Israel has developed its prowess in technology verticals focused on solving security and business problems. But alongside the well-known areas of cybersecurity, blockchain, and AI, new areas of consumer-based technologies have also emerged – such as sports technology, and in particular electronic sports (esports) — competitive video gaming.
Esports is a worldwide phenomenon among Gen-Zers, who spend hours playing and watching other gamers compete. Games such as Fortnite and League of Legends enable millions of players to compete against each other in countries such as the United States, China and Korea.
A notable number of Israeli startups are focused on this rapidly growing field. Guy Katsovich, cofounder of Fusion LA, a Los Angeles-based accelerator focused on Israeli startups, states, “There are over 40 Israeli startups in the space that define themselves as esports related and that number is growing.” Fusion LA has made four investments in Israeli esports to date.
In addition, an esports gamer scene in Israel is developing. Israeli esports teams have started to appear on the scene as well as individual players such as Brokenshard and Fly, who have won several tournaments and generated hundreds of thousands of dollars in prize money.
With the changing definition of what constitutes competitive sports, it could be in the country’s interest to invest in grooming esports players to compete globally.
Gamers have been playing video games competitively since the 1970s. In recent years, with the advent of social platforms such as Twitch and YouTube that allow games to be watched live — as well as the introduction of major prize money at tournaments — the space has exploded.
The business of esports is like other competitive sports with ticket sales to events, sponsorships, and merchandise driving the industry. Revenue, according to the World Economic Forum, is expected to exceed $1 billion by next year.
Professional esports players with high-profile status are no strangers to this industry; influencers including Ninja and Faker have taken on celebrity status with hundreds of thousands of followers on social media and lucrative sponsorship deals.
Games such as Fortnite have more than 200 million gamers playing globally, making it the equivalent of a major social-media platform for Generation Z.
Israel hosted its first esports tournament in 2017 in Tel Aviv. Game In Pro had all the trappings of a major esports event, with over 5,000 gamers in attendance and the support of partners such as Microsoft, Xbox and Lenovo.
Ido Brosh, president of the non-profit Israeli Esports Association established in 2010, believes the sport will continue to grow in Israel.
He says that “many investors interested in the tech side have entered the space, which has raised the sport’s overall profile” and that from the business side “more fans are being drawn to the sport, and the amount of money they are spending is increasing.”
Global markets and audiences are always the aim of Israeli startups looking to scale abroad, and the esports market — a globalized audience with disposable income — has been mostly outside Israel.
Kevin Baxpehler, managing partner at Tel Aviv-based Remagine Ventures, a venture capital fund that invests in esports startups, believes that Israel is positioned to be a leader in the space.
“Many of the entrepreneurs are coming from fields in which Israel is strong, such as video, data analytics, and monetization, and those are exactly the places where the esports industry has the biggest problems that need to be solved,” he says.
Remagine Ventures has also been active in helping build the Israeli esports ecosystem by hosting one of the first major events for startups in the space, which included founders of the leading companies as well as Chris Hana, CEO of Esports Observer, the sport’s most influential publication.
Tel Aviv-based Novos, an online training platform for gamers, recently raised more than $750,000 from prominent investors including an Intel-associated fund.
Novos CEO Or Briga approaches training gamers online in the same way a traditional sports team would: focusing on individual skills in order to improve a gamers’ overall performance.
Briga believes “as esports have become more mainstream more Israeli entrepreneurs who are also gamers are going to build startups to provide solutions in this industry.”
Regarding Israel’s role in the global esports market, Weinberg believes that “Israel is going to play a big part in it, as proven by traditional VCs investing in great Israeli esports companies such as Stream Elements and Overwolf.
Weinberg points out that Israel has successfully grown huge gaming companies such as Playtika. “The challenge of understanding and serving the intersection of sports, gaming and entertainment is something in which Israeli entrepreneurs will excel.”
An Israeli Olympic gold
The real opportunity for Israel could be at the Olympics. Since 2017 the International Olympic Committee has met to discuss the inclusion of esports in future games and Japan has pushed for inclusion of esports when it hosts the 2020 Olympics.
Momentum is on esports’ side with the number of gamers and viewers watching the games; either esports will be a part of the Olympics at some point or will have its own elite competition.
“When you look at where the world is headed, esports will eventually be bigger than soccer,” says Ido Brosh. “Esports will bring in a new generation of fans who were not fans of conventional sports.”
Traditionally, Israel has excelled in sports like judo but has not had the resources and ability to dominate in some of the long-established Summer Games sports. In true Startup Nation fashion, Israel can parlay the tech talent of the country in a future bid to dominate esports in global competitions.
The country has all the talent, the infrastructure with government bodies, and most importantly, the desire to go for the gold.
Jonathan “Yoni” Frenkel heads a digital marketing agency, YKC Media, that focuses on engaging millennial and tech professionals through content. He’s been involved in the New York Israeli tech community for many years and previously held roles as a non-profit professional at both the IAC Dor Chadash and AIPAC.