A startup tackles Southeast Asia’s hidden esports opportunity

An esports tournament. Photo credit: Dota 2 The International.

It may not be long before an athlete wins a gold medal at the Olympics – for playing a computer game. Competitive computer gaming, or esports, has turned from a fringe activity into a genre that’s getting millions of viewers and doling out millions of dollars in prize money.

In Southeast Asia, it may be on the cusp of becoming mainstream. The Manila Major, a prominent Dota 2 competition, filled a stadium and had a US$3 million prize pool.

Alisports, an affiliate of Chinese ecommerce giant Alibaba, will introduce competitive computer gaming as a demonstration sport in the 2018 Asian Games in Jakarta. By the 2022 iteration in Hangzhou in China, it’ll become a medal event.

Entrepreneur Daryl Teo wants to ride the esports boom. “It’s becoming an industry that’ll stay for a long time,” he says.

Formerly the head of strategic products at Uber’s Southeast Asian rival Grab, he has started Spout Entertainment, a three-month-old startup which is using a unique blend of technology, media, and talent management in a bid to nurture esports in Southeast Asia.

The Singapore-headquartered company has already raised a US$2.1 million seed round exclusively from Reapra, a venture builder and startup investment firm. That’s a large figure considering that the median amount for seed rounds in Southeast Asia is US$578,000.

Daryl is part of the investment committee within Reapra, making Spout an internal project for the investment firm.

Millions of esports enthusiasts

Startups succeed primarily by being in the right place at the right time, says entrepreneur and investor Bill Gross. Start too late and a competitor might own the space first. Launch too early and consumers might not be ready for the product.

Spout believes it’s got the timing right. Although Southeast Asia’s pro gaming market is still small, it’s the fastest growing in the world in terms of audience size, says gaming market research firm Newzoo.

It estimates that the region had 9.5 million esports enthusiasts in 2016, and predicts that the figure will grow 36 percent annually in the next three years.

If these projections hold true, Spout will have a total available market that’s about the size of Malaysia’s population – around 30 million – by 2019.

Daryl hopes to turn that audience into a lucrative market.

The third plank

How far can esports go?