How the Pandemic Has Changed Fans' Experience for Good
The COVID-19 pandemic has separated friends, family and colleagues and halted most in-person shared experiences. On the flip side, over the past year gaming, sports and entertainment companies have found new ways to help keep us engaged, connected and entertained. Millions of fans are now more engaged online through new interactive and social gaming experiences, virtual concerts with VIP fan sections and rebroadcasts of sporting events and concerts that feature more interactive and on-demand components.
In the future, a mix of in-person, virtual and hybrid events will create opportunities for companies to keep experimenting with new technologies and creating novel revenue streams as we emerge into a post-pandemic world.
Challenges Led to Innovation
At Fenwick, we have seen a number of business and technology trends emerge or accelerate over the past year among our company clients, which include Twitch, Jam City, 100 Thieves, Riot Games, Peloton, Instagram and Facebook. Chief among the industry shifts are:
- Increased Fan Engagement and Fan Interaction
Companies are offering new opportunities for fans to engage and interact virtually. The chat feature, now an integral part of the esports experience, provides a way for fans to converse in real time. For instance, through Twitch, the world's leading live streaming platform, fans can participate in esports competitions and attend virtual gaming conferences, offering an outlet for gamers to communicate with one another virtually. Shared viewership and other social components are bringing fans closer to the action and making viewing more social.
- More Opportunities for Monetization and Microtransactions
Subscription or membership models, a quick sidebar chat with a professional athlete, inviting fans into a private virtual room to interact with a celebrity and enhanced in-app purchases all offer new revenue generation opportunities. VIP experiences such as exclusive concerts, "meet and greets" and other intimate gatherings can be monetized digitally as well as in person.
- Continued Growth of Mobile
Mobile gaming in particular experienced record-breaking numbers and growth last year. As gamers seek more ways to interact with each other and make games more social Jam City — one of the biggest U.S. mobile game companies — is investing in creating more narrative role-playing games and strategy games, hiring a range of Hollywood talent.
Mobile will also continue to grow as more live events go paperless and cashless, requiring attendees to download an app for e-ticketing and other cashless, touchless and contactless transactions. The continued expansion of 5G and AI will enable even more opportunities for streaming and personalization via mobile.
Mobile devices will also house vaccine passports to the extent they are adopted. These are digital codes verifying an updated COVID-19 vaccination that may soon be required to access concert venues and other public places. The passport will likely be stored via QR code or in a digital wallet.
- Increased Use and Consumer Adoption of VR/AR
Virtual and augmented reality technologies (VR/AR) have continued to gain traction during the pandemic and helped replace some in-person fan experiences. During the 2020 Shanghai League of Legends Championships, Riot Games realized that bringing fans closer to the action was no longer feasible due to COVID-19. With the help of XR (a blend of VR, AR and mixed reality technologies) the company was able to offer a broadcast that gave the fans a more intimate virtual experience. VR/AR technology is in its nascency but will keep maturing over the next several years.
- Expanded Personalization of Influencers
100 Thieves saw content creator and online star Valkyrae become the fastest-growing female streamer of the year in 2020 after she started playing the online multiplayer social deduction game "Among Us." Her popularity continues to skyrocket: according to streaming information database Stream Hatchet, she was the most the world's most-watched female streamer in Q1 2021. This is just one example of the many ways celebrities found new ways to engage with fans during the pandemic, broadcasting from their kitchens and living rooms through Instagram and Facebook.
Peloton's popularity exploded last year, in part, with the help of professional athletes, actors and musicians. Every day users rode with them to compete and/or enjoy the ride.
Legal Trends
With the rise of new digital media, entertainment and gaming technologies, along with the growth and diversification of global audiences and the advent of entirely new business models, we are seeing novel legal challenges and opportunities. Many are related to:
* The production and livestreaming of interactive shows
* Messaging and video chat-related companies that operate chat services for younger users, in particular privacy concerns and questions around content moderation
* An array of regulatory issues have cropped up in the booming esports industry around franchise and licensing agreements, sponsorship and player contracts, and streaming and fan engagement. Issues include FTC disclosures of paid influencer relationships, whether esports agencies collect data offline, online and through new technologies including biometrics, and whether esports agencies are required to be talent agencies under applicable law
* For companies streaming video, CVAA (Century Communications and Video Accessibility Act) compliance and accessibility requirements and FCC registration
* Securities, financial regulatory and intellectual property issues involved with digital assets (including NFTs)
The Long-Term Effects of the Pandemic
We anticipate many of the innovations we saw during the pandemic to further accelerate in this new era. Even as live events return, we expect they will be at lower capacity and feature more hybrid experiences.
Many exciting innovations will continue this year as companies continue to adapt to a sports, gaming and entertainment world that will not return to what it was before the pandemic.
About the Authors
​Andrew Klungness, Partner, Santa Monica
Andrew is a co-chair of Fenwick's consumer technologies team, as well as a principal member of its fintech/blockchain group. He works with clients in a number of verticals, including ecommerce, consumer tech, fintech, blockchain (NFT, DeFi, Layer 1, and others), marketplace, CPG, mobile, AI, social media, games, and edtech, among others. Andrew leads significant and complex strategic alliances, joint ventures and other collaboration and partnering arrangements, which are often driven by a combination of technological innovation, industry disruption, and rights to content, brands or celebrity personas. He also structures and negotiates a wide range of agreements and transactions, including licensing, technology sourcing, manufacturing and supply, channel partnerships and marketing agreements. Additionally, Andrew counsels clients in various intellectual property, technology and contract issues in financing, M&A and other corporate transactions.
Jennifer Stanley, Partner, San Francisco
Jennifer, who leads Fenwick's copyright group and games industry group, is a top advisor to cutting-edge companies in the video games and interactive entertainment industry. Serving as a
"primary care" counselor to companies, Jennifer advises clients on intellectual property,
technology and media transaction strategy; copyright registration, protection and dispute
resolution; and business model analysis and risk management. Her practice encompasses a wide range of industries, including: Advertising, Content (digital streaming, movies, distribution), eCommerce and retail, eSports, Fashion and jewelry, Gaming, Hardware/devices, Influencers (YouTubers, etc.), Sharing economy (food, travel, transport), Talent, and Virtual reality (VR) and augmented reality (AR).
Jennifer is a go-to authority for games and esports matters. She regularly authors thought leadership and is an in-demand speaker in the space.
​Vejay Lalla, Partner, New York
Vejay helps clients navigate the convergence of technology, advertising, media, ecommerce and entertainment, and advises on the potential impact for his clients from a commercial, intellectual property, regulatory and privacy standpoint. He regularly advises venture-backed companies across numerous industries, including games, media-tech, marketing-tech, blockchain, fintech, proptech, augmented and virtual reality, artificial intelligence and machine learning, fashion, retail, beauty and consumer product companies over their entire lifecycle. In addition to his startup practice, Vejay has deep industry knowledge in advertising, media and entertainment focusing on content distribution and licensing arrangements, and talent/influencer deals both in traditional media and digital distribution.
About Fenwick
Fenwick is one of the world's top law firms focused on technology and life sciences, with leading Games and Digital Media and Entertainment practices. The firm has been involved with advertising, media, entertainment and games companies – advising on their challenges and helping capitalize on their opportunities – since the genesis of the digital revolution.
The firm opened its Santa Monica office in early 2019 to better serve more than 300 clients in the Los Angeles region, which include innovative startups, established companies and venture capital investors. If you'd like to connect with one of our attorneys, please click here to contact Zaharit Chen, Business Development Manager.
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Detroit-based GM said on Wednesday its network will encompass almost 60,000 EV chargers nationwide, many run by private companies that can be located and paid for through its apps.
"The financial support GM is providing to EVgo has accelerated our station deployment plans in 40 metropolitan areas across the U.S.," EVgo CEO Cathy Zoi said in a statement. "By year-end, EVgo expects to have approximately 500 stalls from the GM/ EVgo collaboration live, and we are just getting started."
GM and EVgo partnered last year to add 2,700 fast-charging stations across the United States by 2025. That has so far produced just four stations, none in Southern California.
EVgo joins Blink Charging, ChargePoint, El Segundo-based EV Connect, FLO, Greenlots and SemaConnect in the Ultium Charge 360 program. While Tesla has its Supercharger network and the Volkswagen Group of America runs Electrify America — in part, as a result of its emissions cheating settlement — GM and Ford are relying on collaborations with third-party charging companies to build out their national network for electric cars.
"As we launch 30 EVs globally by the end of 2025, this collaboration is expected to help create consumer confidence and excitement about the EV future," said Travis Hester, GM's chief EV officer, in today's announcements. "These new stations are the first of many to come, as we work together with EVgo to offer EV owners more options for charging."
The Ultium Charge 360 program also includes assistance for customers interested in home charging systems. It will cover the installation of a Level 2 home charger with the purchase or lease of a 2022 Chevrolet Bolt EV or Bolt EUV through a deal with Irvine-based Qmerit.
GM announced earlier this year its intent to drop gasoline-powered vehicles and become a carbon-neutral company by 2040. Its luxury Cadillac division will go completely electric by 2030, starting with the Lyriq SUV that goes on sale next year.
GM is also planning to release their GMC Hummer EV pickup truck and SUV, along with a Chevrolet Silverado electric truck. GM will also supply the basis for two electric SUVs to Torrance-based American Honda Motor Co. starting in 2024.
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Startups were ranked by how many votes each received. In the case of a tie, companies were listed in order of capital raised. The list illustrates how rapidly things move in startup land. One of the hottest startups had not even started when 2020 began. A number doubled or even 16x'd their valuation in the span of a few short months.
To divvy things up, we delineated between companies that have raised Series A funding or later and younger pre-seed or seed startups.
Not surprisingly, many of the hottest companies have been big beneficiaries of the stay-at-home economy.
PopShop Live, a red-hot QVC for Gen Z headquartered out of a WeWork on San Vicente Boulevard, got the most votes. Interestingly, the streaming ecommerce platform barely made it onto the Series A list because it raised its Series A only last month. Top Sand Hill Road firms Andreessen Horowitz and Lightspeed Venture Partners reportedly competed ferociously for who would lead the round but lost out to Benchmark, which was an early investor in eBay and Uber. The round valued PopShop Live at $100 million, way up from the $6 million valuation it raised at only five months prior.
Scopely, now one of the most valuable tech companies in Los Angeles, was also a top vote getter.
The Culver City mobile gaming unicorn raised $340 million in Series E funding in October at a $3.3 billion valuation, which nearly doubled the company's $1.7 billion post-money valuation from March. It is no coincidence that that was the same month stay-at-home orders began as Scopely has benefited from bored consumers staying on their couch and playing ScrabbleGo or Marvel Strike Force.
The company's success is especially welcome news to seed investors Greycroft, The Chernin Group and TenOneTen ventures, who got in at a $40 million post valuation in 2012. Upfront Ventures, BAM Ventures and M13 joined the 2018 Series C at a $710 post-money valuation.
Softbank-backed Ordermark, which flew more under the radar, also topped the list. The company's online ordering platform became a necessity for restaurants forced to close their dining rooms during the pandemic and raised $120 million in Series C funding in October.
On the seed side, two very different startups stood out. There was Pipe, which enables companies with recurring revenues to tap into their deferred cash flows with an instant cash advance, and Clash App, Inc., a TikTok alternative launched by a former employee of the social network in August.
We will have the list of Southern California's top seed startups out tomorrow.
Hottest
PopShop Live ($100 million)
The live-streaming shopping channel created by Danielle Lin reportedly found itself in the middle of a venture capital bidding war this year. Benchmark eventually won out leading a Series A round, vaulting the app at a $100 million valuation. The Los Angeles-based platform has been likened to QVC for Gen Z and it's part of a new wave of ecommerce that has found broader appeal during the pandemic. Google, Amazon and YouTube have launched live shopping features and other venture-backed startups like Los Angeles-based NTWRK have popped up.
Boiling
Scopely ($3.3 billion)
One of the most valuable Southern California tech startups with a $3.3 billion valuation, the Culver City mobile game unicorn has benefitted from a booming gaming market that has flourished in this stay-at-home economy. Scopely offers free mobile games and its roster includes "Marvel Strike Force," "Star Trek Fleet Command" and "Yahtzee with Buddies." In October the company raised a $340 million Series E round backed by Wellington Management, NewView Capital and TSG Consumer Partners, among others fueling speculation that it was on its road to an IPO. Co-CEO Walter Driver has said that he doesn't have immediate plans to go public.
Ordermark ($70 million)
The coronavirus has forced the closure of many dining rooms, making Ordermark all the more sought after by restaurants needing a way to handle online orders. Co-founder and CEO Alex Canter started the business in 2017, which recently rang in more than $1 billion in sales. Ordermark secured $120 million in Series C funding by Softbank Vision Fund 2 in October that it will use to bring more restaurants online. The company's Nextbite, a virtual restaurant business that allows kitchens to add delivery-only brands such as HotBox from rapper Wiz Khalifa to their existing space through Ordermark, is also gaining traction.
Simmering
Cameo ($300 million)
Cameo, which launched three years ago, had its breakout year in 2020 as C-list celebrities like Brian Baumgartner banked over a million dollars from creating customized videos for fans. In the sincerest form of flattery, Facebook is reportedly launching a feature that sounds a lot like Cameo. Even though the company is still technically headquartered in Chicago, we included Cameo because CEO Steven Galanis and much of the senior team moved to L.A. during the pandemic and say they plan to continue running the company from here for the foreseeable future.
Mothership ($64 million)
Co-founded by CEO Aaron Peck, Mothership provides freight forwarding services intended to streamline the shipping experience. The company's tracking technologies connect shippers with nearby truck drivers to speed up the delivery process. It raised $16 million in Series A venture funding last year, driving the platform to a $48 million pre-money valuation.
Nacelle ($6.7 million)
Founded in 2019, Nacelle's ecommerce platform helps retailers improve conversion rates and decrease loading speeds for their sites. The software integrates with Shopify and other services, offering payment platforms and analytics integration, among dozens of services. Nacelle raised about $4.8 million earlier this year with angel investors that included Shopify's Jamie Sutton, Klaviyo CEO Andrew Bialecki and Attentive CEO Brian Long.
Boulevard ($30 million)
Matt Danna and Sean Stavropoulos came up with Boulevard when an impatient Stavropoulos was frustrated wasting hours to book a hair appointment. Their four-year-old salon booking and payment service is now used by some of Los Angeles' best-known hairdressers. Last month, the two secured a $27 million Series B round co-led by Index Ventures and Toba Capital. Other investors include VMG Partners, Bonfire Ventures, Ludlow Ventures and BoxGroup.
CloudKitchens ($5.3 billion)
Uber co-founder Travis Kalanick CloudKitchens rents out commissary space to prepare food for delivery. And as the pandemic has fueled at-home delivery, the company has been gobbling up real estate. The commissaries operate akin to WeWork for the culinary world and allow drivers to easily park and pick-up orders as the delivery market has soared during pandemic. Last year, it raised $400 million from Saudi Arabia's colossal sovereign wealth fund.
GOAT ($1.5 billion)
Founded by college buddies five years ago, GOAT tapped into the massive sneaker resale market with a platform that "authenticates" shoes. The Culver City-based company has since expanded into apparel and accessories and states that it has 20 million members. Last year, Foot Locker sunk a $100 million minority investment into 1661 Inc., better known as Goat. And this fall it landed another $100 million Series E round bankrolled by Dan Sundeheim's D1 Capital Partners.
Savage X Fenty
The lingerie company co-founded by pop singer Rihanna in 2018 is noted for its inclusivity of body shapes and sizes. It has raised over $70 million, but The New York Times' DealBook newsletter recently reported that it's been on the hunt for $100 million in funds to expand into active wear. The company generates about $150 million in revenue, but is not yet profitable, according to the report. It became the focus of a consumer watchdog investigation after being accused of "deceptive marketing" for a monthly membership program.
Warming Up
FabFitFun ($930 million)
The lifestyle company provides customized personal subscription box services every three months with full size products. Started in 2010 by Daniel Broukhim, Michael Broukhim, Sam Teller and Katie Rosen Kitchens, it now boasts more than one million members. Last year, the company raised $80 million in a Series A round led by Kleiner Perkins last year and appears to be preparing for an eventual IPO as it slims down costs and refocuses on its high value products.
Dave ($1 billion)
Launched in 2016, the finance management tool helps consumers to avoid overdrafts, provides paycheck advances and assists in budgeting. Last year, it began to roll out a digital bank account that was so popular that two million users signed up for a spot on the waitlist. The company, run by co-founder Jason Wilk, has raised $186 million in venture capital and counts billionaire Mark Cuban as an early investor and board member. Other backers include Playa Vista-based Chernin Group.
Sure ($59 million)
SURE offers multiple technology products to major insurance brands — its platform can host everything from renter's insurance to covering baggage, so customers never have to leave an agency's website. It also offers its platform to ecommerce marketplaces, embedding third-party insurance protections for customers to purchase all on the same webpage. Founded in 2014, the Santa Monica-based startup last raised an $8 million Series A round led by IA Capital in 2017.
Zest AI ($90 million)
Founded in 2009 by former Google CIO Douglas Merrill and ex-Sears executive Shawn Budde, Zest AI provides AI-powered credit underwriting. It helps banks and other lenders identify borrowers looking beyond traditional credit scores. It claims to improve approval rates while decreasing chargeoffs. The company uses models that aim to make the lending more transparent and less biased. This fall the company raised $15 million from Insight Partners, MicroVentures and other undisclosed investors, putting its pre-money valuation at $75 million, according to PItchbook.
PlayVS
Santa Monica-based PlayVS provides the technological and organizational infrastructure for high school esports leagues. The pandemic has helped the company further raise its profile as traditional sports teams have been benched. Founded in early 2018, PlayVS employs 46 people and has raised over $100 million. In addition to partnering with key educational institutions, it also has partnerships with major game publishers such as Riot and Epic Games.
Tapcart ($40 million)
A SaaS platform helps Shopify brands create mobile shopping apps. The marketing software saw shopping activity jump 50% over 90 days as the pandemic walloped traditional retailers. Founded by Eric Netsch and Sina Mobasser, the company raised a $10 million Series A round led by SignalFire, bringing the total raise to $15 million.
Papaya ($31.8 million)
Papaya lets customers pay any bill from their mobile devices just by taking a picture of it. The mobile app touts the app's ease-of-use as a way to cut down on inbound bill calls and increase customer payments. Founded by Patrick Kann and Jason Metzler, the company has raised $25 million, most recently a S10 million round of convertible debt financing from Fika Ventures, Idealab and F-Prime Capital Partners.
Floqast ($250 million)
FloQast is a management software that integrates enterprise resource planning software with checklists and Excel to manage bookkeeping. The cloud-based software company claims its system helps close the books up to three days faster. It is used by accounting departments at Lyft, Twilio, Zoom and The Golden State Warriors. In January, it raised $40 million in Series C funding led by Norwest Venture Partners to bring the total raise to $92.8 million.
Brainbase ($26.5 million)
The company's rights management platform expedites licensing payments and tracks partnership and sponsorship agreements. It counts BuzzFeed, the Vincent Van Gogh Museum and Sanrio (of Hello Kitty and friends fame) among its clients. In May it announced $8 million in Series A financing led by Bessemer Venture Partners and Nosara Capital, bringing the total raised to $12 million.
OpenPath ($28 million)
The Los Angeles-based company provides a touchless entry system that uses individuals cell phones to help with identification instead of a key card. The company offers a subscription for the cloud-enabled software that allows companies to help implement safety measures and it said demand has grown amid the pandemic. Founded by James Segil and Alex Kazerani the company raised $36 million led by Greycroft earlier this year, bringing its total funding to $63 million.
FightCamp ($2.5 million)
FightCamp is an interactive home workout system that turns your space into a boxing ring with a free standing bag, boxing gloves and punch trackers. The company is riding the wave of at-home fitness offerings including Peloton, Mirror and Zwift that have taken off during the pandemic as gyms closed. The company has raised $4.3 million to date.
Numerade
The Santa Monica-based company provides video and interactive content for education in math, science, economics and standardized test prep. Founded in 2018 by Nhon Ma and Alex Lee, who previously founded Tutorcast, an online tutoring service, the company gathers post-graduate educated instructors to create video lessons for online learning.
Our Place ($32.5 million)
The creator of a pan with a cult following on social media, this Los Angeles-based startup designs and retails cookware and dinnerware. Founded by Amir Tehrani, Zach Rosner and Shiza Shahid, the company completed its Series A funding earlier this year, bringing its total raised to date to $10 million.
Tala ($560 million)
For customers that have no formal credit or banking history, this company's application promises more financial access, choice and control. It gathers data to create a credit score that can be used to instantly underwrite and disburse loans ranging from $10 to $500. Co-founded by Shivani Siroya and Jonathan Blackwell, Tala has raised $217.2 million to date. Its investors include PayPal Ventures, Lowercase Capital and Data Collective.
ServiceTitan ($2.25 billion)
Founded in 2007 by chief executive Ara Mahdessian and president Vahe Kuzoyan, ServiceTitan operates software that helps residential home contractors grow their businesses. It provides businesses tools like customer relationship management and accounting integration to streamline operations. The company closed a $73.82 million Series E funding round from undisclosed investors earlier this year.
100 Thieves ($160 million)
Founded in 2017 by former professional "Call of Duty" player Matthew Haag, 100 Thieves manages esports competitions in major titles including "Counter Strike Global Offensive" and "League of Legends." The company also produces apparel and merchandise, opening a physical store and training ground called the "Cash App Compound" in collaboration with Fortnite earlier this year. The company has raised $60 million to date, from investors including Salesforce CEO Marc Benioff and Aubrey Graham, better known as the rapper Drake.
Emotive ($16.5 million)
This AI-powered customer service platform automates text conversations between customers and businesses to increase sales. Emotive uses their sales team to verify questions, distinguishing it from other bot-driven marketing services, according to the company. The company was founded in 2018 by Brian Zatulove and Zachary Wise, who serve as the chief executive and the chief operating officer, respectively. It has raised $6.65 million to date, from Floodgate Fund and TenOneTen Ventures.
Everytable ($33 million)
Created by former hedge fund trader Sam Polk, the Los Angeles-based startup wants to be a healthy fast food chain. It prices its healthy pre-packaged meals around $5 in underserved communities while costing more in other neighborhoods with the goal of reducing so-called food deserts in low-income neighborhoods. It also offers a subscription delivery service. The company recently closed a $16 million Series B round led by Creadev along with Kaiser Permanente Ventures.
Lead art by Candice Navi.
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