Eager to ride high on the surging video-game competition industry, investors rushed this week to take stakes in AlphaDraft, a fantasy e-sports contest startup, and Mobcrush, an iOS app that streams video of people playing mobile games.

Though e-sports might seem like niche entertainment, it has become big business recently. The 2013 championship tournament for “League of Legends,” for instance, a computer game made by West L.A.’s Riot Games, sold out Staples Center and boasted 32 million online viewers.

In all, some 6.6 billion hours of video-game competitions are projected to be watched in 2018, up from just 2.4 billion hours in 2013, according to a study by analytic firm IHS.

That potential for massive growth is feeding an investment binge in the space. Amazon.com bought video game-streaming service Twitch for $970 million in August and encouraged ESPN2 to start televising video-game tournaments in April. It has also led startups to think of novel ways to make money from the growing industry.

While Twitch and ESPN make money from e-sports via subscription fees and advertising, AlphaDraft, housed at Venice accelerator Amplify LA, is using a novel fantasy sports model to make money. Like fantasy football, AlphaDraft runs fantasy e-sports drafts and pays out winnings to those who perform the best betting on the statistical performance of video-game players.

The startup said it has more than 1 million contest entries since launching in January and its top winner, an actuary who designed his own statistical model for creating fantasy video-game teams, has won $30,488 in prizes.

Such enthusiastic engagement in e-sports has outsiders perking up.

Investors, led by Metamorphic Ventures with participation from William Morris Endeavor Entertainment and former National Basketball Association Commissioner David Stern, among others, backed AlphaDraft with $5 million this week.

For its part, WME, a talent agency known for representing actors and musicians, is treating video-gamers like any talent; it bought e-sports talent agency Global eSports Management in January for an undisclosed amount.

“WME sees e-sports as a huge part of the industry going forward,” said AlphaDraft Chief Executive Todd Peterson. “The size of this market will likely surpass the size of all traditional sports markets.”

What’s catching WME’s attention is an industry, much like the sports world, that is flush with celebrities. By sharing their skilled gameplay or humorous in-game commentary on YouTube or Twitch, celebrity gamers have established themselves as influencers of their fans’ buying decisions. WME and others are working on turning that influence into advertising power.

“When it comes to what’s the wow factor in the game and how far it can be pushed, what makes it interesting to watch that comes from influencers, the people pushing the game to the outer limits,” said Jeremy Monroe, chief customer officer at Manhattan Beach’s Ninja Metrics, a video-game analytics company that helps advertisers find and market to influential players. “I believe there is a direct correlation between the boom of e-sports and the technology platforms that allow gamers to be recognized.”

New market

Yet, as Twitch and AlphaDraft have highlighted gamers on Xbox and PlayStation consoles, and PCs, others are looking to push e-sports further still.

“You have the same engagement, if not more, on mobile,” said Javier Ferreira, chief operating officer of Culver City mobile gaming studio Scopely. “What is now needed is a platform that allows or enables this behavior that is already happening in mobile games to surface.”

Venice’s Mobcrush, an iOS app that streams video of people playing mobile games, wants to be that platform.

The company raised a $4.9 million seed investment round this week from investors including Rincon Venture Partners, Crosscut Ventures, Lions Gate Entertainment Corp., CAA Ventures and BAM Ventures. It believes it can duplicate Twitch’s success live broadcasting PC and console video games with mobile games.

Mobcrush founder and Chief Executive Royce Disini said people enjoy watching mobile games for many of the same reasons they enjoy watching game play of console or PC games.

“There’s an entertainment value, there’s a learning value and there’s a community value,” he explained. “The community forms and watches someone play and they chat around it.”

The company, which also live streams noncompetitive mobile game play, is currently in private beta testing. In March, Disini said, Mobcrush live streamed an experimental e-sports tournament for the mobile game “Hearthstone,” making it the first company to broadcast a competition right from mobile phones. The company has plans to live stream more tournaments this summer.

Ultimately, if mobile e-sports prove to be as exciting as their predecessors, Mobcrush’s backers see a media channel with even bigger prospects.

“E-sports are migrating to mobile and mobile is much bigger potential market than PC,” said Clinton Foy, investor and managing director of Venice’s Crosscut Ventures. “There are 2 billion mobile devices out there, and people want better content than just casual games. We think it’s a massive opportunity.”

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