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Skillz is the biggest e-sports company gamers have never heard of

TechCrunch TechCrunch 15/06/2016 Lora Kolodny

The very mention of e-sports tends to conjure up titles like Bethesda’s Quake, the arena shooter, or Valve’s Dota 2 and Riot’s League of Legends, both arena battle games, which are played by professionals for piles of cash with prize pools in the millions of dollars.

But a San Francisco startup called Skillz paid out 21% of last year’s e-sports prizes worldwide, and is on target to pay out 38% of e-sports prize money won in 2016 tournaments according to the company’s Chief Executive Andrew Paradise.

The claim is corroborated by industry reports from ESportsEarnings.com and other research firms that track how much e-sports tournaments are paying out.

Skillz also broadcast 8.5 million minutes of its tournaments being played by professionals via platforms like Twitch and YouTube last year. This year, it expects to stream 40 million minutes.

So why don’t gamers know Skillz by name, already?

For one, the startup doesn’t own a game franchise of its own, or create titles itself. Instead, it sees itself as something like Netflix in its early days, says Paradise.

Back in its red envelope era, Netflix helped studios make money from their “long tail” content, or older films loved by cinema-philes who wanted to watch them over and over again at home. It didn’t create any content of its own.

Similarly, Skillz helps game developers and studios make more money from their existing titles by rendering them tournament playable for cash or bragging rights.

Making even casual games like Bubble Shooter Tournaments, Real Money Pool or Mini Golf Stars competitive keeps players engaged with a game longer, and gets players to play more often.

Because it works across so many different genres, and with a focus on a mobile user experience, 49% percent of players who compete for pride or prizes on Skillz titles are women.

That’s bucking an industry trend. Other e-sports tournaments have been focused around PC and console games, and have typically drawn a majority-male user base. Despite some promotional efforts to include more female pro-gamers, they have also been seen as completely unfriendly or unappealing to women who would be pros or join teams.

Skillz has even attracted Electronic Arts founder, Trip Hawkins, to its advisory board. Hawkins, who put sports games on the map with the creation of the Madden Football franchise and EA Sports, said he believes Skillz is making e-sports accessible to everyone, not just professionals and pros in training.

He compared Skillz to programs at schools, intra-office leagues and even venues and rec centers that make traditional sports like baseball, basketball or football accessible to players who are not professional but would want to be if they could.

“A whole tech stack for e-sports had not been built and standardized,” Hawkins said. “But there has to be a set of platform features to let players have accounts set up the way they need, be able to communicate and broadcast or be broadcast, make payments, manage transactions and receive prizes. That’s where Skillz has a head start.”

Paradise declined to disclose the company’s exact revenue—which includes a mix of advertising, sponsorships, fees for running events online, and fees for paid tournaments.

But he did disclose that Skillz generated $20 million in entry fees last year, and is on target to do $50 million in entry fees this year.

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