The Chernin Group President of Digital Mike Kerns said he is “extremely bullish” on e-sports, and that recent pro team investments in the space “make sense.” Kerns was part of a panel at the 16 NeuLion Sports Media & Technology Conference discussing where and how private equity is flowing into sports. Panelists talked about issues such as the Disney-BAM Tech deal, investing in e-sports, daily fantasy sports and whether teams can be good incubators for startups (i.e. The Dodgers Accelerator program). Kerns said of e-sports, “There’s going to be a macro shift toward franchising. Publishers are going to get more hands-on, which will be a good result for well-run, professional, well-capitalized franchises. The combination of those events will bring in Fortune 100 brands and lead to meaningful sponsorships.” Kerns also believes new streaming/OTT platforms will start to compete more with Twitch for big-time e-sports content. Houlihan Lokey Managing Dir & Head of Sports Chris Russo is “optimistic” on e-sports, as current pro sports team owners have the wherewithal to “monetize these assets, such as conducting events in their arenas, using production capabilities to do programming around e-sports and bringing sponsorship sales teams into the mix.”
BAM BAM! LionTree Advisors Head of Sports Lyle Ayes said Disney’s new stake in BAM Tech is a “hedge.” Ayes: “They need an OTT strategy, so from that perspective, it makes sense. BAM Tech has technology to stream at a scale that most other companies don't, so as Disney thinks about how to put its content through digital, BAM Tech is a good partner. But it also eats away at its core business.” Needham & Co. Entertainment & Internet Analyst Laura Martin noted that since Disney Chair & CEO Bob Iger took over, he has spent $7B on Pixar, $4B on LucasFilm and $4B on Marvel, so $1B for streaming is equivalent to “dabbling in digital.” Martin: “Disney is a $150 billion company, so to spend $500 million to $1 billion on something digital that is going to be important is a perfectly legitimate bet, even if you have to write it off in the end.”
PLACE YOUR BETS: Ayes said of the troubles for DFS over the last year, “The regulators wanted to take their piece of the action.” Ayes on where DFS goes from here: “It was more of a sequencing issue than a viability issue. The fantasy companies got out in front of themselves without paying that toll up front. Now it's back to business as normal, but I think some of those sky-high valuations take a while to come back.” Kerns was less optimistic on DFS, saying “the game itself is flawed.” Kerns: “It’s a complicated consumer experience compared to something like betting $50 on the Giants one night with one click. Traditional betting on sports is like 10 times bigger than daily fantasy and a million times easier, so the only investment hypothesis I’ve ever bought into for the valuations is that these guys are going to become Vegas-type betting places.”
QUICK HIT:
* Kerns, on why Disney bought into BAM Tech: “I think (Disney Consumer Products & Interactive Media Chair) Jimmy Pitaro was just sick of getting kicked around by (MLB President of Business & Media) Bob Bowman.”
