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Third-party service providers are common in every developed industry. Take, for example, the restaurant industry — companies like Seamless, GrubHub, and Ritual have stepped in to facilitate discovery, ordering, delivery, and loyalty rewards. In sports, third-parties have been at the forefront of technological advancements in areas like player training, scouting, broadcasting, and more. SMT, a tech company focused on sports, pioneered the yellow first down line, which first featured in a broadcast on September 27th, 1998. The scoreboard on TV broadcasts (yes, even the scoreboard) was another invention by a third-party provider. Before that, the camera used to pan to the physical scoreboard in the stadium!

Imagine watching football without knowing the score or how far 10 yards is…

Gaming (esports included) is the latest such industry to see growth in its third-party ecosystem. Over the last few years, companies have popped up to provide a range of services, from outsourced multiplayer engines, to influencer marketing, and even scouting and recruiting esports athletes. Some examples include Popdog (agency, marketing), Mobalytics (player training), Battlefy (tournament organizing), Skillz (multiplayer for mobile games), FanAI (audience monetization), and, of course, our company StatsHelix.

Here are my thoughts on why these companies and others like them need to exist, and some examples of big players in the industry supporting their third-party ecosystem. (Note: I got a bit carried away writing this and it ended up being much longer than I expected)

  • Third party service providers and developers will play a bigger part in growing the gaming and esports industry going forward. They bring specific expertise outside of a game developer or publisher’s core competencies, and can add value to a game’s ecosystem.
  • Publishers are largely embracing this trend and actively supporting the third party ecosystem. Valve and Riot are only two examples of this. They are largely happy with anything that grows their player or viewer base because they are experts in monetizing players and viewers.
  • However, IP remains the property of the game publishers and it’s important to make sure third-parties aren’t either negatively harming that IP or directly monetizing players at the publishers’ expense.

The Value of Third-Parties

It’s not immediately clear to everyone why game developers (especially the big ones with their vast resources and engineering talent) need to outsource anything at all.

“Why can’t the game developers do this themselves?”
-Literally every VC, ever

To help explain this, let’s go back to my first example — the restaurant industry. A restaurant’s core product is its food, and its most important skill set is creating good food that people want to eat (and, for dine-in customers, a pleasant atmosphere where people want to eat it). Restaurant owners are not, for the most part, experts in delivery logistics and online marketing. They have limited access to data and can’t track ordering patterns beyond those of their own patrons. Your average restaurateur doesn’t exactly have the SEO chops to make page 1 results for Kung Pao Chicken. But Seamless does.

What’s YOUR go-to spot?

Tech platforms like Seamless solve these problems by providing easy to use solutions that just work, and by splitting the development cost over thousands of restaurants to generate economies of scale. Running a successful restaurant is hard enough — imagine doing so while also paying to keep several full-stack engineers on board! Restaurants would much rather pay a small SaaS fee for these services — and they do.\

Now let’s take a look at gaming and see how this applies. Gaming is a huge industry — bigger than film and music combined — that generates around $150 billion in annual revenue. Obviously, the game developers and publishers are doing something right. In general, game devs are very good at certain things. Some examples:

  • Character design
  • Telling interesting stories
  • Creating fun gameplay mechanics
  • Delivering brilliant visuals
  • Creating in-game items that players want to buy

Overwatch is a beautiful game with brilliant character design and an interesting lore

However, all but the biggest and richest developers (and even some of them do) struggle with things like:

  • Poor netcode (smooth online playing experience)
  • Matchmaking (matching opponents with similar skill levels)
  • Game balance (making sure no character is too strong relative to others)

And that’s only the game itself. Then there are things like:

  • Building communities of players around the game
  • Supporting competitive play (esports)
  • Esports broadcasts
  • Live data APIs (exporting data from a game to power things like broadcast graphics)

Overwatch is a perfect example of a title that nails character design, lore, and gameplay mechanics — I’m writing this at the time of New York Comic-Con and hordes of Soldier 76s and Tracers have been roaming the streets for the past few days. However, it has historically struggled to balance competitive play and has received a lot of criticism from the community for aspects of its matchmaking. Its esports competition, Overwatch League, is very difficult to follow for non-players and has struggled to grow viewership since its first season.

Nearly every game developer and publisher (including the giants Activision Blizzard and EA) can benefit from working with a third-party provider, and most of them already do in one way or another. Game publishers have hired third-parties to do things like run esports tournaments, find streamers to promote new games, build multiplayer engines for their games, and much more. In fact, some games are built entirely on third-party engines like Unreal or Unity.

PUBG acquired Madglory in March 2018

Some have even made full acquisitions in the space. Last March, PUBG Corp. announced it was acquiring MadGlory, a company that worked on network features like matchmaking, tournaments, and game chat — showing that even the biggest game devs need help.

Support for Third-Parties:

Though some publishers won’t want to admit it, most in the gaming space are realizing they can’t do everything well and that the community (and third-party developer ecosystem) can help them grow their games and, more importantly, make them more profitable!

Here are a few examples of top players in the gaming industry promoting the growth of third party developers on their platforms.


Valve, with their laissez-faire attitude and extremely hands-off approach, are probably the best example in the space. Rather than running their own tournaments, Valve relies on third-party tournament organizers (like ESL, Dreamhack, and Faceit, to name a few) to do so. In their own words:

We make it free to get a license to operate a CSGO tournament because we want to get out of the way of third parties creating value for our customers.”

With Dota and Counter-Strike being two of the oldest games in the esports scene, Valve has plenty of data to support their approach. They’ve realized that the more viewers they get on their esports broadcasts, the more players they get, and the more in-game merchandise they sell. As a result, they’ve decided to let anyone run CS:GO events and focused on what they do best — monetizing players.

StarLadder ran the latest CS:GO Major in Berlin

The most recent CS:GO Major, operated by StarLadder, generated more than $11 million for teams involved (according to Valve) through sales of player/team branded in-game items. Based on our understanding of revenue splits, Valve itself probably pocketed over $10 million from the success of this tournament. Not bad for something entirely organized by a third party!

Riot Games:

In the past, publishers used to release games that cost ~$60 and pushed players to play them only until the next game in the series was released. With free-to-play games monetized through in-game micro-transactions showing just how profitable they can be, those publishers are now actively working to keep players in their existing games for longer. Access to exciting third-party tools that build on in the in-game experience can help do that.

Developers like Riot have heavily invested in improving their public APIs to allow third parties to build tools for their game. These tools include analytics and coaching software, community portals for making new friends to play with, and more. Anyone can simply head over to and sign up for an API key.

Anyone can sign up for a Riot API key

Riot are even going as far as talking to top tier VCs like Sequoia and encouraging them to invest in companies that build on their API, with an explicit promise not to pull access to data or otherwise interfere with these startups. This makes a lot of sense — with around 8 million concurrent players, League of Legends is quickly becoming its own investment “industry,” much like healthcare or artificial intelligence!

Other game publishers have also voiced a similar attitude towards opening their API to third parties and letting them build and monetize tools. From what PUBG has said publicly, it’s clear that their only objective is to maximize the number of people playing their game. Once those people are playing, PUBG is more than happy to sit back and sell them $9.99 skins based on their favorite streamers — which they are buying at a crazy rate.

So, back to that first question — Why can’t game publishers do this themselves? Well, perhaps one reason is that they’d rather grow the whole pie and monetize it the way that they know best, rather than fight third-party developers outside of their own areas of expertise.


In 2017, Twitch announced the Extensions program, basically giving third parties free reign to develop on top of the Twitch platform and help improve broadcast quality. Twitch decided that rather than building everything in-house, it would allow others to step in and solve needs for both individual streamers and professional broadcasters.

“You know the problems that your communities face best, much better than we do, and extensions are how we empower you to solve those problems.”

This makes a lot of sense. There are hundreds of games played on Twitch at any time, and new games coming out monthly. It would be completely unrealistic for Twitch to source both the manpower and individual game expertise necessary to develop high end broadcasting aids for every single game on its platform. With the Extensions program, Twitch can allow subject matter experts to build software that enhances the viewing experience for all Twitch viewers.

Here’s an example (and a not-so-subtle StatsHelix plug):

In September 2018, we (along with our partners Genvid) powered the world’s first interactive esports broadcast at the Faceit London Major. Through a Twitch extension, viewers were able to track their favorite players’ in-game stats and show/hide the scoreboard and interactive mini-map on demand. It would have been nearly impossible for Twitch to produce this on their own — instead, they let two third party developers (with expertise in manipulating live game data and syncing UI elements) deliver a better viewing experience for the millions of fans tuning in. This resulted in the best CS:GO viewing experience on a stream to date.

Imagine watching CS:GO without knowing the score or Taco’s AWP percentage…

Enhancing the experience for fans at home lets Twitch better position itself relative to other streaming services (such as Mixer or Caffeine) when it negotiates to be the exclusive streaming partner for streamers and tournaments. So, just like the game developers and publishers, Twitch is allowing third parties freedom to build things that ultimately help it grow its market share.

Extensions also open the door for Twitch to further monetize through Bits, its proprietary currency used for in-stream micro-transactions. Creative extension developers can add features that use bits to drive revenue for both themselves and Twitch — Extension developers get 20% of Bits revenue. So as more third-party developers build on the Twitch platform to add functionality, Twitch directly profits without spending a single dollar. Sounds like a great deal to me!

A Cautionary Tale

It’s not all rainbows and unicorns however… despite all the benefits that publishers see from working with third parties, they are still the ultimate IP owners and can, at the literal flip of a switch, shut down anyone working with their game. Game publishers usually do this for one of two reasons: 1) a third party is directly monetizing at their expense (taking money out of their pocket, essentially) or 2) they’re engaging in behavior that the publisher deems harmful to their player base, either directly because it affects the integrity of the game, or indirectly (things like reputational risk).

Game publishers have sent cease and desists to many third parties over the years across different product categories — mainly things like illegal gambling, shady cryptocurrency, or tools that provided players an unfair advantage relative to others.

Here’s one particular example that stands out from the crowd:

Don’t be the next Visor…

In August 2018, Visor — an “AI games coaching startup” raised a $4.7 million seed round led by Accel and other notable investors (Y Combinator, NextGen Venture Partners). Their product essentially functioned as an in-game AI coach, helping Overwatch players with messages such as “protect your healer.”

Less than a month later, Blizzard posted the following in its community forum, essentially labeling anyone using Visor as a cheater and threatening to ban them from Overwatch. The company was, effectively, dead (they’ve pivoted since — and re-branded for obvious reasons).

This (very costly) mistake could have been rather easily avoided. Here are a few suggestions for entrepreneurs in the space:

  • Game publishers have been very vocal about supporting third-parties. If you are a third-party developer, make sure that you are in constant communication with the publisher whose game you’re building around. Get their feedback and let them know what you’re up to, so you can avoid spending lots of time and money on something they don’t want existing.
  • Preferably, be B2B. While there’s nothing wrong with going B2C, publishers are good at monetizing their customers already. The less money you try to extract from their customers directly, the less likely you are to overlap with their own plans to do so.
  • Finally, I know it’s long and boring, but READ THE EULA (end user license agreement). Many game publishers are happy to work with you, so long as you don’t break their existing, published rules. In the above Blizzard post, they actually quoted their EULA in their response to Visor. That’s embarrassing.

Looking Forward

This is only the beginning. As third-parties prove their value, publishers will be more willing to work with them in the future. Developers that either help publishers grow their user and viewer bases OR address a pain point for those users and viewers will see the most benefit.

The team at StatsHelix has been working with publishers, broadcasters, tournament organizers, and esports teams as third-party providers (in one way or another) since 2015. We are very passionate about this subject! If you have any questions or would like to learn more, feel free to reach out at:

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