This startup wants you to make money popping bubbles on your phone
It’s no secret that the gaming industry has become a massive force in entertainment with estimated annual global revenue this year of $152 billion. What might come as a surprise is the fact that mobile gaming counts for nearly half that amount.
With the sheer ubiquity of smartphones and handheld devices, not to mention increasing performance and graphic quality rivaling consoles, mobile games have become a lush marketplace: In 2018, mobile games accounted for 74% of global consumer spending in app stores. By the end of 2019, mobile gaming is expected to have 60% market share among all forms of gaming. It’s no wonder why companies like Apple and Google are trying to cash in with their recent gaming subscription services Apple Arcade and Play Pass. And it’s been reported that Nintendo may be developing its own gaming phone.
Mobile gaming has earned its validity in the marketplace—but when it comes to esports, acceptance hasn’t come as quickly.
[Photo: courtesy of Skillz]
“I would say ridicule was where we started,” says Andrew Paradise, CEO and founder of mobile esports platform Skillz. “And then in the last 18 months or so, we’ve transitioned to a place where industry professionals really believe in mobile esports.”
Esports, or competitive gaming, has ballooned into what some analysts have estimated to be a billion-dollar industry. The math might be fuzzy for some but what’s not are the prize pools. In July, 16-year-old Kyle “Bugha” Giersdorf won $3 million at the Fortnite World Cup, the largest individual prize in esports history. But that was with Fortnite, a game that has generated nearly $4 billion in revenue and has become a cultural touchstone.
What Skillz is aiming to do is bring that same competitive fervor to casual gaming by democratizing the development side for indie creators, as well as creating an esports culture around mobile games, which have traditionally been thought of as single-player experiences (think of a Candy Crush or Bejeweled championship match.) In essence, Skillz allows users to turn their skill-based games (word and object puzzles, sports, card games, etc.) into prize-based competitions and/or play other people’s games in tournaments where pools can reach $250,000. With 30 million registered users, Skillz hosts more than four million tournament entries per day and awards $60 million in prizes each month.
As interest in mobile esports heats up, major investors want in. This week, Skillz announced funding from the National Football League’s investment arm 32 Equity, joining such other backers as the owners of the New England Patriots, Milwaukee Bucks, New York Mets, and Sacramento Kings. Skillz also announced that former Airbnb CFO Laurence Tosi has joined its board of directors. “With a multi-faceted business model, distinctive for the network effect of its gaming marketplace and proprietary technology platform, Skillz is on track to become one of the great companies of tomorrow,” he said in a statement.
Perhaps, but does mobile gaming really have a future in esports?
Mobile gaming for all
With intuitive tools and features, game engines such as Unity and Unreal Engine have significantly lowered the barrier of entry into developing games. In turn, there’s been a more diverse set of creators in the indie space, which, when it comes to women specifically, has been long overdue. Although women make up about half of gamers, only 22% are actually developing them. On both the developer and player side, Paradise says Skillz is seeing women thrive: Last year, seven out of 10 players on Skillz were women. Jennifer Tu, for example, actually managed to pay her way through Harvard by playing games on Skillz. And on the developer side, out of the more than 20,000 creators operating through Skillz, the most successful by Paradise’s measure has been Tether Studios, founded by Aletheia O’Neil and her husband in 2014.
“Some creators have built multimillion dollar businesses on our platform,” Paradise says. “They’re small companies building actual non venture-backed, cashflow-positive game companies, which is really pretty much impossible right now without something like Skillz [being] the ecosystem for discovery.”
Because it’s easier than ever to build mobile games, app stores are flooded with offerings, making it difficult to gain any traction. Add to that, cost-per-install rates to market mobile games has gone up in both Amazon and Apple’s stores.
“These guys can’t actually afford to market their games,” Paradise says. In addition to offering a more curated selection to scroll through than major app stores, Skillz also hosts developer challenges every quarter—soon to be monthly—where creators can compete for resources, including a promotional budget and professional guidance from industry professionals. Most important, creators own the games they power through Skillz outright. (Skillz’s primary revenue is from competition entry fees, brand sponsorships, and in-game ads.)
“This comes back to me growing up writing video games and being a competitive gamer,’ Paradise says. “We really believe in the content creator owning their content. That’s how it should be.”
A casual spectacle?
Skillz has done well to open the door for indie developers and for gamers to make some quick cash or a sustainable living from casual games—but do those types of games translate into esports culture? Sure, any game played at a competitive level can be considered an esport, but, like traditional sports, it should be a spectacle for fans.
The Fortnite World Cup sold out at Arthur Ashe stadium in New York City, with more than 19,000 fans crowding in over three days. The Overwatch League Grand Finals sold out Wells Fargo Center in Philadelphia—the same for the League of Legends World Championship final in Paris’ AccorHotels Arena. These games draw tens of thousands of fans because the games themselves have garnered massive followings over the years, but these are games that are also entertaining to watch as a spectator. First-person shooters, fighting games, and so forth can have an almost cinematic quality to the action. It’s hard to imagine fans selling out arenas to watch someone pop bubbles in Bubble Shooter or spell in Word Race.
Skillz currently records and broadcasts every tournament, but even in digital esports arenas like Twitch, casual gaming has a long way to go.
“We’re still really early on the viewer,” Paradise says. “It took a long time for the competitive gaming industry to be built out on PC, to having competitive tournaments, to getting spectators. You’re going to see the same thing in competitive mobile gaming. One of the huge benefits is you’re talking about a device that’s already going to be in everyone’s pocket. So you have this instant ubiquity of access.”
True, but there’s one problem with mobile phones: They’re mobile phones.
“Mobile isn’t a universal platform like PCs and consoles—there are a myriad of different devices that run different versions of the OS,” says Christina Alejandre, an executive consultant in gaming and esports. “Because of this discrepancy, some might not perceive the competition as being ‘equal’ due to performance and handling issues caused by inferior technology.”
In addition to different operating systems and varying phone models that could affect a player’s performance, Paradise also acknowledges that the partial rollout of 5G, which promises ultra-low latency in connection speeds, is also a potential concern. Right now, the major U.S. carriers—AT&T, Verizon, and T-Mobile-Sprint (assuming the merger goes through)—have 5G but only in select cities, and, in some cases, only for businesses and not personal use yet.
“We’re definitely not there yet, the hardware and the network,” Paradise says. “But you can see the convergence lines.”
He hopes that having strategic partners such as the NFL can help further converge those lines in terms of the broader culture. He believes that the relationship will grow Skillz’s distribution and let it reach more consumers who might not be aware of it.
“Mobile esports has reached this mainstream acceptance that it will be the future,” Paradise says. “Now the next piece is for all the companies in the industry to actually build that out. I feel like [mobile esports] hit this critical mass that’s just very different from where things were a few years ago.”
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