SEA esports startups face survival test amid downturn

At the height of the Covid-19 pandemic, esports startups such as Evos Esports and Tier One Entertainment raised multiple rounds of funding. The inclusion of esports as a medal event in the 2019 Southeast Asian Games further underscored the industry’s rapid ascent. 

But in the past year, things haven’t gone as well.

Image credit: Timmy Loen

Despite Southeast Asia’s massive base of 277 million gamers, the esports startup landscape has experienced a sharp funding downturn. Data compiled by Tech in Asia shows that Emerge Group and Box Vietnam were the only esports companies in the region to secure funding between January 2023 and August 2024. In contrast, at least nine esports deals were made in 2021 and 2022. 

Is the esports hype in the region dying down? How are esports startups coping with the current funding downturn?

Dwindling audience size 

According to Darang Candra, director of Southeast Asia research at video game market intelligence firm Niko Partners, the region’s esports industry has entered a “self-correcting phase” following the Covid-induced spike, with audience size growing by less than 10% in 2023 compared to 17% in 2022. 

This slowed growth can be attributed to several factors such as market saturation, cautious investors, fewer tournaments, and fans spending less time gaming and watching matches.

Globally, things don’t look good for esports either. In the US, Faze Clan was acquired for just US$17 million in late 2023, a significant drop from its US$725 million valuation in 2022 during its market debut. It has also suspended trading of its stocks since March 2024. Denmark-based Astralis, known as the first esports company to ever go public, also delisted in 2023.

In addition, Southeast Asia’s esports industry relies heavily on brand sponsorships. Candra points out that during Covid, some brands turned to esports as an alternative, but they went back to sponsor traditional sports like basketball and football after the pandemic.

For example, Tokopedia sponsored Indonesian esports team ONIC in 2021, but its logo no longer appears on the team’s jerseys. Instead, the ecommerce firm has become a major sponsor for the country’s premier basketball league as well as for the Bali United FC football team.

Photo credit: Indonesian Basketball League

One of the most prominent esports startups in Southeast Asia is Tier One, which has reportedly been facing internal turmoil. Its co-founder, Filipino celebrity Alodia Gosiengfiao, left the company in November 2023 due to differences in “visions and values.” 

Tier One didn’t respond to Tech in Asia’s request for comments.

Competitions aren’t enough 

Thrive without VC funding?