Racers and enthusiasts hope event spurs sport into a billion-dollar industry

Racers and enthusiasts hope event spurs sport into a billion-dollar industry

This weekend, 100 pilots will gather to race in front of the Manhattan skyline at speeds of more than 60 miles an hour. These pilots won’t be in the air, however—they will race drones in the 2016 U.S. National Drone Racing Championships.

And for the first time ever, they’ll race live on a national broadcast: ESPN3 will air the race on Saturday and Sunday at 1 p.m. Eastern time—the first time America’s largest sports network will cover the sport. For drone racers, organizers and enthusiasts, Disney-owned DIS, +0.70%  ESPN’s streaming broadcast is a breakthrough moment.

“ESPN legitimizes drone racing from a hobby level to a sport level,” said Sahand Barati, chief executive of Drone Sports Association, the racing league that is putting on the New York race this weekend. “ESPN airing it is proof [that drone racing] is going to be a real thing versus just a fad.”

Barati says sponsors have piled into the event, and that drone racing is now on companies’ radar as the newest way to tap into the emerging crossover between sports and technology—and target a generation of young viewers more interested in YouTube and Pokémon Go than Monday Night Football.

But can this new fringe sport attract enough attention—and money—to go mainstream?

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A pilot for Chinese team D1 sits in the pilot seat preparing to fly the team drone at the World Drone Prix drone racing championship in Dubai in March 2016.
The Nascar of flying robots

Drone-racing leagues have been springing up around the country for the past few years, with more appearing just in the past few months.

There are dozens of small or regional leagues that organize small events. Then there are the contenders, a handful of bigger leagues—like Drone Sports Association, the Drone Racing League and the International Drone Racing Association—that are all vying to become the Nascar of flying robots.

Among these bigger players, no one league has yet to emerge as the heavyweight: some leagues have secured significant investment, while others are taking the lead in major sponsorship deals or broadcast contracts. The Drone Racing League in January said it secured more than $8 million in funding, including investment from RSE Ventures, the venture-capital firm run by Miami Dolphins owner Stephen Ross.

Another league, the Aerial Sports League, is going to open a full-scale, drone racing entertainment complex in San Francisco this month. Also this month, a racing series called DR1 will be the first drone race to stream on popular social gaming platform Twitch. It’s sponsored by PepsiCo.’s PEP, +0.22%  Mountain Dew.

For the championship race on ESPN’s streaming offering this weekend, Drone Sports Association has snagged sponsorship deals from action-camera maker GoPro Inc. GPRO, +1.77% which has said it is developing a drone, as well as Ernst & Young and American International Group AIG, +2.59%  .

The ESPN broadcast will combine features of a traditional sports broadcast with elements that have grown out of the popularity of professional videogame events, dubbed eSports. Commentators will call the race live and there will be pre- and post-race interviews with racers, but there will also be first-person camera views from the drones.

For many sponsors, the similarities between drone racing and eSports, as well as other new technologies, are the main draw.

“It’s a sport, a form of recreation, but it has implications in other sectors we have been following, like streaming and virtual reality,” said Keith Strier, who coleads innovation and digital enterprise strategy for sponsor Ernst & Young. “Take all these different topics and put them into one nice little package. No other sport comes closer to capitalizing on them. “

Despite the appeal for sponsors, many in the drone racing community wonder if there is enough support for so many leagues to survive. Zoe Stumbaugh, a drone pilot who is competing this weekend, said she thinks consolidation must happen for the sport to make money.

“A lot of leagues are competing against each other for entertainment purposes and profits,” Stumbaugh said.

Sally French, MarketWatch

Zoe Stumbaugh pilots a drone at Maker Faire in San Mateo, Calif., in May. Stumbaugh will compete this weekend in the 2016 U.S. National Drone Racing Championships, which will air live on ESPN.

For now, Ernst & Young’s Strier says having multiple leagues is spurring innovation and growth in the industry.

“They all have slightly different approaches,” Strier said. “Some approach with produced racing experiences, others focus on live, organic sports.”

If consolidation did happen, it would follow a similar pattern set by other sports in the past. Many football fans today may have no memory of the American Football League, but it was a merger between the NFL and the AFL in 1966 that created the National Football League as we know it today.

“When the consolidation happened, that’s when sponsors got behind it seriously,” Stumbaugh said. “They were able to unify the industry versus tearing it apart.”

That was appealing to sponsors, who didn’t have to compete for viewers nor top athletes who participated in other leagues.

Sponsors dig it, but will drone racing ever pay the bills?

For a first-time drone racer, the experience of piloting isn’t always fun—it can be downright nauseating. To race a drone, pilots must don first-person-view, or FPV, goggles that allow them to see what the drone’s onboard camera sees as it whips through the air. With the drone flying at 60 mile per hour, it’s a prime recipe for motion sickness.

But the world’s top racers say the nausea quickly fades with experience, and is replaced with euphoria.

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A pilot for the British Team Black Sheep UK flies at the World Drone Prix drone-racing championship in Dubai in March.

“When you put on these goggles, it’s like putting on Superman’s cape,” said Erich Recker, a producer for Reckognition Productions, which produces the TV show “Droned” for the Discovery-owned DISCA, -0.34% Science Channel. “You are literally going from couch to the sky. It’s a rush.”

It’s a rush, but could drone racing ever be a moneymaking career?

“We have professional videogame players who make millions a year, so why can’t drone racing do the same thing?” Drone Sports Association’s Barati asked.

The biggest pro eSports players can pull in millions. Peter Dager reportedly has won more than $2 million playing in videogame tournaments, and the video game-oriented YouTube channel of Felix Arvid Ulf Kjellberg, better known as PewDiePie, has made him one of the internet’s richest stars, with a reported $12 million net worth.

The professional videogame industry is expected to generate global revenues of $500 million in 2016. There are at least 100 players in the e-gaming community making between $300,000 and $1 million a year.

No drone racer is making anything remotely close to that type of money right now, but Barati says he could see that happening as the drone-racing industry grows and more companies come in wanting to sponsor pilots.

“There are already about a dozen drone racers who are widely known in the drone community,” said Fred Paik, a co-producer on “Droned.” “We’re just at the tipping point of awareness of drone racing.”

One of those drone racers is Luke Bannister, a 15-year-old from the U.K. who won the $250,000 grand prize (out of a $1 million total prize pool) at a drone race in Dubai in March.

Dubai’s race was the largest-scale drone race in the world, with a budget in the millions of dollars, Barati said. The budget to put on this weekend’s race won’t be that high, but he said it would be the biggest, most expensive race to date in the U.S.

Most pilots know that drone racing won’t pay the bills soon.

“A full-time career would be great,” Stumbaugh said. “But for us to get to that kind of level [of salaries that professional videogamers make], it will take years just for the industry to flesh itself out.”

Stumbaugh is one of the world’s top drone pilots, and she has gotten to the point where she receives equipment and travel sponsorships from drone companies. Her experience as a pilot has led her to an assortment of odd jobs, like setting up feeds for streaming sites focused on drones. But she still says if you add up how much she spent getting started and attending races, she hasn’t made any type of profit from drone racing.

Ernst & Young’s Strier says it isn’t unreasonable to believe a handful of drone racers will make some money within the next three years.

“There will be money through advertising with ESPN airing this. Then you’ll have people subscribe to their favorite pilots on Twitch or watch their content on YouTube. There is also traditional ways like sponsorships,” he said. “I think drone pilots will benefit sooner rather than later.”

From fringe to mainstream

Behind the sport’s rapid growth has been an equally rapid development in drone technology.

Until very recently, drone racers had to be tinkerers. You couldn’t pick up a racing drone at the local electronics shop, so drones were always custom-built, often by the pilots themselves. People who wanted to fly but didn’t want to break out the soldering iron were excluded from drone racing, Paik said.

Sally French, MarketWatch

The Blade Nano QX2 is one of the few ready-to-fly racing drones on the market.

That all changed two years ago, when Horizon Hobby introduced the Blade Nano QX drone, a ready-to-fly racing drone that cost only a few hundred dollars. Horizon Hobby now manufactures a newer version, the Blade Nano QX2. A racing drone, controller and the FPV goggles cost $400 to $500.

Horizon Hobby is known for making RC cars, airplanes and helicopters, but Blade brand manager Steve Petrotto says drones now make up about 40% of the company’s sales. As more people are exposed to drone racing—whether on ESPN this weekend or in another race—Petrotto says sales will continue to rise.

“Honestly sales have been on the rise since the media started promoting drone racing in general,” Petrotto said.

The frame to build a newer, popular drone called the Tiny Whoop, which is small enough to fly around living rooms, sold out on Horizon Hobby after a famous drone pilot posted a video on YouTube of him flying it in April.

“It’s almost hard to manage the demand on that product,” he said. “It was one of the hardest things to forecast. Our supply for the rest of the year burned up in a week.”

For drone racers hoping their sport catches on with a mainstream audience, it’s important that this ready-to-race segment of the drone market continues to grow.

“The general public can’t just go to the store and pick up this hobby up like they can a videogame or soccer ball,” Stumbaugh said. “The main gateway (to making drone racing popular) is to have the drones available to the general public.”

For now, not many companies are following Horizon Hobby’s lead and making ready-to-fly racing drones, but it isn’t out of the realm of possibility. DJI, the world’s largest drone manufacturer with a $10 billion valuation, says it has no plans to produce a racing drone. But the company this month is opening a drone-flying facility in South Korea, which includes areas to race drones.

DJI’s main competitor, Yuneec, which has a $60 million investment from Intel Corp.INTC, +1.16%  , also said it is currently not working on a racing drone, but on Thursday announced its own $249 first-person view headset, the same technology that racers use.

‘Nerdy is cool’

Drone racing is still a fringe sport, but interest appears to be growing, and fast.

AirVuz, one of the more popular websites for racers to post videos, had 800,000 visitors in July, CEO Mike Israel said, four times more than in June and about 20 times more than May.

Still, there’s some fear that drone racing will never amount to more than a niche sport.

“Drone racing as a sport is barely a year old,” Barati said. “Anything that new should make people somewhat skeptical.”

It’s male-dominated and thus far appeals mostly to a young, tech-focused demographic (you could call them nerds).

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A test pilot at the World Drone Prix drone racing championship in Dubai in March 2016

Paik said that given the success of eSports—which draws a similar demographic—he’s not concerned, and that the nerdiness of it might be part of the appeal.

“What was considered nerdy in the past—a lot of those labels don’t quite mean as much anymore,” he said. “Nerdy is cool.”

But given the speed at which drone racing went from nerds racing in their backyards to nerds racing live on ESPN, it’s shaping up to be a moneymaker for the companies that have a hand in it.

“Not only is (drone racing) going to make money, it’s going to create a vibrant ecosystem of advertisers and brands that want to benefit from it,” Strier said.

Strier said a year a half ago, he didn’t even know what drone racing was, and now he’s involved in drone racing both professionally and personally (he’s taking his family to watch the games live in New York this weekend).

“With the ESPN deal, I think this will go down on record as the fastest maturity level for any sport,” he predicted.

One thought on “Racers and enthusiasts hope event spurs sport into a billion-dollar industry

  1. Mike Israel - August 8, 2016 at 12:40 PM

    This was a great article and I was proud to be quoted in it on behalf of AirVuz, a video sharing platform I created last year. AirVuz has become the leading online drone video sharing community and racing and FPV flying are key areas of content for us.

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