Written by: Jay Yi, MBA; Edited by: Chris Thompson, CFA, MBA, P.Eng
eResearch | Enthusiast Gaming Holdings Inc. (TSXV: EGLX) and J55 Capital Corp. (TSXV: FIVE), a capital pool firm, completed a merger with Aquilini GameCo Inc. and Luminosity Gaming to form a leading eSports company in the world with a combined pro forma 2018 revenue of US$22M, financing of US$55M, and global audience of 200 million. The combined entity will be called Enthusiast Gaming Holdings Inc., and will trade on the TSX Venture Exchange under the ticker “EGLX” on September 9, 2019.
The new Enthusiast Gaming is a vertically integrated company within the video game and eSports media industry as its portfolio of assets will now include 50 eSports influencers, 80 gaming media websites, 900 YouTube and Twitch channels, and eight professional eSports teams including the Vancouver Titans, the leading team in Overwatch, a popular team-based multiplayer shooter game developed and published by Blizzard Entertainment.
Months before Enthusiast Gaming announced its merger, in March 2019, Aquilini GameCo announced acquisition of Luminosity Gaming, which has professional teams in six popular eSport games including Fortnite, Call of Duty, and Counterstrike. The Aquilini Group, the parent company of Aquilini GameCo is the owner of the Vancouver Canucks NHL Team, and plans to support Luminosity in marketing and businesses services.
Enthusiast Gaming started in 2014 as a blog and has quickly built a growing network of online assets devoted to video gaming and eSports that has provided various revenue opportunities including three main silos:
- advertisements from media content such as videos and blogs, which has grown to 85 websites, 75 million visitors, and 12 billion ads per month;
- ticket sales from events and conferences, including the EGLX, which first started with 120 gamers, then grew to break the Canadian record for the largest gaming convention with 12,000 attendees, and then reached 55,000 attendees in October 2018 that sold out over a three-day weekend; and
- sponsorships for their events and professional eSports teams, which includes the EGLX event and their eight professional eSports teams.
In March 2019, Comscore, a leading 3rd party media measurement and analytics company, ranked Enthusiast Gaming as the fast growing gaming information property with Total Unique Visitors traffic growth of 56% and Total Views growth of 324% between 2017 and 2018.
Menashe Kestenbaum, CEO of Enthusiast Gaming, stated “Being ranked as the fastest growing gaming platform by Comscore is a significant accomplishment for Enthusiast as we continue to chase large industry players for the number one spot. It shows we are executing our strategy of becoming an industry leader.”
Enthusiast Gaming stimulated its viewer base through its growth acquisition strategy and made eight acquisitions since January 2018, which includes gaming websites such as PC Invasion, The Escapist, Operation Sports, Diablo Wiki, and their most recent acquisition in January 2019, The Sims Resource, a subscription gaming website which generated C$2.8M (40% of its revenue) from subscription payments in 2018.
According to Newzoo, the global eSports market is expected to reach US$1.1 billion in 2019, a 27% year-over-year growth, with 82% of revenue generated from media rights, advertising, and sponsorships. The highest grossing revenue silo within eSports is sponsorships, which generated US$456 million in 2019, which is supported by the growing professional eSports leagues.
As eSports companies compete to commend the highest viewership in an effort to win sponsorship and media rights, Enthusiast Gaming is on the right track as they now lead the market in monthly viewers.
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