“This year we are planning to get half a million US dollars in revenue,” Ivan Danishevsky on ESM. One holding development
Ivan Danishevsky is a founder of esports holding ESM.One. His portfolio comprises dozens of products ranging from public to closed. In his interview with AIN.UA Ivan spoke about esports industry, search for investments, and future development of projects.
How many projects do you promote under ESM.ONE?
I have one large project, a few smaller ones and lots of MVP. According to my estimate, the total number has reached 32. I can talk about five cases publicly:
- Analytical agency Esport Charts;
- Service for organization of esports tournaments ESM.Zone. In Ukraine it operates under ua brand;
- School of streamers and a channel tv;
- Platform for donations us;
- Own esports teams.
Other projects still have no domains nor public presence. Let me explain it one by one.
Esport Charts is an agency that is engaged in analytics for esport teams and organizations, isn’t it?
Yes. We sell data to teams and organizers of esports tournaments. The data is presented as reports. In other words, they get a PDF file containing all the relevant details on a monthly basis.
The document shows team performance and compares it with competitors. For instance, our client Fnatic is one of the world’s largest esports teams. Their report contains approximately 6 slides dedicated to their performance: participation in tournaments and quality of the game, number of followers, the activity of audience across various channels. 3 more slides are dedicated to competition.
Now we are working to show presence brands, i.e. show the frequency of sponsored ads during streams. There are summaries for each team member. For example, a player had 8 hours of streaming and every minute such and a such number of people were watching him. The brand concerned got such and such level of awareness. This metrics is screen time multiplied by a number of hours watched by the audience.
These reports are very useful to teams. They allow them to skillfully set their pricing. Clients can reasonably increase the placement price based on statistics. Without our answers, there wouldn’t be any assessment criteria, and everything would boil down to a single question:
— Are you ready to pay us 100,000 for an ad in the tournament?
So, does that mean that you provide advertisement metrics? Do you have competitors?
We do have competitors, but they are not as global. Everyone is primarily focused on Twitch, which is the most open and comprehendible platform that gives a lot of data via API. We definitely collect more information and divide it into channels. It is an added value.
We aspire to become “Google analytics” for streaming resources and the entire broadcasting industry.
We do not just indicate how many viewers were on the channel – but also tie it to what is happening. Our analysts analyze all streams and write: “On these days there was such an event, the following teams participated in it, the result is the following.” Our rivals analyze only the numbers of the stream per day, while we know what was happening every minute.
What data do you collect and how do you do it?
All that is publicly available. For example, the number of viewers across all possible platforms. We save the stream and analyze it using algorithms. So, with the help of “machine vision”, we are looking for logos and discern content types.
There is also a technology that I hope will appear on Esport Charts later this year. These are very advanced bots that “sit” inside the game and get all the data. They give out a stream of pure information: in-game purchases, movements, events, up to the touch of buttons. This is very detailed information from inside the game. The bot is a spectator during the match, which is completely legal.
You can instantly get a feed from one player or you can get it from all of them – but with a delay. It works with Dota 2, CS, LoL and others. We are developing a similar thing for PUBG, Fortnite, and their mobile versions.
Are there reports that cost more than US$1,000-3,000?
Yes. Reports that cost US$1,000-3,000 are very automated. Figuratively speaking, they comprise dozens of man-hours and hundreds of thousands of machine-hours.
There are also very specialized requests for reports, which cost between US$15,000 and US$25,000. For example, they ask “How many people have visited offline LoL events over the past year? What are these events, in which countries and cities were the arenas?” This is not what our analytical system says right away. But analysts, having made several dozen requests and spent several days, will be able to provide the answer. This is very unique information: there are about 600 cities, and no centralized information is available.
Team reports usually cost US$1,000-3,000. Studios and tournament organizers will have to pay US$2,000-5,000, and betting companies US$5,000-15,000.
On the interesting side: we are currently negotiating with the Ministry of Education of Thailand, which asked us “What is the most popular game in Thailand?” Apparently, Thailand does not know which game is popular!
And we find such information. But there are also nuances. Thailand does not stream on Twitch and YouTube. They stream on Facebook, on private channels in groups that are difficult to access from the outside. This is very unusual and difficult to monitor. But we will find it by hook or by crook. Such a report is expensive, because you have to write software, and come up with custom solutions.
We had 5 custom reports in the past year alone.
How do sales work — actively or passively?
We have never sold actively, clients always come to us. Most often these are team managers who use free Esport Charts resources. 80% of letters are practically the same: “Hello, I love your website, and I have the following question.”
We give away a lot of information. That is, you can get almost all data yourself, but it takes a huge amount of time.
People who value their time do not waste it. They do not save US$3,000 on getting the statistics they need.
Our site is the largest in this domain with 200,000-500,000 unique visitors per month. I can safely say that 8 out of 10 top publications in the world like CNN, Bloomberg, Washington Post, The New York Times use our statistics.
Do you have clients from Ukraine? Starladder, Natus Vincere?
Some Ukrainian companies buy statistics from us, we work with some in exchange for their services, but I will not disclose the details
How much do Ukrainian brands spend on advertising in eSports?
About 4 million UAH per year. These are pennies, of which, 2 million are spent thanks to our efforts. Prominent names include Silpo, Novus, Fornetti. It should be at least 40 million a year. To do this, Ukrainian eSports must grow. It has to have an appeal for a brand to want to spend money.
How many people are working at Esport Charts?
Did you raise the funds?
Yes. About half a million dollars. Of them about US$300,000 are angel investments, another US$200,000 came from a Chinese accelerator. This does not take into account the funds that I paid from my own pocket.
Which accelerator? Why China?
Chinaccelerator of SOSV firm. As a matter of fact, we were invited to quite a few accelerators, including Ukrainian, but they offered too little money. I’m talking about US$20,000-50,000 for a share of 7-10%. We don’t value a business like that.
So what was the valuation for the funds raised in China?
5% for a little short of US$200,000. The first conversation with representatives of the accelerator was held in November; we reached an agreement in February, and by March 3 we prepared all the documents and flew to China. Our accelerator is software-based, it focuses on Chinese-international products and the market.
I was interested because China is the dark horse of the gaming industry. In China, they do not stream on Twitch, Facebook or YouTube. They use their own platforms.
According to the Chinese, their market has 50 times more viewers than Twitch. We did not believe it, so we decided to check it out for ourselves. In the past month, we have visited Tencent, Alibaba and the largest companies in China. At the same time, there are no requirements to do something exclusively tailored to the local market.
Is the company registered in China?
No, in the U.S. In Delaware.
Why didn’t you go to the U.S.?
It is somewhat unattractive, nothing to learn in our esports affairs. I was interested in China. I have been to the U.S. many times, we have a lot of friends and partners there. I know America well enough, and Europe too.
Whereas China is a total mystery. But a lot of things are happening there, records are being set, and I don’t believe them. I would like to make sure that there is trust in the Chinese market. In eSports itself, it’s difficult to teach us something, we can accelerate ourselves now.
Now it’s clear about the accelerator. Who gave US$300,000 of angel investments?
These are people not from venture or angel investing in Ukraine. Friends and family in other words.
Have you been looking for the money in Ukraine?
So far it is difficult. They do not give anything nor know anything about eSports. I spoke with many, but to the point, I talked only with Victoria Tigipko and Alexey Vitchenko. They do not offer anything. Although we are a quite popular, technological and robust product with real people behind it.
For a long time, I was hoping to do something in Ukraine. I really wanted to start with Ukrainian investments. But Ukraine wants to “invest in venture capital” in car marketplaces and plane tickets.
How does your business make money?
Well, it’s too early. We have income, but there’s no revenue.
What about proceeds?
In 2018, Esport Charts brought us about US$200,000. All projects — US$300 000. We are hoping to get half a million this year.
What’s missing to become profitable?
We don’t have a sales department. We are in the process of building it. On the other hand, our operational costs are quite low, at about US$40,000-50,000 a month.
Does that mean that you have investments to keep you afloat for a year?
No, we have almost exhausted them. But the project still has my personal funds.
We will attract in the near future up to half a million – one million through convertible notes on the same terms as with SOSV (and they are good). Then either self-sufficiency next year, or rapid growth through the next investments.
Efficiency of advertising in CIS and Ukraine — estimate of Esport Charts
How to spend 10M on CIS’ eSports market
How to distribute the budget based on the results of the year 2018:
- 75M — Starladder;
- 75M — RuHUB;
- 2M — Maincast;
- 5M — WePlay;
- 1M towards native twitch ads.
- 14M of Russian-speaking audience;
- 200M views of broadcasts;
- over 300M hours of stream views by viewers;
- primarily male audience (~80%).
Holding an online tournament between the CIS countries (1 discipline) – over 1 million viewers, 200 hours of broadcast, 400,000 hours of views, more than 3,000 participants
What one can expect from 1M annual budget on the Ukrainian market
- You should not focus on broadcasting because the Ukrainian audience there is only 18-21%, the rest will go towards foreign users.
- Broadcasting in Ukrainian will give 250,000 – 300,000 viewers. If you add broadcasts in Russian – the number of viewers will grow 6-10-fold at the cost of blurring the geography of the audience.
- Advertising of eSports event on Instagram and Facebook will yield 4 million coverage in Ukraine
Competitions on the Ukrainian tournament platform sponsored from this budget:
- a series of online tournaments and offline finals (1-2 disciplines) – 3,000-5,000 participants, 10,000 viewers, about 1,000 visitors of the final;
- a series of amateur online tournaments throughout the year across a variety of disciplines, including mobile games – over 35,000 participants.
eSports team – Dota 2 or CS:GO:
- PRO — Natus Vincere (the third most popular organization in the world in 2018), holding a series of meetings with fans, signing session, a show-match with tournament winners, lotteries in the team’s accounts in social networks. The exposure of publications in social networks for NaVi – more than 400,000 followers, of which about 50,000 are Ukrainians.
- Semi-PRO – support for 1-2 teams throughout the year, which participate in online tournaments with coverage of 5,000 – 10,000 viewers. In the case of the team’s successful performance – participation in international LAN-tournaments with online coverage of up to 2 million foreign viewers per 1 tournament.
Support of development of Ukrainian student and school eSports.
With an emphasis on popular disciplines among youth: 20,000 – 50,000 interested players, including participants from 12 to 18 age group. Exposure to more than 500,000 students and 1 million pupils. Types of support: educational program course, school / district / city / region competitions.
This is an eSports tournament organization service. What’s its status, are you developing it?
In the past year we organized over 1k tournaments. It is a lot. Approximately 20k people participated in total.
What was the largest tournament you organized through GG.UA?
CyberStar — 260 teams, NON STOP Energy League — 270 teams. There is also a unique student tournament, which we organized ourselves, without the support of brands.
What is that?
A unique thing – our student tournament was officially recognized, up to the point when the rectors put their signatures on paper. In Ukraine, there were no similar cases before. We held the tournament under the auspices of the Ministry of Education, and instead of the expected 4-8 universities, 67 universities with about 115 teams participated.
Why the official recognition of the tournament is important?
My main task in Ukraine is to train eSportsmen and lobby for eSports so that it gains ground here.
And how much did you spend on the tournament?
A lot. It is expensive. We had to offer prizes, organize everything, bring the finalists to Kyiv. There were two disciplines — Dota 2 and LoL. Winning teams got UAH 20,000 per team, and the total cost of the tournament was hundreds of thousands of hryvnias.
Were these your personal funds?
No. This was the money of contributors, i.e. people who wanted to make it happen. Figuratively speaking, each gave 100,000 hryvnias.
Who are these people?
I and my pals. As a matter of fact, the rectors of universities helped too.
Did they just pull the money out of their pockets?
Just like that, yes. Firstly, we are talking about hryvnias, not dollars. Secondly, it is all aimed at creating a new direction.
They intend to get students who want to major not in “economy of something,” but in IT and eSports.
Do you want to create eSports faculties?
And we are already doing it. The first one will appear pretty soon and the curriculum will commence on September 1 of this year.
Ukrainian Federation of Electronic Sports
You are the president…
Of the Ukrainian Federation of Electronic Sport. It is called Esports Ukraine.
Yes. You are the founder of this NGO. Why? How do you contribute to this project?
To become nationally recognized and legalize eSports. Thanks to this NGO, we can communicate with the state. The work for the federation takes up to 20 hours a month of my time, but there are several full-time employees there.
Can you hold tournaments without the federation?
This is an embryo of a federation, it must grow to a state where opinion-leaders of Ukrainian eSports (nurtured by us) will develop Ukrainian eSports not only through my own resources but also through the efforts of other people and the community. And this must be done by the federation, and not simply through the LLC. This should be a non-profit activity. This is the way things are right now.
In other words, the federation was established not to make profits, but to promote the development of eSports.
There’s also a Dnipro-based “Federation of cybersports of Ukraine”. Why has it been created?
I really want other people (the more the better) to share my vision. Whether they are going to be members of the federation or not, it does not really matter. Therefore, I am very happy when other organizations are doing good things in this direction.
Why are they your competitors?
Probably because they want to nationalize eSports in their own direction. In Dnipro, they are doing the same thing. I don’t know why; I just don’t understand their position.
Why won’t you nationalize it first?
I don’t see why do we need to do it. Moreover, how do we do it? There’s a ton of nuances.
Then someone will do it before you do.
Yes. And it is very offending. There have already been many attempts by people who have nothing to do with eSports at all. I respect the Dnipro guys, at least because they love eSports as much as we do. But there are still many competitors who do this, they say, “under the auspices of ministers” or someone else. They do it to get yet another area of influence and suck from it.
These are people who have nothing to do with eSports at all. Accordingly, if these are the guys from Dnipro, I don’t mind. We will probably even get along just fine. If it is me, we will definitely get along.
All those active people who do it for the sake of eSports will find a place for themselves. But if it is a third party, which, as I say, came “on behalf of the minister” to wrangle budget money – this, of course, will be insulting.
When will the national Federation come about? Your thought on this.
Not this year. Maybe in the next year.
What is this project?
This is a school of streamers. At least, it was originally intended as a school. And this is our own streaming channel, which we use for training, broadcasting, commenting on our eSports events, etc. As we are now trying to focus, all these projects are frozen. Zeer.tv exists, it just doesn’t work that regularly.
Previously, Zeer worked under the CyberStar Academy. Formally, it was the academy, but so far there are not enough resources to extend the project. Together with Kyivstar, we conducted an educational course for all those who want to become streamers. We taught all the participants the basics during a two-month course – similar initiatives are needed. And now we hit the freeze button on this project. Figuratively speaking, we turn it on once a month for several hours in order to stream our tournaments from GG.UA
Why is the channel in such a state? Wasn’t it profitable?
Yes, because it was never profitable, and because besides money it also needed management. The testing budget of US$10,000 has been exhausted, it lasted for about 8 months.
What’s going to happen next?
We will not disable anything. Zeer.tv should develop into an academy, it is a good educational product with outstanding potential. But you also need to invest in it – not only money but people too. That is, you need to build a team. Basically, each of these projects is not flying high yet because there is a shortage of people.
It is oftentimes easier with money: you either have it or you don’t. And with people – a person can be bad, or unable to perform, lazy or not know ins and outs of a specific topic (and the topic is really hard to comprehend).
We are doing a fairly narrow-focused thing. Therefore, in order to skyrocket it right here and right now I need a person who will come to me and say “I know the ropes and I want to make game, esports, and other broadcasts. I am ready to take it on. I will find help, resources and everything else.” This is what he must really want to do, and in this case, I will be very helpful.
Esport Charts and the federation have such people, but other projects don’t. Therefore, we have all other projects suspended. Just because of the human factor in the first place.
Same question all over again: what is it and how it works?
This is a donation system for streamers. A tool to bring them money – you can display messages on the air, you can vote. There are different ways about it.
Why can’t you use native platform solutions?
There are virtually no native solutions. There are alternatives though. But they are all expensive. Secondly, they are illegal per se. Thirdly, we are unhappy with their functionality.
Concerning the high cost – we are talking about platform fee. Usually, it is 10-15%, we take 5-9%. But so far the platform works only for our projects, including Zeer.tv. The turnover from donations is quite large, several million hryvnias per year. But the project is not yet developing qualitatively, but simply working. It is frozen and does not require investments.
You have got your own donation processing, haven’t you?
Something like that. It is intended to legitimate the field. The task of the platform, besides technical innovations, is to make donations legal. We want to make sure that all Ukrainian streamers can pay taxes as FOP [Private entrepreneur] transparently and conveniently. Now all this is very inconvenient — you can literally withdraw donations through checks, like in AdSense
You are training a few eSports teams, aren’t you? How many?
In the world? Approximately 6,000. I have three, each with five players and a few staff members. The discipline is Dota 2, and now we are considering a few others.
How much do they earn?
Between US$300-1,500 On average, participants are 20 years old. They play 4-6 hours a day. One team does it free of charge, they really like being a team.
Where do they get money from?
They had played before, but they lived off nothing. Teams do not have strictly prescribed KPIs. They are created to find these very metrics. I want to learn how to make teams. And so far I’ve managed to accomplish it.
In other words, you bury your money just to prep?
Yes. We hope that the Federation will have normal answers to these questions: how to collect, how to prep, how to calculate success, how to set KPIs and which ones. The results are already there – recently, in just two attempts, the teams won the Open AI Five. This is a big deal.
Do you use them to run your technologies? For instance, for a bot that collects game action log?
And this, too, I train my bots on them. Teams give us a lot of feedback, and they participate in all tournaments. This is our QA, part of quality assurance.
Are there a lot of strong players in Ukraine?
Yes. Ukraine has a very good concentration of strong players by global standards. This is confirmed by statistics: many high-ranking players, a high number of Ukrainians in world teams.
The problem of eSports space now is that there is no amateur branch. And this is what I want to develop. I want an amateur to be able to join professional eSports. Apart from the technical problems that we, hypothetically, have already learned to solve with tournaments or something else, this has many practical and social implications. We also want to solve them.
For example, parents may not always recognize an esportsman in their child.