer LLC to Intuit Inc. for $100 million. He started Skillz soon after with fellow AisleBuyer alum Casey Chafkin, now Skillz’s chief operating officer. (Chafkin’s brother, Max, is a staff writer.)

Big-name competitors are moving in on Skillz’s turf. In the past month, and , two of the world’s top-grossing computer games, released mobile versions. (As of April 11, they’re the two top free apps in the iOS App Store.) Shortly after, Finnish game developer Supercell Oy, last year’s highest-earning mobile publisher, announced the formation of a 36-team league that will compete using its superpopular game .

Some of the biggest esports teams signed on for the Clash Royale League, including NRG Esports, co-owned by Skillz investor Andy Miller, who’s also part owner of the NBA’s Sacramento Kings. “I’m really bullish on mobile gaming,” says Miller, an entrepreneur who sold Quattro Wireless to Apple. “The tech is there, and everyone has a phone.”

Microsoft Corp. and Inc. are experimenting with similar services. Microsoft recently bought PlayFab Inc., which helps developers make and publish games, and Amazon just launched GameOn, a direct Skillz competitor. Paradise says that’s validation. “Amazon doesn’t enter industries where they don’t see massive market opportunities,” he says. “And they won’t be the last.”

BOTTOM LINE – Skillz, the early leader in mobile esports, doubled its monthly revenue, to $16 million, in less than a year. But it faces tough competition, including from Supercell and Amazon.

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