Investors Turn To Video Games in North America as Esports Numbers Fly Past MLB & NHL Audience

 

Financial Reporter Who Foresaw the Pot Investment Craze, Says This Market is the NEXT BIG THING!

Find Out Why Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) is Uniquely Positioned to Play a Prominent Role in Future Market Growth

While investors have been busy studying the US and Canadian pot markets, another market has been quietly exploding in value.

Led in particular by esports,that market is Video Gaming. The rapid growth it has been experiencing has financial reporter Chris Parry – who first picked up on the rising popularity of pot investing, saying that video gaming now is what pot was back in 2015. In other words, him and other industry experts believe that this market and companies like Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) are set to see rapid growth in the future. 

Already, Michael Jordan[1] has invested in esport startup AXiomatic Gaming, which owns the professional-gaming franchise Team Liquid. Also, Canadian rap-giant Drake has acquired co-ownership of 100 Thieves[2], a “lifestyle, apparel and esports” company.

These two entrepreneurs are not the only early market investors. New England Patriots owner Robert Kraft, New York Mets executive Jeff Wilpon and LA Rams owner Stan Kroenke have all invested in Activision Blizzard’s new Overwatchesports league[3].

All of this growth and investment in video gaming is good news for Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF), which is currently the largest independent online gaming network in North America.

Esports is quickly becoming one of the largest spectator sports in the world, with the global audience expected to total 456 million in 2019[4]. Earlier this year, Goldman Sachs made a head-turning prediction:

“Esports will soon surpass Major League Baseball and National Hockey League in viewership numbers, and match even the NFL’s much-vaunted audience figures in five short years.”

Goldman Sachs cited Newzoo’s latest Global Esports Market Report[5], which reported that the global esports economy will grow to $905.6 million this year, a 38% year-over-year increase, with a global audience of 380 million, comprising 165 million enthusiasts and 215 million casual viewers.

But even with all the recent growth, the video gaming market is still young and flying somewhat under the radar – but that won’t last for much longer! It is projected that the global gaming market will generate up to $150 billion in revenue in 2019[6].

As more and more investors look for ways to tap into this market’s explosive growth, one company that is beginning to capture attention is currently little-known Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF).

Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) has transformed in just the past few years from one gaming blog and a tiny operation hosting in person gaming meetups and tournaments in small bars to one of the fastest-growing gaming networks in North America.

While Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) is selling out entire venues[7] with their huge live gaming expo events – with over 30,000 attendees at the last EGLX event in October 2018, its greatest asset remains a massive active online community of over 75 million unique visitors per month and growing. Enthusiast’s network is becoming the number one platform for brands targeting the gaming demographic.

Over the past few years, the gaming industry has racked up some impressive windfalls for investors, as well as for brands such as Nvidia, Take-Two and China’s Tencent. And yet we may still be witnessing the tip of the gaming iceberg. According to Gamescape, approximately 39% of the total US gaming audience[8] are in the coveted (and hard-to-market) 25-34 age range, while 61% of 18+ viewers earn over an above-average $50,000 a year. Not surprising then, that advertising and sponsorship dollars are pouring into the gaming industry – and the increases are accelerating every year.

More importantly still, Newzoo says the average revenue per enthusiast is currently $3.64[9], which pales in comparison with average revenue per NBA fan, for instance, which is $15. This figure is expected to rise to $6.60 by 2021, an increase of over 80%.

 

Esports Pulling in the Biggest Names in Major League Sports

With audience figures and revenue per spectator projected to rise significantly in countries such as the United States and China, it seems we are on the cusp of a golden age for gaming as a spectator sport. More investment capital than ever is flowing into the gaming industry, with Epic Games just this October announcing $1.25 billion[10]in new investments — the largest funding round for a new company, according to PitchBook data.

As the creator of Fortnite (currently the world’s most popular video game ), Epic now boasts investments from Kleiner Perkins, Lightspeed Venture Partners, KKR, aXiomatic, Vulcan Capital, ICONIQ Capital, as well as from minority stakeholders Disney, Tencent and Endeavor. Funding rounds for gaming companies promise to continue on this upward trajectory, with the previous high of $550-million[11]raised less than 18 months before that, by Sea Limited, a Singapore-based online-gaming portal for Southeast Asia.

Meanwhile esports leagues and teams have begun attracting investor attention from some of the most well-known titans in big league sports. In 2017, New England Patriots owner Robert Kraft, New York Mets executive Jeff Wilpon and LA Rams owner Stan Kroenke all invested into Activision Blizzard’s new Overwatch esports league.

When asked why he invested $20-million[12] in an Overwatchesports team, Kraft began with the obvious: An increasing number of youth these days would much rather watch interactive video games than sit passively for three hours in front of a sports game.

Each of these three US sports giants have now sunk tens of millions into the founding of one of 12 franchises based across the United States, making it the most ambitious league in esports. The Overwatch League promises to attract more exposure than any other esports league, and recently inked a deal to broadcast hours of content on the flagship ESPN network, ESPN2, Disney XD, ABC and its family of streaming services. Even Michael Jordan is now getting in on the action, jumping into a $26-million[13] Series C funding round for aXiomatic, the parent company of Team Liquid, a Netherlands-based professional esports organization.

Gaming: The Next Pot-Class Opportunity

And key analysts are also growing increasingly bullish on gaming and esports as a historic investment opportunity. “Pot in 2015 is esports in 2018,” proclaimed Equity.Guru’s Chris Parry this September. Parry, who made his mark a few years back as the first financial reporter to identify pot as an investment opportunity, now sees the same type of investment climate happening in esports today. That is, huge waves of investment funds rushing in, yet few investors knowing exactly where to park it. These early-stage investors might consider Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF), currently the largest independent online gaming network in North America. 

What Menashe Kestenbaum, founder and CEO of Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF), accomplished in three short years may seem miraculous, but is actually a reflection of how quickly the industry has exploded in the past few years. Consider the fact that Enthusiast got off to a humble start online, with one blog called Nintendo Enthusiast, and offline, packing a local Toronto pub with 120 gamers every Sunday. These days, Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) shatters its own impressive records year after year for the largest gaming convention in Canada—its latest Enthusiast Gaming Live Expo (EGLX) held in October 2018 hosted over 30,000[14] at the sold-out Metro Toronto Convention Centre. 

At EGLX this year, fans watched two major esports tournaments—including the Canadian finals for the World Electronic Sports Games (WESG), sponsored by Alisports (a division of Alibaba) and LG UltraGear, which put $150,000 CAD in prize money up for grabs. EGLX also hosted the Twitch and Capcom-sponsored Canada Cup 2018, which had a prize pool of over $50,000 CAD. 

Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) is built by gamers for gamers, and connects the community across more than one touch point that continues to grow at a staggering rate. Starting from a single blog, Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) now operates a sprawling network of over 80 owned and affiliated gaming websites (including The Escapist, Daily Esports, Destructoid, Operation Sports, the Sims Resource and Nintendo Enthusiast) appealing to every niche gaming community and drawing over 75 million visitors a month.

Enthusiast Gaming (TSX.V:EGLX)  is climbing the ranks of the top gaming sites in North America. EGLX’s current comScore rank is No. 5[15] in gaming traffic, behind frontrunner Twitch, followed by IGN, GameSpot and Curse. Of these sites, only Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) remains independent, with Twitch having been acquired by Amazon for $1-billion[16] in 2014 (Curse is owned by Twitch).

The company’s network of website affiliates earns a 70% revenue share of earnings. Once Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) identifies a high-performing affiliate, however, the company may make an offer to buy the company outright, bringing additional revenue in-house while reducing margins and expanding their community and reach. Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) has an aggressive growth strategy through acquisition and in 2018, they successfully acquired 7 digital properties with more benchmarked for 2019.

In January 2019, Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) signed a definitive agreement on to acquire 100% of the assets of The Sims Resource (“TSR”)[17]. This transformative acquisition will add approximately 35% to Enthusiast Gaming’s rapidly growing revenue base. 

Many sites within the network are well-established properties such as Destructoid.com, one of the Top 10 gaming journalists sites in the world for the past 10 years, with an Alexa ranking of 12 among gaming news sites. Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) currently derives most of its revenue from advertising, clocking in over 12 billion ad requests per month across its vast network. Its growing volume of advertisers mostly comprise gaming companies who want to target Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF)’s hard-to-reach demographic.

 

A Passionate Management Team and Advisors Respected by Gamers

It’s clear that Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF)’s management is made up of passionate gamers who are an active part of the gaming community. Despite Enthusiast Gaming (TSX.V:EGLX) ’s rapid growth, its founder Menashe Kestenbaum continues to stay close to his gaming roots, surrounding himself with like-minded gaming visionaries and entrepreneurs. 

Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) is viewed favorably within the gaming community, who can see that their independent grassroots passion for gaming is genuine and can’t be easily replicated by corporate sites such as IGN or Gamespot.

Here’s a quick look at the key figures behind Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF):

Menashe Kestenbaum CEO: A passionate gamer, Menashe got his start in video games when he was 13 writing for IGN, where he eventually became a community leader. In 2011, Menashe launched his first gaming blog, “Nintendo Enthusiast[18]”. In 2014 he incorporated Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF), monetizing and growing the network since. Menashee has personally owned and operated gaming websites to a readership of over two million gamers, and has led Enthusiast – growing a writing and community staff of over 84 people.

Eric Bernofsky: COO & SVP of Finance: Eric was previously Director of Corporate Development for Pelmorex Media, which owned The Weather Network. Prior to that, Eric spent nine years covering the Canadian media, telecom and technology sectors as an Equities Research Analyst for Desjardins Securities at HSBC.

John Koller, Advisor: As the current Head of Global Integrated Marketing at Twitch, John Koller brings over 20 years experience with Electronic Arts and Playstation. As Playstation’s VP of Marketing, he led five platform launches as well as the multi-billion-dollar Playstation business in the US. Prior to to his 19 years at Playstation, John was head of marketing at Electronic Arts.

 Matt Levitan, Advisor: Matt Levitan’s experience in the Canadian video game industry spans two decades, for which he recently spent nine of them as Senior Director of Marketing and Public Relations at Sony. Before that, he was VP of Client Services at Segal Communications, directing all marketing and public relations efforts for Playstation Canada. Since 2014, he’s launched Press Start Marketing, a consulting agency.

Matt Ryan, Advisor: Matt Ryan was previously Nintendo Canada’s head of communications and strategic partnerships, leading product-to-marketing campaigns for the launch of Wii, Wii U and Nintendo 3DS. After that, he launched Trip to the Moon Marketing Inc., a marketing, communications and brand partnerships agency for entertainment, arts and culture brands. 

Mike Wall, Advisor: Mike Wall spent 11 years as Vice President of Sales at comScore, which reached a $2.5B market cap in 2015. Prior to that, he was Sales Executive at Visual Sports, a VR simulator startup founded in 2000, which was acquired by market leader Full Swing Golf. Mike also the Founder and Principal of Park Hill Ventures, an early-stage venture advisory firm working within Canada’s innovation economy.

Front Row Seats to the Next Investment Windfall in Gaming

Considering the sheer size of the addressable market, Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) is ripe with blue-sky potential. The global interactive gaming market makes up almost half the world’s population at 2.6 billion people (vs. 100 million in 1995), according to Kleiner Perkins’ Mary Meeker in her 2017 Internet trends report[19].

Meanwhile, North American gaming revenue alone made up over $25 billion[20] in 2017. Companies such as IGN, EA Games, Activision Blizzard, Take-Two Interactive, Epic Games and Valve may have done extremely well riding out a boom in their own respective gaming niches, but Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF)’s audience is spread out across various niches. With increasing revenue from the company’s authentic gaming communities, both online and offline, investors are likely to see unmatched growth in the foreseeable future, irrespective of the economic climate. Momentum is clearly on Enthusiast Gaming’s side, as the company has already posted eye-popping 625%[21]YoY revenue growth year to date in its latest third-quarter results in late November. 

And now it has the funds necessary to fuel the next stage of its growth trajectory. This November, Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) raised $9-million[22] in oversubscribed convertible debenture  financing, dwarfing its previous three financing rounds. Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) will use the fresh capital to close a few substantial acquisitions to boost its top-line revenue while adding several leading industry experts to its executive team. 

With a team of seasoned gaming veterans, the Kestenbaum-led gaming revolution has officially kicked off, and it’s coming faster than you realize. The gaming sector is growing and the esports infrastructure is building out quickly. The emergence of gaming leagues, teams, esports stadiums, sponsorship and apparel deals and broadcast deals is taking the industry mainstream, and once it hits critical mass, investors will take notice. By then, Enthusiast Gaming’s (TSX.V:EGLX) (OTCQB:EGHIF) investors will have front row, courtside seats to the action, in what could be the most profitable gaming community in the world, online and offline.

6

Reasons

That Make Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF) a Compelling Gaming Play

1

Tapping a historic opportunity in gaming

A tremendous amount of investment, advertising and sponsorship money is flowing into gaming these days. With Goldman Sachs forecasting esports audience to surpass even the NFL in viewership numbers, Enthusiast Gaming’s (TSX.V:EGLX) (OTCQB:EGHIF 85 gaming sites will be there to soak up much of this stellar growth.

2

The largest gaming network in North America

Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF sits at ground zero of the gaming and esports opportunity. With 75 million online visitors per month, Enthusiast Gaming is already the largest gaming audience in North America and growing.

3

A community of gamers, built by gamers, for gamers

Unlike corporate sites like IGN and Gamespot, the independent Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF has authentic street cred with gamers. Management executives such as Menashe Kestenbaum and Niero Gonzalez are passionate gamers themselves and respected veterans of the industry, with a finger on the pulse of the gaming community.

4

Agnostic platform, lower risk opportunity

Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF is an agnostic platform that covers all subsectors of the gaming industry. Most gaming industry peers like game developers and esports teams put all their eggs in one basket, with significant amounts of upfront capital. Enthusiast Gaming’s network strategically covers a variety of topics, content formats, and media platforms which provides a lower risk investment option into the gaming sector

5

This next gaming wave may be unprecedented

Analysts are now seeing the floodgates starting to open for esports investment, similar to what happened with pot investment a few years back. As Chris Parry says, “Pot in 2015 is esports in 2018.” Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF looks to be well ahead of the curve, building a huge network of authentic gamers willing to spend on both online products and in-person experiences.

6

EGLX’s unparalleled momentum

In the past three years, Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF has grown from one online blog website and a small series of gaming meetups to the largest gaming network in North America. Enthusiast Gaming (TSX.V:EGLX) (OTCQB:EGHIF is still climbing the ranks of the top gaming sites in North America, and has booked an amazing 625% year-on-year revenue growth in its past quarter.


[1] https://www.bloomberg.com/news/articles/2018-10-25/michael-jordan-makes-foray-into-esports-with-startup-investment
[2] https://www.engadget.com/2018/10/23/drake-co-owns-100-thieves-esports-brand/
[3] https://www.forbes.com/sites/darrenheitner/2017/07/12/robert-kraft-and-jeff-wilpon-among-franchise-owners-in-new-overwatch-league/#1482e879761a
[4] https://newzoo.com/insights/articles/newzoos-trends-to-watch-in-2019/
[5] https://newzoo.com/insights/trend-reports/global-esports-market-report-2018-light/
[6] https://newzoo.com/insights/articles/newzoos-trends-to-watch-in-2019/
[7] https://www.enthusiastgaming.com/enthusiast-gaming-announces-record-breaking-attendance-at-eglx-canadas-largest-video-gaming-expo/
[8] https://esportsobserver.com/average-age-esports-viewers-gamescape/
[9] https://newzoo.com/insights/articles/esports-revenues-will-reach-696-million-in-2017/
[10] https://www.bloomberg.com/news/articles/2018-10-26/fortnite-s-epic-games-gets-1-25-billion-from-new-investor-group
[11] https://www.seagroup.com/media/27
[12] https://www.forbes.com/sites/rogergroves/2017/07/17/robert-kraft-investment-in-esports-telling-about-millennial-disaffection-with-traditional-sports/#2aead5d6347f
[13] https://techcrunch.com/2018/10/25/nba-all-star-michael-jordan-leads-a-26-million-round-for-esports-group-axiomatic/
[14] https://globenewswire.com/news-release/2018/10/31/1640372/0/en/Enthusiast-Gaming-Announces-Record-Breaking-Attendance-at-EGLX-Canada-s-Largest-Video-Gaming-Expo.html
[15] https://midasletter.com/2018/10/enthusiast-gaming-holdings-inc-cveeglx-ceo-esports-boom/
[16] https://www.businessinsider.com.au/amazon-buys-twitch-2014-8 
[17] https://www.enthusiastgaming.com/enthusiast-gaming-to-acquire-the-sims-resource-the-worlds-largest-female-video-gaming-website/
[18] https://www.nintendoenthusiast.com/
[19] https://www.recode.net/2017/5/31/15693686/mary-meeker-kleiner-perkins-kpcb-slides-internet-trends-code-2017
[20] https://www.statista.com/statistics/500070/gaming-revenue-north-america/
[21] https://www.enthusiastgaming.com/enthusiast-gaming-reports-625-revenue-growth-ytd-in-third-quarter-2018/
[22] https://www.enthusiastgaming.com/enthusiast-gaming-closes-oversubscribed-non-brokered-private-placement-of-convertible-debenture-units-for-9-million/

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