Background

As a result of the rapid growth of the Esports and gaming industries, a number of companies are looking to leverage their experiences in related industries as they enter this expanding marketplace. Maturation of key markets in North America, Europe, and Asia has resulted in an explosion of opportunities for stakeholders across a diverse range of focuses; be it game developers and publishers; Esports teams, content creators, and hardware and peripheral manufacturers.

An athletic apparel and accessory manufacturer was seeking to launch a NewCo that would offer an apparel accessory targeted specifically at Esports athletes and gaming enthusiasts.  The Company approached Teknos seeking an analysis of its internal expectations around the market opportunity, as well as guidance on key areas of risk and opportunity that it should be cognizant of.

Deep knowledge of the core gaming demographics and how they respond to the introduction of new products was essential to this engagement, as was an understanding of the unique quirks of Esports and gaming sponsorships as compared to more conventional sports.

Analysis and Recommendations

In order to fully understand the challenges facing our client, Teknos undertook a deep dive of the overall Esports and gaming marketplace. A review of streaming viewership data was completed in an effort to discern trends in an effort to focus potential partnership efforts across particular titles and with particular streamers.

In addition, we took a long look at the dynamics around Esport team sponsorships, including both duration of contracts and the placement of branding on Esport team jerseys relative to the viewers point-of-view (POV) while observing competitive play.

Teknos ultimately tested the company’s internal financial model for reasonability and developed multiple scenario analyses in order to evaluate the potential ramifications of different variables such as changing market adoption and penetration, changing pricing structures, and differing cost scenarios.  This included evaluating differences in international spend and adoption of new products in the space, as well as the potential impact of intellectual property rights infringement and tariffs on the company’s products.

Results

At the end of the engagement Teknos presented a robust analysis to the company’s management team, outlining potential values for the organization under various discrete scenarios. In addition, we provided specific thoughts on areas of concern in the client’s go-to-market strategy, as well as methods to address them.


Teknos Associates provides valuation and advisory services for emerging growth companies and their venture capital backers. Clients rely on our financial expertise, knowledge of technology markets, and high standards to deliver relevant and timely valuation reports, opinions, and analyses.