HOS2107. E-Sports 101

1) Overview of Esports / Sports Tech 101

2) Technical and Strategic Accounting and Finance Issues

3) Case Study and Services Review

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Part 1 and Part 2 -  Esports and Sports Tech 101

(Total session time 55 minutes)

The session can be split into two segments.

Part 1 — Esports 101

1. Macro overview of the esports ecosystem

a) Macro media industry / ecosystem, where does e-sports fit within the larger media ecosystem.

b) Overview of the esports ecosystem today and where future growth areas are.

c) Trends and forecasts in the industry (highlight key trends and forecasts).

Part 2 
Technical Accounting and Finance Issues - Discuss some of the relevant topics in the industry.

Here are three topics where our esports clients had some specific issues.

a) Distinct Licensing -
Licensing of IP  - Contracts often have explicit and implicit promises, making it difficult to determine whether the license of their IP is distinct from other promised goods and services, and therefore a separate performance obligation. The ability for a customer to make use of the licensed IP without the purchase of other promised goods and services will likely indicate that the two promised goods and services are separate and distinct. What are best practices here

b) Sales or Usage Based Issues -
Esports or Sports tech companies often enter into contracts in which they license IP in exchange for a fixed fee as well as a sales- or usage-based royalty. ASC 606 requires that revenue be recognized either at the time that the performance obligation to which the royalties are allocated is satisfied, or when the sale or usage by the customer occurs, whichever comes later. The recognition of revenue in these circumstance is complicated by the difficulty of determining whether the fee received is a sales- or usage-based royalty. There is a significant amount of professional judgement required here.

c) Exchange of Advertising
Esports and Sports tech companies often enter into contracts wherein they license their IP to a customer in exchange for advertising rights, cash, or a combination of the two. If advertising rights are obtained, the entity must determine whether they represent contingent payments for the use of the IP, non-cash consideration for the IP, etc.

d) Tax - They are several Tax issues. However, I didn't pick anything specific to discuss. I can modify and add Tax issues. 

e)  Case Study and Services Review

1. Problem - Why did the client come to us and what were they trying to solve for.
2. Solution - What solutions was the firm able to offer the client. How did we price services?
3. Outcome: How did this client benefit from a dedicated resources that the firm built..

f) Service Areas: Discussion Around Service Areas. What are the key services your firm can provide in this ecosystem. How do you position and market these services to clients?

1. Attest: Reviews and Audits
2. Tax: Corporate and International Tax Services (discuss in detail), Transfer Pricing, Personal Tax..
3. Advisory: Outsourced Accounting / CFO, ERP, Cloud, Cybersecurity

Learning Objectives:

• Understand the Macro E-sports Ecosystem
• Understand Technical Accounting Issues facing this industry
• Understanding Services you can provide to this industry