eSports Competitions are Becoming a Popular Phenomenon
NEW YORK, Aug. 28, 2019 /PRNewswire/ — The winners from Dota 2’s The International and Epic Games’ Fortnite World Cup were paid more per-player than the winners of major sporting events such as the Wimbledon and The Masters, making eSports one of the most lucrative careers. The Fortnite Cup paid out USD 30 Million in prizes and 16-year old Kyle “Bugha” Giersdorf took home the USD 3 Million solo grand prize. Meanwhile, Dota 2’s The International 2019 paid out over USD 33 Million in prize pool, in which professional organization OG, took home USD 15 Million. The attractive payouts have led many teenagers and young adults to consider developing a career within the eSports industry. For instance, following the conclusion of Dota 2’s The International 2019, Johan “N0tail” Sundstein has now collectively gained USD 6.88 Million in earnings, making him the highest earning player in eSports history. While Sundstein’s earnings is highly appealing, players cannot expect to become top tier athletes overnight. Initially, Sundstein earned about USD 2,000 in earnings from playing Heroes of Newerth. However, due to the declining player count, Sundstein decided to transition to Dota, where he began to make the majority of his earnings. The rate the eSports market has grown over the past several years positions the market to become a disruptive global force. According to data compiled by Infoholic Research, the global eSports market is expected to triple by 2025, reaching a value of USD 3 Billion. Additionally, the market is expected to exhibit a CAGR of 20% during the forecast period from 2019 to 2025. UMG Media Ltd. (TSX-V: ESPT), Take-Two Interactive Software, Inc. (NASDAQ: TTWO), Activision Blizzard, Inc. (NASDAQ: ATVI), QUALCOMM Incorporated (NASDAQ: QCOM), Oracle Corporation (NYSE: ORCL)
Each year, eSport tournament payouts drastically increase. For instance, Dota 2’s The International 2018 boasted a prize pool of USD 25.53 Million, but in just one year alone, the payout increased by another USD 8 Million. Typically, most companies generate the prize pool from in-game player purchases or also known as microtransactions. Generally, most microtransactions are purely cosmetic, however, in some instances microtransactions can give players a competitive advantage. Valve Corporation, the developers and publishers of Dota 2, released “battle passes” that player can purchase in-game for a price of USD 9.99. The battle pass is based on a tier system, which requires players to complete a series of challenges in order to advance. Each time players tier up they are rewarded with prizes such as cosmetics or emoticons. Valve said that 25% of the revenue from battle pass sales go directly back into The International’s prize pool. Moreover, players are much more inclined to purchase the battle pass because Dota 2 is a free-to-play game. Most of the top eSport games are free-to-play games like League of Legends and Fortnite. According to eSports earnings, Dota 2 has paid out USD 216.23 Million in prize pool since its inception in 2013. Meanwhile, Fortnite has delivered USD 73.08 Millionin just two years, while League of Legends has cashed out USD 68.79 Million since 2009. Statistically, free-to-play games are much more appealing to consumers even though the qualities may lack compared to pricier options. Since the game is free, more players are inclined to try the game, driving a large user base, and in return, there is a larger opportunity for players to purchase in-game products. While microtransactions can be controversial, it is a major driver of a Company’s revenue which allows it to boast lavish tournaments. As a result, the media around eSports is increasingly growing each year as players are captivated by the high level of skill and the exhilarating rush at tournaments. “Gaming, specifically competitive gaming (also called eSports) has started to grow at an astounding rate. Traditional sports franchises and even Netflix are worried about this new competitor, as live streaming and in-person events continue to encroach on their territory,” said Brett Schafer, Co-Founder of Market Brothers Media. “Whatever you think of eSports personally, you cannot deny how big it has gotten, and will become. We are still in the early stages of this new industry, one that should continue to grow over the next two decades. It could pay off handsomely for any investor that decides to get in early.”
UMG Media Ltd. (TSX-V: ESPT) announced yesterday that, “it has entered into an agreement to acquire Victor’s Gold. Victor’s Gold is a game mode development company, which provides operators with a platform to run unique events in managed esports titles.
Victor’s Gold provides P2P tournaments and game modes to monetize in-game events that can occur on a consistent basis. Victor’s Gold introduced a distinct game mode, ‘Mercs’ for Counter-Strike which is compatible with most popular shooter games that allows for every in-game engagement to be a point of cash contest. Victor’s Gold’s established base in CS:GO, League of Legends, DOTA2 and PUBG, expands UMG’s influence in the online competitive gaming world and opens new doors for future sponsorship and broadcast activations. Victor’s Gold has operated its Merc Tournament Series at numerous LAN centers in the US and has plans to expand into the casino setting as well as additional LAN centers.
UMG CEO, Dave Antony, had this to say about the acquisition: “The introduction of Victor’s Gold to UMG will allow for many exciting new opportunities for our brand. We’re ecstatic to be able to expand our reach into CS:GO, League of Legends and more with Victor’s Gold and have plans to integrate it into UMG’s platform.”
Victor’s Gold CEO, Ben Abramowitz, commented: “Victor’s Gold is really excited at the prospect of taking our original game content to the next level. An acquisition by UMG would provide Victor’s Gold with a massive boost to capabilities and access to media distribution channels vital to exponential growth.”
In consideration for the acquisition of Victors Gold (the “Transaction”), UMG will issue 1,000,000 Common Shares at a price of $0.30 per share. The Transaction is subject to due diligence and regulatory approval, including the acceptance of the TSX Venture Exchange. The Transaction is an arm’s length transaction.
Closing is expected in the next 30 days.
As well, UMG is pleased to announce that it has retained the services of Independent Trading Group (“ITG”) to conduct market making services. ITG will trade shares of UMG on the TSX Venture Exchange (“Exchange”) with the objective of maintaining a reasonable market and improving the liquidity and stability of UMG common shares in compliance with the policies and guidelines of the Exchange. Under the terms of UMG’s agreement with ITG, ITG will receive $5,000 per month for their services. The agreement will continue in effect on a month to month basis and will automatically renew for subsequent monthly terms unless terminated by either party. There are no performance factors contained in the agreement between ITG and UMG and ITG will not receive any shares or options from UMG as compensation for their services. The arrangement with ITG is subject to Exchange acceptance.