Why are Tech Companies Chasing Gamers?

Gaming is a massive, often overlooked market, which has been popping up in headlines, and has a sizable presence in greater Seattle.

To put the magnitude of games in perspective, the highest grossing movie of all time is Avengers: Endgame, which generated ~$2.8 billion of revenue. The popular Grand Theft Auto V has generated over $6 billion in revenue, and despite being a 6-year-old game, recently had its best week ever thanks to elements that were added recently – an in-game casino.

Over the next few years, gaming is going to heat up in the same way that every major media company is now jumping into streaming video. So what are the key things to watch, and what is noise? Here are the top three trends to watch in gaming right now.

Click here to read more on Geekwire (where this post was published!)


Why We Invested in GawkBox … in Three Charts and One Photo

Pictured in the Photo – L-R Andrew Allison, CRO; Hope Cochran, Venture Partner Madrona, Daniel Li, Senior Associate; Chris Brownridge, CEO; Tony Chong, CTO

Today we are excited to announce our investment in GawkBox. Over the last few years, we have closely followed the macro trends in live streaming, digital marketing, gaming, and eSports, and we are thrilled to be partnering with the GawkBox team to build a company at the center of this ecosystem.

GawkBox is a platform for the live streaming market that lets fans send sponsored “tips” to their favorite streamers by downloading and completing actions in specific games or apps. Fans can make donations to streamers without direct credit card purchases, and advertisers can engage fans of live streamers with targeted and measurable marketing campaigns.

GawkBox’s users, creators, and advertisers all love the platform because it solves the problem of monetization in the live video market, creating a win-win-win for everyone. Obviously, they have a great product, but why else are we excited about this? Here’s why in three charts:

Live Streaming and Online Video is the Future of Media

Over the last 5 years, the average daily viewership of Twitch has increased 10x to an average of nearly 800,000 viewers per day. In the same time period, Disney has lost over half of its key demographic of kids age 2-11. (For an additional point of comparison, the average daily viewership of CNN is ~700-800K and ESPN is ~800-900K viewers). While Twitch and other online video channels continue to grow, traditional broadcast and cable viewership is shrinking.

Why? Online streaming video is accessible anywhere, on-demand, and interactive. The unique combination of social and broadcast media on sites like Twitch or Facebook also makes live streaming incredibly sticky because of the ability to interact in real time with the people creating the content. Live, online video will redefine media, and we’re not the only ones who think so – Mark Zuckerberg is “obsessed” with live streaming too.

We’re excited about this because GawkBox is building a platform that helps more content creators earn money and build careers in live streaming and online video. By solving a key monetization problem, GawkBox is going to accelerate the growth of the industry.

Digital marketing is growing rapidly as advertisers see positive ROI

It’s not a coincidence that two of the largest companies in the world today are digital marketing platforms focused on measurability and performance. Marketers and advertisers spend a lot of money on ads if they can measure a positive return on investment. (If you want to learn more about performance marketing from an advertiser’s perspective, I highly recommend this video with Gabe Heydon, the CEO of MachineZone, on what the future of marketing will look like).

Over the last century, newspaper advertising revenue reached a peak of $49B across all newspapers. Alphabet surpassed that in just 15 years because they were the first company to offer a performance marketing solution at scale. Facebook is growing just as quickly because it offers a straightforward way to market products and acquire users while allowing advertisers to measure their return on marketing spend.

Today, as a marketer, it’s very hard to deploy dollars into the live streaming market because it is not scalable to sign many deals with individual streamers, it is difficult to measure installs from impressions, and the live streaming format does not lend itself to traditional display, banner, or video ads. GawkBox is the first company that allows marketers to access the live streaming market with a performance marketing solution, and their ad ‘unit’ is a fun, endemic way to engage with fans.

Gaming and eSports are massive, early-adopter markets

The media loves to cover eSports, especially tournaments with big prize pools, billionaires spending tens of millions of dollars to purchase teams, and young players who earn millions of dollars playing video games. However, the other topic that gets covered less is the pure entertainment value of gaming. Big gaming companies (and small indie game studios as well) have experienced massive growth over the last 5 years, and we’re willing to bet more kids in the US have played Minecraft than football, baseball, or soccer. In fact, there are 2.6 billion gamers around the world in 2017, compared to 100 million in 1995, according to Mary Meeker.

The growth in gaming can be attributed to many factors, including the ease of marketing and distribution across platforms like Steam, Xbox Live, and app stores, the gaming industry’s ability and willingness to innovate on their products, and a larger trend towards more interactive forms of entertainment.

Many of GawkBox’s earliest partners are gaming publishers, gamers, and other people in the gaming ecosystem, and we think this is a fantastic initial market. We’ve seen before that many innovations in gaming like online networking, graphics computation, secondary markets, messaging, and free to use/play business models quickly make their way to other industries and use cases, so there is a lot of room for GawkBox to expand into other types of customers after this initial early adopter audience.

We are big believers in this team and their ability to build a big business

Chris, Andrew, and Tony, the cofounders of GawkBox, worked together as early employees of Vungle, where they pioneered the concept of rewarded video ads and built a $300+ million revenue business. Since our first meeting, we have been consistently impressed with their ability to lead, execute, and envision the future of this market.

At Madrona, our philosophy is to partner early with the best entrepreneurs in the Pacific Northwest, and we have been lucky enough to work with many of our most successful companies from day one. After working with this team, we are absolutely convinced they are going to be doing big things, and we are very excited to be leading their Series A.

Finally, here is a link to the GawkBox website. I highly recommend checking it out and telling your favorite streamer about it!

  • If you’re a fan, you will love this product because you can support your favorite streamers without having to make actual credit card purchases. Just play games or download apps from the top publishers and earn tips for your streamers.
  • If you’re a streamer, you will love this product because it is a simple way for your fans to support you, and other streamers are doubling their monthly income after partnering with GawkBox.
  • Finally, if you’re an advertiser, you will love this product because you will be able to engage with the live streaming audience in a fun, unique, and native way. And you’ll be able to measure your return on advertising spend on a granular level and encourage users to reengage with your game or app after the initial install.

We are thrilled to be invested in this amazing Seattle-based team who has big plans for how they are going to change the world of live streaming, marketing, and gaming. It’s early days for this industry, and we are excited to be building the future together!

What Twitch and eSports can teach us about building successful media companies

From a 2011 spinoff of Justin.tv to a $1 billion acquisition by Amazon in 2014, Twitch has taken over eSports viewing and led the growth of the broader live-streaming market. At the time of the acquisition, many people outside of gaming and media had never heard of Twitch and were surprised that Amazon would pay $1 billion for it. Continue reading “What Twitch and eSports can teach us about building successful media companies”