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Mobile gaming is the ‘future of entertainment': Skillz CEO

Skillz CEO Andrew Paradise joins Yahoo Finance’s On The Move panel to break down why the mobile gaming industry is advancing the entertainment industry.

Video Transcript

JULIE HYMAN: As we know, one of the things that people have been doing during this pandemic and the various rolling quarantines is playing e-sports, doing a lot of gaming. Our next guest's company will run two billion tournaments in 2020. I had to read that number several times to make sure I was reading it correctly. We're joined now by Andrew Paradise, the CEO of Skillz, which is a mobile e-sports platform. Andrew, how is that even possible? I mean, two billion tournaments, how exactly does your platform work? And how do-- I mean, I guess people are not doing anything else? Or they're fitting in this gaming where they can?

ANDREW PARADISE: Honestly, we're just getting started. But we are the leading mobile e-sports platform in the world. Skillz is a B2B2C technology platform that enables game developers to monetize their games through competition. And our platform powers thousands of games across the app stores. But our longer-term vision, our 100-year vision for our business, is to build a competition layer for the internet.

ADAM SHAPIRO: So I have to ask this question with a preface. My version of gaming is 1980s Palace Playland in Old Orchard Beach, Maine, where you went to an arcade. How do you make money? Because the creation of your company was because you got annoyed when you accidentally hit on an ad and lost the game you were playing. So if you've eliminated that, where do you make the cash?

ANDREW PARADISE: Yeah, so we're a transaction-based business model. And we revenue share with our developer partners so that we're mutually aligned for success by monetizing the end consumer. We'll generate $225 million in net revenue this year in 2020. And we're projecting $555 million of net revenue in 2022, so 57% to year.

- Andrew, what games in particular are really kind of taking off at this point in time? And I guess, where do you see the industry going as far as mobile gaming goes, right? We have two new consoles coming out from Xbox-- sorry, Microsoft and Sony. PC gaming continues to do well. Nintendo has its Switch, which is on fire. So I guess, where do you see the industry moving? And how long does mobile gaming stick around for?

ANDREW PARADISE: Well, today, mobile gaming is a $68 billion segment. It's larger than movies, music, and books. It's the fastest-growing segment of gaming. And it's projected by multiple sources to grow to $150 billion by 2025. And when you think about mobile gaming as a platform, it's really-it's interactive content built for interactive devices. That's why it's becoming the future of entertainment.

In terms of other forms of gaming, console and computer, they're definitely not going away. They're longer-form formats today. I think we still have a ways to go to see the right types of adaptations for mobile and tablet, so in terms of controllers and peripherals, to build that longer format kind of consumption pattern on mobile and tablet. But you're already seeing mobile e-sports and mobile gaming really becoming the leading type of gaming in more developed markets like Asia.

JULIE HYMAN: Andrew, talk me through the social component of all of this? Is there a social component? What does it look like? And as we try to-- we had a conversation earlier in the show about TikTok, but also about Facebook's new Campus product, which is aimed at college students, is gaming, and are platforms like yours, actually becoming a different kind of social network, one that may replace, even, for some users, the more established networks?

ANDREW PARADISE: Absolutely. Look, I think when a consumer chooses to pull their phone out of their pocket and seeks entertainment, they have a lot of options, whether it's a static form of entertainment like a TikTok or a Facebook or an interactive form of entertainment like a Skillz. Our platform-- certainly, competition is social, right? And I think we really think about our onus as a society of building out a competition platform that will enable the healthy types of competitive interaction versus the unhealthy types of competitive interaction. And so it is absolutely about a social experience. And it's a interactive social experience.

- Andrew, and I ask-- you know, you mentioned Asia. You know, smartphones are really the way a lot of people around the world get access to the internet, right? They don't have standard laptops or desktops. It's mostly smartphones. I guess moving forward, do you think that it's going to continue that way, where the other countries or developing countries around the world focus more on that, and then that's where you start to see the majority of the players? Or do you think that in the US and Western Europe, we're seeing even more people switch over to mobile gaming? Or do you think they're continuing to do gaming on consoles and PCs and then supplementing downtime with gaming on mobile phones?

ANDREW PARADISE: Well, it's a funny anecdote. When I was a venture capitalist in the 2000s, we were predicting text messaging would become huge in the United States. Because it was already prevalent in Europe. And I think you're seeing that, in that case, the European market was ahead of the US market. In terms of mobile gaming and interactive content, we're seeing that the Asian markets are far more developed in the US market. And I think a big reason for that is we have a lot of fixed infrastructure already built out in the US between personal computers, as well as landlines. You're seeing your fastest growing segments in terms of mobile actually in Africa.

In terms of wireless carriers, we're actually very bullish on India as a massive mobile gaming community. There are now 350 million smartphone users in India, which is actually, if you think about that, more people than the entire United States.

JULIE HYMAN: Andrew Paradise, really interesting stuff. Thank you so much. You're the CEO of Skillz.