Despite the rapid growth in the popularity of eSports in Russia, it is still below the radar of investors. What are the industry's risks that stop them, and how can they still use its potential?

While in new York in 2016, the League of Legends (LoL) World Cup games attracted 15,000 fans, in Russia they were just beginning to talk about the industry's prospects. In the same year, the Russian Esports Federation achieved its inclusion in the all-Russian register of sports - it received the right to be called an official sports discipline, and it began to develop actively. According to the research company NewZoo, Russia is the third largest eSports audience: the number of viewers of eSports broadcasts last year reached 22 million people, and by the number of visits to Twitch, we are in second place in the world — 42 million visits per month. What are the prospects for monetizing this audience?

Investors are out of the game

In Russia, they train professional eSports players at ITMO and managers of eSports projects at the Higher school of Economics. In may 2018, the investment attractiveness of eSports was discussed at the SPIEF, which illustrates the growing attention of the investment community to the Esport market.

According to the results of the PwC report on investments in sports startups and developing businesses in 2015-2017, 35% of transactions with Russian participation were in eSports projects, namely Internet services, sports organizations and facilities, media and gadgets. Over three years, 26 transactions were made, the total investment amounted to $127 million, $100 million of which came from the purchase of Alisher Usmanov's USM Holdings Ltd company Virtus.pro. In 2018, another major deal followed: Mail.ru Group acquired eSports holding ESforce also for $100 million. Corporations are trying not to miss out on a new market and are already competing for an audience: more recently, we have seen the almost simultaneous launch of streaming platforms from MTS and Tele2. Thus, the industry is gaining momentum and attracting the attention of an increasing number of stakeholders.

However, Russian venture capital investors stand aside from all this hype. According to the results of the Russian annual research "Venture Barometer 2018", investors do not identify this industry as attractive for investment, although they do not write it in anti-leaders. In other words, they are rather indifferent to this area and pay more attention to other actively growing industries. Corporate investment in the industry looks a little more lively, but it is not comparable to international investment: American investors invested more than $1 billion in the industry in the first quarter of 2018, while Chinese company Tencent invested $632 million in the Huya streaming platform, according to Esports Business Digest. What does Russian eSports lack to attract investors?