Risks and Trends

Billions on the startup market, Investments in eSports

Risks and Trends 2018 Takeaway 2018-02-06
The future of net neutrality, financing startups and investing in eSports - these were the tech trends at Polityka Insight's conference.

Key points

Uncertainty over net neutrality. Ben Bartlett, Public Policy Manager at Facebook, Marcin Cichy, President of the Office of Electronic Communications (UKE) and Jacek Niewęgłowski, Member of the Board at P4, owner the mobile network operator Play, discussed possible restrictions that might affect users’ access to the network. On December 14, 2017, the US Federal Communications Commission (FCC) limited net neutrality in the US. This means that internet service providers will now be able to vary the speed of data transmission, and thus control how fast websites load up. As a result, they will try to profit from that fact by offering faster access through internet packages, similar to subscriptions currently offered by cable providers.

EU unlikely to introduce changes. Cichy stressed that net neutrality is included in relevant EU regulations. He also added that he fully supports it and is against any restrictions. According to Niewęgłowski, the discussion on net neutrality centres around fundamental issues – such as equal access to services or civil liberties. Therefore – in his view – the issue has become political. In the US, telecom operators such as Comcast, Verizon, Time Warner Cable and AT&T are against net neutrality. They have spent considerable amounts on the development of network infrastructure and would like to use the changes to generate additional profit.

Billions to energise the startup sector. Over the next four to five years, PFR Ventures will use its five funds to invest PLN 2.2 billion in financing new startups. This money will first go to around 50-60 venture capital funds that will, in turn, invest them in companies at various stages of development. Those funds will be repayable – in a few years’ time, they will return to PFR as profits from the sale of company shares. PFR will then be able to reinvest in the development of an ecosystem of innovative entities. The Chairman of the Investment Committee at PFR Ventures Monika Morali-Majkut said that the first decisions, taken already this year, will involve investing in startups in the "seed" phase.

Problems with the commercialisation of projects. Morali-Majkut believes that one cannot be afraid of possible losses. According to her, investors should make mistakes because they learn from them. She argued that PFR money is filling in gaps in the market. Until now, Poland’s problem did not involve a lack of ideas for modern businesses, but a lack of money to develop such entities, particularly when companies needed several dozen million zlotys. Morali-Majkut does not believe that the market would overheat. She is convinced that in a few years, after the current phase of PFR Venture financing is completed, there might still be a shortage of funds, particularly for companies at a late stage of development that want to scale up their business and expand on foreign markets.

Investors want to profit from eSports. In South Korea, finals in competitive video game championships attract tens of thousands of people that fill in local stadiums. Forty-six million viewers watched Intel Extreme Masters in Katowice. Former co-owner of Legia Warszawa and current co-owner of AGO Gaming and Abstra Bogusław Leśnodorski has also invested in eSports. According to him, Polish eSports teams have a greater chance of achieving global success than Polish football or basketball clubs. He admitted that world's best eSports teams cost up to EUR 10 mln euros a year. Investors are able to profit from eSports owing to, among others, sponsorship, advertising and sale of video rights.

Paid video services will not hurt traditional media. Colin Bortner, Director of Global Public Policy at Netflix, said that services such as Netflix embrace the needs of a new generation of consumers who are able to view what they want and when they want it using multiple devices. Bortner quoted research that indicated that paying for one service increases the likelihood that users will choose another paid service. He also believes that Netflix does not hurt local television. On the contrary, it can be a good distribution platform for smaller producers. Netflix offers over 30 productions in languages other than English, for instance, the German TV series “Dark”.

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