Esports Betting, Integrity, and Expansion: Insights from Talon CEO Xiao Zhang on the Growing Gambling Market in the Gaming Industry
The booming esports industry is witnessing a surge in betting, with experts forecasting a leap from $510 million in 2024 to a whopping $2.41 billion by 2033. As this trend promises new fan engagement opportunities and revenue streams, it also sparks debates about the integrity and sustainability of the highly competitive field.
In an exclusive tête-à-tête with SiGMA World, Xiao Zhang, CEO and co-founder of Talon Esports, shared his insights on the evolving landscape of esports. Zhang admitted that, just like any competitive sport, betting is an inevitable part of the esports ecosystem. He also recognized the risks associated with the significant sums of money involved, such as match-fixing scandals that have tarnished the reputation of numerous organizations and players in games like Counter-Strike, Dota 2, StarCraft, League of Legends, and Valorant.
Zhang, however, argued against treating esports differently from traditional sports when it comes to betting. He believes that betting can be positive, as long as care is taken to ensure integrity. He emphasized the importance of education, urging teams and developers to help players understand the consequences of compromising competitive integrity.
Regarding Talon Esports' expansion in Asia-Pacific, Zhang spoke about the challenges and opportunities. He highlighted the diversity in each market, with varying preferences for games, platforms, and content. To capitalize on this, Talon focuses on localization in its approach, fostering a sense of unity among fans across different regions.
The road to profitability for esports organizations remains challenging, with escalating player salaries and concentration of revenues in the hands of game developers being major concerns. To overcome these challenges, innovative revenue models such as sharing revenue from digital items with teams are beginning to emerge. This allows organizations to focus on building communities, a crucial aspect that supports teams through product and digital item purchases.
Zhang expressed cautious optimism about the potential of artificial intelligence and blockchain in esports. While AI might enhance athlete performance, he noted that the current tools are not directly integrated into games. Blockchain, on the other hand, appears to be advancing more concretely. With a strong connection between gaming enthusiasts and Web3, Talon has partnered with cryptocurrency broker Flipster, rebranding its Dota 2 team as part of this collaboration.
When evaluating new titles to invest in, Talon adopts a data-driven approach, taking into account the potential audience, brand exposure, and revenue and expense analysis. Sustainability is another key factor for Talon, as it invests in smaller esports with secure sponsors and niche communities. For more significant titles, Talon takes a long-term view, often investing 2 to 3 years for desired results.
To keep the audience engaged, Talon has invested heavily in community and content strategies, with localized marketing teams seen as essential. Winning is important, but Zhang emphasizes the value of entertainment. Esports teams, according to him, are primarily entertainers, not just athletes. The unique combination of Asian roots and an Australian upbringing in Talon's founders sets the brand apart in terms of public communication.
Zhang remains optimistic about the future of esports. He believes that with technological advancements in mobile devices, internet speed, and graphic quality, esports could rival traditional sports in cultural and economic significance. Gamers from generations born and raised with digital devices will drive this growth, transitioning from mere hype to long-term engagement and loyalty.
Esports betting, while posing risks to integrity, also offers new avenues for engagement and monetization. With collaborative, technology-driven, and regulatory efforts, the industry is taking proactive steps to safeguard its integrity and ensure long-term sustainability. Talon Esports, with its data-driven approach, strong focus on localization, and commitment to education, continues to play a vital role in shaping the future of esports.
- In the conversation with SiGMA World, Zhang suggested that technology could help safeguard the integrity of esports, particularly through the advancement of blockchain.
- As Talon Esports expands in the Asia-Pacific region, they recognize the importance of technology not only in enhancing performance but also in engaging fans and monetizing their platforms, such as through partnerships with cryptocurrency brokers like Flipster.
