Cryptocurrency for gamers, a streaming platform, schools for beginner doters – not all such e-sports startups become successful: some projects do not even have time to declare themselves, while others leave loudly and with scandals. Cybersport.ru decided to analyze several ambitious, but eventually closed (or close) projects.
The purpose of this material is not to gloat over other people’s failures, but to show that even with a good idea and a competent business plan, it can be extremely difficult to implement any idea. In addition, any failure is a valuable experience for the entire industry.
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The loudest failures, of course, are associated with large projects: they cheerfully enter the market, burn the money received from investors and suddenly disappear. Few of these entrepreneurs are willing to talk about mistakes, so the real reasons for failure can only be guessed at. But in some cases, the burnt-out startup puts on a real show in the end.
2017 was marked by a boom in blockchain and cryptocurrency. The esports industry tried to combine these two trends. One of these entrepreneurs is Alexei Burdyko, the founder of Game Show. He presented the Play2Live project – a blockchain-based streaming platform with its own cryptocurrency.
It was assumed that this platform will provide streamers with the opportunity to easily monetize broadcasts, and viewers – to make money on various activities. Both tasks were assigned to the Level Up Coin, or LUC. By the way, it was she who made it possible to attract money for the development of the project – on the sales of its own crypto Play2Live, according to the statements of the creators themselves, earned at least $ 30 million.
What exactly these funds were spent on is a big question, but they were not enough. The creators of Play2Live decided to make a whole ecosystem, but forgot about maintaining their cryptocurrency, the value of which did not rise significantly above $ 0.016. As a result, by January 2019, there was no talk of any fight against Twitch and Bitcoin, and some employees left the project, who did not receive a salary for two months due to the breakdown of a deal with a new investor.
Play2Live soon left the market, after slamming the door: there was a scandal involving collectors, the kidnapping of a former commercial director, charges of stealing $ 3 million and extortion. P2L, obviously, was initially focused on the cryptocurrency audience and was not even going to seriously compete with Twitch. But the project suffered from technical solutions and, paradoxically for a cryptocurrency startup, the lack of Level Up Coin support.
While preparing this material, we asked Alexander Zavoloka, CEO and co-founder of the StreamHERO.com startup project, Runtime.gg co-founder, and one of the organizers of the EPICENTER series of tournaments, to comment on several cases.
Finding out the real reasons for the failure of the project is hardly possible. In 2020, Burdyko died from complications caused by the coronavirus.
“Oofay!” – Azubu, Hitbox and the Unequal Battle with Twitch
Play2Live is far from the only streaming platform to fail. Seasoned gamers and esports fans, for example, will probably remember names like Hitbox and Azubu. Both companies tried to fight Twitch, but ended up losing this war, even after joining forces.
The stories of these platforms are similar, but their methods of fighting in the streaming market were slightly different. For example, Azubu relied on collaborating with popular streamers, which generally allowed her to stay afloat for five years. Later, the site was accused of non-payment of funds to partners and participants of their own tournaments, and one of the reasons for the failure in the e-sports segment was the inability to pay Riot Games for broadcasting League of Legends championships. And all this with an initial investment of $ 40 million and further large infusions of money.
In the meantime, the younger Hitbox planned to take over the competition with technological solutions. The site raised $ 4 million, including from Wargaming, and began working to create a more user-friendly product for gamers. As a result, the project lasted only two years and in 2017, Azubu was bought out. The companies announced the creation of Smashcast, another platform that did not manage to make a splash. Today, the service that was supposed to capture the mobile streaming audience is no longer available.
By and large, both companies had every chance to take the place of Twitch, but they ran into money problems. The head of Azubu himself admitted that he spent the funds of investors on the development of the project irrationally, and the management of Hitbox failed to convince potential sponsors of the possibility of competition with the main streaming platform after it was acquired by Amazon. On the other hand, even Microsoft with its Mixer and multimillion-dollar contracts with Tyler Ninja Blevins and Mike Shroud Grzesik…
DreamTeam and crypto-based esports
In 2017, another project related to cryptocurrency was launched – DreamTeam from the founder of Natus Vincere, Alexander Kokhanovsky. This platform provided a range of services for creating and managing esports teams, and also offered to use the DREAM cryptocurrency to accomplish all these tasks.
In theory, DreamTeam could become a systematic framework for the entire transfer market and management. With quality tools and a large audience, the industry would receive a unified system for the selection and assessment of players and personnel, solve the difficulties with the organization of the work process and the implementation of tasks, and also get rid of a number of other problems like contract disputes.
In fact, dragging all esports organizations onto one platform and forcing them to abandon their usual methods is a completely unrealistic task. DreamTeam could only be of interest to teams entering new disciplines, where scouts need additional analytical tools, and players who want to build a strong roster or are ready to develop on their own.
The project started with Counter-Strike support, later started experimenting with League of Legends and eventually made it to Apex Legends and Call of Duty. According to Alexander Zavoloka, DreamTeam has shown itself well in the last two disciplines – such an adaptation of plans and a change of course is normal for a startup.
Why, in such a situation, the project needed its own cryptocurrency is not clear. Its presence in DreamTeam can be explained only by the desire to attract more investment from users interested in crypto. In the end, all transfers and services are well paid for and more familiar means.
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Since June 2020, DreamTeam has suspended operations because it has not reached its financial and product KPIs. The creators of the project planned to restart it according to the new business model this fall, but no news about the reincarnation of the Dream Team has been reported so far. ZeroGravity itself declined to comment on the situation.
TobiWan and crypto freelance casters
The strangest esports-related blockchain project is BestMeta from disgraced commentator TobiWan. As conceived, this platform was supposed to help content authors (primarily casters of all stripes) to promote and implement their ideas. The users themselves had to sponsor their creations using another cryptocurrency.
TobiWan’s desire to help colleagues is understandable, but in 2018, when BestMeta was announced, any influencer could already find sponsors for their projects on their own, including among fans. People are ready to pay for content that interests them on existing platforms for monetization – it is enough to show them a good example of the implementation of the idea and set the goal of donations.
BestMeta was created to solve a problem that had already been resolved, and even tried to screw on an unnecessary cryptocurrency in the context. The project tried to enter the general gaming market, but naturally failed. It is possible that its creators made money on the sale of tokens, but apart from the unpopular comic show Well Played in British style from TobiWan himself, they did not present anything useful and interesting.
In the summer of 2020, TobiWan was accused of harassment and inappropriate treatment of girls, after which the Beyond the Summit studio and the Dota 2 developers refused to cooperate with the commentator, so one should hardly expect new startups in the esports industry from him.
M19 and the craving for esports
The history of this tag began back in 1999, but we will focus on its reincarnation into a full-fledged e-sports club with rosters in several disciplines at once. In 2017, a new M19 started with investments “comparable to the top 10 largest esports organizations in the world”, from the Strongbow Investments holding, its estate, the League of Legends team (the one that was Albus NoX Luna) and her slot in the Continental League. The situation was as similar as possible to how high-profile ambitious startups are launched.
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