♟️Generating $100M a Year from Chess

Read time: 5 minutes

Good morning! It's Friday, April 19th. Today's post looks at Chess.com, the online platform largely responsible for the recent spike in popularity of the ancient game. 

THE FEATURE

♟️Generating $100M a Year from Chess

There's nothing tangibly new about chess— the game is still played on the same board with the same pieces as it was over 1,500 years ago.

However, the game is experiencing a massive resurgence, reaching its highest popularity level since Bobby Fischer won the 1972 World Chess Championship.

Behind this resurgence is Chess.com, the internet chess server bringing an ancient game into the modern era through influencers, entertainment events, and ingenuity. 

The Founding Story

Chess.com founder Erik Allebest, a graduate of Standford Business School, has always been fascinated with chess. Before creating his online chess server, he started a chess teaching company and then an equipment business, Wholesale Chess. 

Becoming frustrated with the endless SEO grind to find customers, Allebest pivoted. In 2005, he bought the domain Chess.com for $55K to create the first online chess community.

His idea was to create an online community that prioritized discussions over sales, hoping to create a similar platform to MySpace for his favorite game. 

But Chess.com became a whole lot more than just that. There was overwhelming demand among users to play chess online, so Allebest built the technology himself and launched a subscription product that virtually taught people how to play chess.

With an invaluable domain name for SEO marketing and first-movers advantage, Chess.com hit 1M users by 2010, 20M by 2017, and skyrocketed during the pandemic to over 100M users. 

In 2023, Chess.com logged more games played than ever, a stunning 12.5B— solidifying its status as both a place to play chess and a cultural hub. 

What's the Business?

Chess.com leverages a freemium model that pulls chess fanatics obsessed with getting better at the game into paid subscriptions with advanced tools in each tier:

• Free: Watch ads to play chess online, 3 puzzles a day, 1 full game review a day

• Gold $6.99/month: Unlimited Puzzles, unlimited lessons, unlock all bots, no ads

• Platinum $10.99/month: Unlimited game review

• Diamond $16.99/month: Unlimited insights and unlimited coach explanations

Unlimited puzzles and game reviews may not sound like a big deal to non-chess players, but they are. Chess.com's proprietary game reviews walk players through their games, highlighting any missteps and suggesting alternative strategies. The puzzles also advance player skill, presenting users with difficult scenarios in which there's only a single optimal move to make. 

Basically, Chess.com's paid subscription tools can vastly accelerate a user's chess ability in ways that chess players of the past wouldn't have imagined possible. 

By 2022, Chess.com hit $100M in annual revenue, making the 700-employee company immensely profitable. 

How They Win: Tailoring Chess to Modern Tastes

Before the pandemic, Chess.com had an effective monopoly on everyone interested in playing chess online. Unfortunately, that wasn't very many people. The solution? Fuel cultural interest in the game to widen the targetable market. 

Chess.com primarily achieved this through influencer marketing. By partnering with the top content creators in the chess niche and equipping them with tools for streams, videos, and the ability to play subscribers, the chess category exploded on platforms like YouTube and Twitch. 

Some of those partnerships include names like grandmaster Hikaru Nakamura, international master Levy Rozman, and sisters Alexandra and Andrea Botez— who have a combined audience size of 12.3M subscribers.

Chess.com's reach has expanded beyond weathered chess veterans, as seen in their PogChamps tournaments, in which grandmasters coach popular non-chess Twitch streamers. The latest PogChamps tournament had a $100K purse for the winner!

While it would take too long to list all their marketing strategies, Chess.com has created a robust content machine that's got the world hooked on everything and anything related to chess. And when those new fans are looking to get into the game, Chess.com is there to teach them… for a price. 

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