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Want a Surging Investment Opportunity in 2021? Look no Further than Esports

Jon Brown Jon Brown, Stockhouse
1 Comment| April 27, 2021

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(Image via www.virtualpitstop.gg)


Despite most of our social plans being ruined in 2020, one industry that has not only remained afloat during the COVID-19 pandemic, but thrived, is esports. In fact, gaming market analytics company NewZoo stated that the industry generated over $1 billion for the first time in 2020.
Click to enlarge

Proudly Canadian and based out of Europe, ESE Entertainment Inc. (TSX-V: ESE) has used its valuable assets and world-class operators in the gaming and esports industries to connect audiences in Europe, Asia and North America with esports-related content, advertising, sponsorship support, and a growing esport team franchise.
Capabilities include, but are not limited to, physical infrastructure, broadcasting, global distribution for gaming.

While the sights and sounds of the crowd cheering are missed, the excitement remains. Following a strong 2020, the Company’s foundation has been strengthened even further thanks to an agreement announced in December with global payment technology partner Nuvei Corporation (TSX: NVEI), who will be the title sponsor of leading esports team K1CK for all of its competitions for the 2021 season, across League of Legends, FIFA, Apex Legends and more.

There’s more to esports than just games on computer systems, and ESE has been supporting a diverse set of assets. This includes working with top entertainment and music companies like Columbia Records and Sony Music. Further, their esports business has included work with tier-1 celebrities like Snoop Dogg and Marshawn Lynch.

Stockhouse Editorial recently caught up with ESE Entertainment’s Chief Executive Officer, Konrad Wasiela, to find out more about the Company’s accomplishments in late 2020 and what it has in store as we flip the calendar to 2021 ….


SH: Thank you for joining us today. Many were tracking esports at the start of the pandemic as an industry to watch, believing that competitive gaming was set to grow with so many isolated or under lockdown. From your experience, how has esports grown in the past year?

Esports is recognized for initially having large in person competitive gaming venues, and fortunately COVID had a limited impact on sector growth as users were able to shift to remote platforms such as Twitch. Reviewing back on the year, global esports revenues grew to $1.1 billion in 2020, a year-on-year growth of +15.7% compared 2019 according to Newzoo Market report. ESE Entertainment’s diversified business model includes media rights and sponsorship which turns out to account for over 70% of all global esports revenues in 2020. This highlights that ESE is strategically positioned to capitalize on the largest revenue generator in the esports sector. The lockdown amplified demand for better broadcasting and infrastructure capabilities in esports as competitions went mostly remote. ESE Entertainment was already focused on this gap in the industry even prior to COVID-19 providing infrastructure technologies: software for events and tournaments, broadcasting capabilities, global media distribution and its WPG acquisition.


SH: What do you predict for the industry’s growth in 2021?

For the upcoming 2021 year we anticipate continued growth and more flow of funds into the sector by big name sponsorships, advertisers, endorsements and celebrity engagements. As esports continues to attract the Millennial and Gen Z audience, advertisers will have increased interest for the demographic engagement for brands. Similar to any other emerging sector, institutions will evaluate best way to gain a piece of the esports action and will execute by sponsoring, endorsing, advertising or partnering with esports companies. Regardless of the type of synergy established betweens brands and esports companies, esports provides a new platform and audience to target. In ESE’s case of having their K1CK team sponsored by Nuvei allowed for expansion of payment solutions for teams, sponsors, merchants and publishers.


SH: As with any professional sport, sponsorships are key and Nuvei is unique in this space. For those that are new to the scene, what does having this level of support mean for ESE and the K1CK team?

The sponsorship is a major milestone as it symbolizes Nuvei’s first main commitment to the esports sector. The sponsorship includes the integration of Nuvei’s payment processing technology across ESE’s ecommerce and esports channels. Further, it includes logo jersey placement for ESE’s esports team K1CK in the upcoming 2021 season. This brand exposure is key, as the K1CK team participates across some of the largest games in the world like League of Legends, FIFA, Apex Legends and more. Nuvei’s technology will also assist ESE with payment barriers as its global footprint expands beyond Europe, and provides additional alternative payment methods and currencies for customers.


SH: You have said that payments in the esports arena is a significant opportunity, how significant?

Esports infrastructure is key, and even during COVID, there has been large investment for example Shanghai is constructing a esports center that is estimated to cost just under $900 Million. ESE plans to capitalize from arenas providing broadcasting infrastructure technology for remote viewers of the event who stream and live-in person engagement, both requiring payment support systems. In addition to the typical sports-related revenues of merchandise, concessions and ticket sales.


SH: In April 2021, ESE announced that it had acquired World Performance Group (WPG), what will this bring for fan engagement going forward?
The WPG acquisition is anticipated to make ESE one of the largest esports infrastructure companies in the world, bridging esports companies with their fans and customers. In 2020, WPG’s assets generated revenue in excess of $14,000,000.
WPG is one of the first service providers to engage the fans of sports and esports with B2B, B2C and ecommerce support. Existing clients include one of the largest organization in motorsports, and the world’s largest esports company.


SH: We saw you recently announced some exciting news around simulation racing (sim racing) and your new business unit, Virtual Pitstop. How is ESE getting involved in this booming segment of esports?

Sim racing is one of the fastest growing esports and has been supported by the International Automobile Federation (FIA) for over two years. FIA reinforces sim racing by endorsing esports competitions, cooperating with game publishers and encouraging local organizations to explore the esports side of racing. A ground-breaking decision was made by FIA to officially recognize digital racing as one of the disciplines in which the Federation’s members can run virtual tournaments of the country’s Championship, under the formal name of Digital Motorsport.

In March of this year, we announced Virtual Pitstop, a new business unit dedicated to simulation racing (“sim racing”). Virtual Pitstop will provide technology for video game developers, racing fans, and gamers to engage in motorsport related esports across the globe.

Some of the highlights of the Virtual Pitstop will include the following:

• Precise design of cars and tracks using 3D laser scanning technology.
• Development of 3D models of real-life racetracks, which can be implemented into video games.
• Development of virtual reality (VR) and augmented reality (AR) content.
• Research and development into non-fungible tokens (NFTs) applied to sim racing.
• Creation of animations, skins, visualizations for promotional or architectural purposes.
• Organization and execution of international digital motorsport events.

The business unit will build on ESE’s existing client base and generate new revenue streams, and the Company is confident it will secure ESE’s position as one of the leading esports companies in the sim racing space.

SH: That is exciting. Who are your customers in Sim Racing?

ESE is proud be working with some of the largest motorsport companies in the world including Porsche and Kia Motors. We are in discussions with several tier-1 automotive companies that can utilize Virtual Pitstop’s services and technology.


SH: Prize pools are the main goal for players, has this changed under the pandemic and what do you see for the size of winnings going forward as esports becomes mainstream?

The pandemic has had little impact on user engagement numbers shifting competitive tournaments to remote streaming for most interactions. In order to retain and continue growth revolving around the competition, the prize pools have remained to be large sums and haven’t decreased. Some examples in 2021 are PUBG which plans a prize pool of $14M, Call of Duty for $4.6M, and more.


SH: Looking out to the latter side of 2021, is there anything on the Company’s horizon that investors should keep an eye out for?

Over the past year, ESE has established its base and is now set for aggressive growth. The company is evaluating a significant pipeline of acquisition targets, and has proven itself able to complete transactions with the two past successfully completed deals.

In 2021, investors can expect major revenue milestones, more acquisition targets to be signed, expansion of existing partnerships, and overall management executing deals in this fast-paced sector. The ultimate goal for the company is to reach a $1Bn+ valuation based on fundamentals of revenue and profitability. 2021 will be a critical year for the company’s growth.


SH: You recently announced that Rick Brace, past president of Rogers (NASDAQ: RCI), has joined your board. What does this mean for ESE?

I believe Rick Brace joining our Board is a transformational addition to our existing strong team and sets a rare precedent in the esports industry. Throughout his trailblazing career, Rick has been instrumental in the evolution of media in Canada. He led negotiations with global sports organizations including the NFL, NHL, NBA, MLB, PGA, FIFA World Cup and NASCAR. Rick has made a clear point that he intends to be a very active member of the ESE Board, especially to help scale ESE globally and execute on top tier opportunities. On behalf of the ESE team, we are thrilled to have Rick on board


SH: Thank you for joining us today, anything further to add?

ESE is hyper focused on building a $1Bn+ valuation based on fundamentals of revenue and profitability. We think this is a once-in-a-lifetime opportunity to consolidate an exciting sector that is evolving every day. We are working relentlessly with our talented and experienced team to build a dominant player in the global esports and gaming market. Make sure to add TSXV: ESE to your watchlist, and look out for upcoming news.


To learn more about the Company, visit ese.gg.


FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.



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Best play is in LUCK or US listing LUKEF
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