On Monday, October 26, Esports EntertainmentGroup (GMBL) announced an agreement to acquire ggCircuit LLC and Helix eSports LLC for roughly $43 million. The deal is expected to close prior to January 1, 2021. While the company will provide an update to its full year 2021 revenue guidance (which currently stands at $13 million) upon finalization, management did raise full year 2022 revenue guidance to $42 million (from $25 million previously).
For those unfamiliar with the name, Esports Entertainment Group (EEG) utilizes a three pillar strategy, investing in Esports Entertainment & Infrastructure, Esports Wagering, and iGaming & Traditional Sports Betting as it looks address all aspects of the rapidly growing esports market from the gaming to viewing to betting.
With this acquisition comes four new platforms, three that help build out the companies esports infrastructure offering and one that services the esports betting market.
"With the acquisition of Helix and ggCircuit, we have created the most diversified, US-listed esports entertainment asset in the entire ecosystem,” stated Grant Johnson, CEO of Esports Entertainment Group on the release. “These acquisitions significantly strengthen our Three Pillar Strategy, adding state-of-the-art esports entertainment centers, an esports-focused vertical enterprise software business, a best-in-class esports analytics platform, and a player-vs-player skill-based wagering platform to our diversified asset base. Together with what we’ve already built and further near-term acquisition opportunities, Esports Entertainment Group is well on its way to becoming a global industry leader.”
On the infrastructure side, EEG will acquire Helix , Genji and ggCircuit. Helix eSports “Helix eSports owns 5 esports centers including 2 of the 5 largest centers in the USA.” The average age of the players at these centers is 18.1 years old and the sites see over 6,000 unique gamers every money and has experience hosting tournaments and large scale events. “Esports are already a billion-dollar opportunity and expanding at a CAGR of 24%,” added Murphy Vandervelde, founder of Helix. “With growing mass market appeal and a wealth of untapped opportunities, I am eager for Helix to become part of Esports Entertainment Group, where we can capitalize on the significant macro trends that will help catapult us to global leadership in this dynamic industry.”
Genji is a “data collection, analytics and scouting platform” that has already launched products into Helix eSports centers and generates revenues via sales to publishers and esports leagues (such as the NBA 2K League) with plans to eventually sell its product to “all competitive players looking to enhance their gameplay through analysis, fair competition and roster optimization.” On the release, founder William Collis commented, “Some of the best publishers and leagues already rely on Genji as the trusted analytics provider. I am thrilled with the opportunity to work together with the Esports Entertainment Group team to build on our extensive successes as we seek to become the dominant player in the global market.”
As for ggCircuit, the platform can best be described as a “B2B software solution that provides cloud based management for gaming centers, a tournament platform and integrated wallet point of sale solutions for enterprise customers.” Essentially this is a platform that operates across Helix eSports centers (and over 1,000 other connected locations) and makes it easy center operators to “goal is to help gaming centers grow their business through easy to use esports software.” Additionally, “This software provides player incentives with coin rewards, prize redemption, and events to keep them coming back.”
ggCircuit’s offerings include ggLEAP which includes “cloud based management software, web admin, PC client, and point of sale,” ggROCK which is “PXE server technology for center efficiency and game updates” and ggCircuit SPECOPS, designed to assist “esports location startups through business planning and technology implementation.” Zack Johnson, founder of ggCircuit, said, “We are excited to join forces with Esports Entertainment Group! With our combined state-of-the-art platform and resources, I am confident that we will rapidly scale growth in the quarters ahead.”
On the wagering side, Esports Entertainment Group acquired LANDuel, “a proprietary player vs player platform, built in Unity, that allows for skill based wagering on third-party video games both in gaming centers and eventually remotely.” Per the release, “LANduel also holds close relationships with several major game publishers to ensure events and wagering follow community guidelines. LANduel is currently working alongside the New Jersey Department of Gaming Enforcement on a pilot program.”
Bottom line, this is a very transformative acquisition for Esports Entertainment Group. It creates one of the only publicly traded pure-play ways to play the massive opportunity in esports. While the company is small, the opportunity is massive and with this acquisition provides them with the key assets they will need to compete for share in this rapidly growing space.
Esports will no doubt continue to benefit from the upcoming launch of next-gen consoles and a shift in the entertainment of choice platforms being seen by younger consumers. Don’t forget, on Netflix’s NFLX 4Q18 earnings release, when speaking about competition, management commented, “We earn consumer screen time, both mobile and television, away from a very broad set of competitors. We compete with (and lose to) Fortnite more than HBO.”