Profiting from a reward system to play at home, Advertisers win through Versus Systems

We all know that the online industries are having unprecedented popularity, in part due to the COVID-19 pandemic that has left people with more spare time to play games, engage in Esports and stream videos. Well one company is profiting from this via their in-app advertising that rewards consumers. The fun part here is by rewarding users to view the ads both the consumers and the advertisers are winners.

Versus Systems Inc. (CSE: VS | OTCQB: VRSSF) is a company that provides in-game prizing and promotions (essentially rewards). The Company’s proprietary in-game rewards engine engages the online gaming community through rewards, which benefits users, developers and brands. And it’s not just video games; the in-app tool also works on streaming services and any interactive media, anywhere in the world.

Just think about it for a minute. Most people never click on regular ads while doing an activity. Why? Because there is no reward. But what if you could get a 10% discount voucher for McDonald’s or a 20% discount on a new gaming console? Suddenly consumers are interested to engage because there is a reward for them to do so. The advertiser also gets rewarded by the engagement and hopefully a visit soon from the consumer to redeem the reward. A win-win for both parties. This is the brilliance of Versus Systems’ in-app advertising platform.

Versus Systems – An in-app platform that encourages users to engage by giving rewards

Source: Versus Systems company presentation

Versus Systems is expanding globally with key partner HP

After a successful launch of their OMEN series computers in 2019, HP is expanding their rewards program, powered by Versus. Versus will also be adding streaming video as a vertical through Kast, a mobile game developer in Animoca, and growing the HP relationship.

Starting this summer of 2020, Versus’ in-app advertising tool will come pre-installed in OMEN and Pavilion Gaming desktops, gaining exposure to tens of millions of machines worldwide. Additionally, HP and Versus will be developing a version of OMEN Rewards to be launched in China this summer. Asia Pacific is home to a $72 billion gaming market according to Newzoo’s 2019 Global Gaming Report.

Versus Systems says that their “current price of US$0.50 Cost Per Engagement (CPE) is less than Facebook average Cost Per Click (CPC) but with much higher engagement and purchase intent.”

Versus Systems has proven it to be successful with 36% of rewards winners going into physical locations to redeem rewards. Advertisers achieved a 3.5x return on ad spend. That is way better results than leading advertising companies such as Facebook and Google.

Versus Systems’ in-app advertising is cheaper than Facebook click

Source: Versus Systems company presentation

Closing remarks

Versus Systems is making all the right moves using their brilliant in-app advertising tool to reward and engage users and win advertisers, especially in the enormous gaming and streaming communities. A simple cost per engagement revenue model follows the Software as a Service model, which we all know once scaled leads to very high margins and profits.

Versus Systems Inc. is growing fast and about to burst onto the global scene. Risk is there due to the early stage, but the potential upside is really exciting. At the current market cap of just C$37 million investors better not wait too long as this can really move up fast if it takes off.

Enthusiast Gaming’s Virtual Concert for MusiCares COVID-19 Relief Fund tonight at 9pm EDT (Thursday, May 14, 2020)

Plus, Menashe Kestenbaum on the effect of COVID-19 on gaming and esports industry and Enthusiast’s partnership with GRAMMY® nominated DJ ZHU and MrFreshAsian

“We definitely have seen huge surge in traffic since COVID started. Quarantined at home with a lot of digital devices and technology – and gaming is tremendously up. We are setting all time traffic record across the board…We have positioned ourselves in an industry that is somewhat recession proof, somewhat pandemic proof and because it is all digital it is well equipped for the future and it keeps on growing…I foresee next four-five years of continual growth based on where the sector is headed and how we are primed at the forefront of this.” States Menashe Kestenbaum, President, Founder and Director of Enthusiast Gaming Holdings Inc. (TSX: EGLX | OTCQB: ENGMF), in an interview with InvestorIntel’s Tracy Weslosky.

Menashe went on to provide an update on Enthusiast Gaming’s Virtual Concert the proceeds of which will go to MusiCares COVID -19 Relief Fund. The three-hour charity stream will start at 9pm EDT on May 14, 2020 and will be live streamed on the front page of Twitch.TV. The concert will be used to promote Enthusiast Gaming’s partnership with GRAMMY® nominated artist and newest Luminosity content creator DJ ZHU, and Twitch streamer of the year MrFreshAsian.

Menashe also said that for the younger generation gaming and esports have become the predominant form of entertainment and the COVID-19 pandemic has brought gaming and esports at the forefront in terms of entertainment.

To access the complete interview, click here

Enthusiast Gaming continues to grow rapidly despite COVID-19, as esports continue to boom

COVID-19 (coronavirus) has impacted the esports sector, but it is still thriving online. Meanwhile the gaming sector has been a major winner from the lockdowns.

Esports and online gaming are booming despite some esports events being cancelled

As much of the world has been stuck at home in lockdowns, many people have turned to online gaming and esports for entertainment. The cancellation of most conventional sporting events is also thought to be boosting the sector.

For example, the Guardian recently reported: “Twitch, one the world’s biggest streaming platforms for gamers, is estimated to have grown its audience by up to a third in March alone.” The article headline “Esports ride crest of a wave as figures rocket during Covid-19 crisis” is commonplace nowadays.

In China there are an incredible 560 million people (62% of online users) participating in live streaming video, led by esports with 260 million viewers.

Gaming and esports has become a social revolution

The boom in gaming and esports is more than just a COVID-19 lockdown phenomenon. Online gaming and esports has become a social revolution. The youth of today are connecting online and forming online gaming communities with each other. It is this online fun and bonding that makes it so addictive. A form of escapism from society’s problems and a way of hanging out online with like-minded friends. This is why the gaming/esports revolution grows stronger each year.

Online gaming led by the Millennials and Centennials is the new social revolution


Enthusiast Gaming Holdings Inc.

Enthusiast Gaming Holdings Inc. (TSX: EGLX | OTCQB: ENGMF) is a rare ‘listed pure play’ on both gaming and esports and is set to benefit more than most from this social revolution. Enthusiast Gaming has the largest gaming network in North America and the English speaking gaming regions. The Company reaches more gamers than Twitch, IGN, Gamespot in the USA; and reaches over 200 million gamers on a monthly basis, with 1 billion page views.

Enthusiast Gaming is succeeding in their mission to build the world’s largest platform of communities for gamers and esports fans. Enthusiast Gaming’s user base is dominated by males (73%) from two generations – the millennials (40%), born 1981-1996; and the centennials (30%), born 1996-2010.

What’s incredible about Enthusiast Gaming is their reach. As shown on the chart below, the Company reaches gamers from all angles including: 100 gaming sites, 900 YouTube channels, 7 professional esports teams, 50 influencers & content creators, and 30 live events globally.

Enthusiast Gaming’s network has multiples touch points of engagement with over 200 million gamers


Enthusiast Gaming continues to partner and grow rapidly

The Company’s recent news highlights the rapid growth:

Enthusiast Gaming Revenue is growing rapidly

Enthusiast Gaming’s revenue is forecast to almost triple in 2020 to ~C$35 million, up from C$12 million in 2019. Analyst’s have 2022 revenue forecast at C$68 million, which if achieved would be a >5 fold increase in 3 years. By that point the Company should also become earnings positive.

The Company sees the potential to grow user numbers as well as to increase the revenue per user. The chart below shows the revenue growth opportunities.


Closing remarks

Enthusiast Gaming mentioned in their latest company presentation that COVID-19 has resulted in an increase in users of 20% across the media platform and a 40% increase on some larger, key sites on the platform, with significant increase in paid for subscriptions across the platform.

A combination of new partnerships and rapid organic growth means Enthusiast Gaming should continue to see rapidly rising revenue as it rides the wave of the gaming and esports boom. This should also mean the point will soon come where profits also begin, and then rapidly rise.

For investors, Enthusiast Gaming offers a great opportunity to buy into a pure play listed gaming and esports stock still in the early stages of growth.

Looking to build the infrastructure to connect the world’s gaming platforms…

You either like Las Vegas, or you don’t. And you either go to Vegas to gamble or you go for the shows….so you say!

The online gambling industry has grown in leaps and bounds over the past decade. Latest figures indicate that in 2017, the size of the online gambling market was almost US$46 billion. It is expected to as much as double by 2024, according to industry research. The internet is not just for streaming movies and porn anymore, with the increase in power and usage of smartphones and tablets.

The online gambling industry is fragmented, presenting an opportunity for consolidation and the usage of new and improved technology. In addition, the shift to a seemingly more favourable regulatory environment could be supportive of significant future growth.

FansUnite is looking to capitalize on this improving environment. Just listed on the Canadian Securities Exchange (CSE: FANS) on May 5, 2020, the company is focusing on technology related to regulated and lawful online sports betting, casino and other related products. “FansUnite is building global infrastructure to connect the world’s gaming platforms through new technology”.

The company is pursuing multiple revenue streams, but all are associated with some form of online betting. Currently, the company’s principal business is operating the McBookie website, offering regulated and lawful online sports betting to the UK market which generates revenue and is marginally profitable. FansUnite is also a provider of technology solutions, products and services in the global gaming and entertainment industries. FansUnite focuses on both the regulated B2C and B2B sales fronts and develops, operates and looks to acquire technology platforms and assets with high-growth potential in new regulated markets or developing verticals.

The board of directors and management of the company are well-experienced in the fields of traditional sportsbook management as well as casino and gaming and data analytics – people are always a key asset.

Is there downside risk? Of course. Online betting requires events to bet on – the current global shutdown makes that a problem and eSports is still a developing industry. Online betting IS prohibited from Canada and illegal in the US, limiting market penetration. The company is looking to offer the potential of a cryptocurrency-based sports book in a cryptocurrency market which is volatile and problematic.

On the positive side, FansUnite has a head start with its management and existing product line. The company is looking for strategic acquisitions and launching new B2B clients in 2020 as well as obtaining a UK Gaming License, none of which are assured. The question is will this be enough as the online gambling and gaming industry grows.

How the coronavirus is impacting the gaming and esports sector…

As we all know coronavirus (aka COVID-19) is currently causing havoc with the stock markets. In the real economy some sectors are losing while others are winning. For example, tourism is being smashed while health care is in huge demand. Today I give an update on the gaming and esports sector to see how it is being impacted in the real economy.


Gaming in China is booming as a result of the coronavirus enforced lockdowns and more time spent at home. Anecdotal reports suggest gaming in China has increased in early 2020 as consumers were stuck at home.

SensorTower reported:

“The top mobile game by worldwide revenue for January 2020 was PUBG Mobile from Tencent with more than $176.3 million in user spending, which was nearly four times more than the title generated in January 2019. Approximately 52.8 percent of PUBG Mobile’s revenue was from China……Honor of Kings from Tencent was the second highest earning mobile game by worldwide revenue for January 2020 with more than $151.3 million in gross revenue, which represented 25 percent year-over-year growth from January 2019.”

The Gaming Recap reports (no link):

“Year over year in January, aggregate online game time spent for Tencent’s most popular games would increase 28%, monetization of these games was seen to be up 50-60% from normal seasonality, with nation-wide online games seeing cash grossing increasing 30-50%. In February, China would see a 62% jump in mobile game downloads.

Bloomberg reports:

“Virus quarantines in China spur Tencent, NetEase gaming surge. Mobile gaming DAUs grew 48% since December, topping year prior. For Mahjong and Game For Peace (PUBG), two of Tencent’s most popular titles, daily active users increased 109% and 44%, respectively, in the two months through February.”

Daily Average Users for popular games in China


Back in January in the InvestorIntel article “The Wuhan Coronavirus crisis leads to some investment opportunities“, I wrote:

“As consumers choose the safety of home, online shopping and entertainment sites should be winners……online shopping companies Alibaba (NASDAQ: BABA) and (NASDAQ: JD), food delivery giant Meituan, and gaming and social media giant Tencent (OTC: TCEHY).”

Online gaming has been a big winner simply because it is a popular form of entertainment and in many cases provides some online social interaction. Both of these will continue in future years, and in the short term with coronavirus leading to increasing global lockdowns the thematic will only get stronger. There will be a shift towards more global consumers matching the coronavirus global pandemic shift, where previously it was mostly a China problem. This will lead to increased revenues for gaming companies that service the global marketplace. Tencent will still be a leader, but other gaming related stocks will also do well.

Some other global gaming companies include Sony Corp. (NYSE: SNE), Activision Blizzard (NASDAQ: ATVI), Electronic Arts (NASDAQ: EA), NCsoft Corporation (OTC: NCSCF), Nexon Co Ltd (OTC: NEXOF), NetEase, Inc. (NASDAQ: NTES), Nvidia (NASDAQ: NVDA), Advanced Micro Devices (NASDAQ: AMD), Ltd. (NASDAQ: CYOU), and SciPlay Corp. (NASDAQ: SCPL).

The current most popular gaming model has been free to air games with players spending money on in-game purchases. While this will continue, a new model of cloud gaming will allow a whole new breed of online players to play the latest and greatest online games, from practically any device, for a small monthly subscription. This new trend is known as ‘cloud gaming’ (or Gaming as a Service (GaaS)) as it involves internet streaming to deliver games on your device of choice. Key companies in the market are Google Stadia, Microsoft xCloud, Sony Playstation Now, Apple Arcade, Shadow, Vortex, Parsec, and Nvidia’s GeForce Now.


Esports has been impacted by the coronavirus as stadium tournament events with large crowds are being canceled, due to new rules limiting crowd gatherings (usually to <500, and sometimes to <100).  This then impacts the number of events that can be held, or if they are held with no crowd it can reduce the excitement. The flip side is that as conventional sporting events are canceled due to coronavirus then this may attract new viewers to esports.

Closing thoughts

For the next few months, the gaming sector is looking a stronger bet than the esports sector. The good news for investors is that the market-wide sell-off in equities has been almost across the board in every sector. This means gaming companies with booming revenues are now more attractively valued and should be on investor’s radars. The esports sector may not get the same revenue boom but again stocks have been sold down indiscriminately leaving plenty of bargains.

What we need to remember is that in bad times people want to have fun and tune out from all the stress and worry of coronavirus. And that is exactly what the gaming and esports sector offers, and why it will continue to have success in 2020.

Gaming is booming in China as the coronavirus means more time at home

With the coronavirus still raging on in China and 70,548 confirmed cases, and 1,770 deaths it is no wonder that much of China remains in lockdown. As a result, online gaming activity is setting record highs in China as more people spend more time at home.

The implication for investors is that Chinese gaming-related companies should be in for a booming quarter when they next report results. While some of this is already priced into gaming stocks, should the coronavirus last longer more gains can be expected.

Tencent rallies 10% in the past month as more Chinese stay at home gaming

Last month when I wrote: “The Wuhan Coronavirus crisis leads to some investment opportunities” I mentioned that Chinese internet stocks can be possible winners including gaming and social media giant Tencent (OTC: TCEHY). The stock has rallied 10% since then. The longer the coronavirus has a significant impact then I expect the Tencent rally to continue.

Game live streaming hours watched up 17% in January

VentureBeat just reported that game live streaming was up 17% to nearly 500 million view hours in January 2020. The most popular streaming sites were Amazon’s Twitch (NASDAQ: AMZN), Alphabet Google’s (NASDAQ: GOOGL) (NASDAQ: GOOG) YouTube Gaming, Facebook Gaming (NASDAQ: FB), and Microsoft (NASDAQ: MSFT) Mixer.

In China, Tencent backed Douyu and Huya will benefit from increased live streaming. Ironically Douyu’s headquarters is located in Wuhan, the center of the coronavirus epidemic.

A game called ‘Plague Inc.’ has become highly popular and is like the real-life coronavirus threat

Ironically one of the most popular games in China nowadays is titled “Plague Inc’. It involves trying to spread a deadly disease globally. The game maker Ndemic Creations said their ‘website had gone offline due to high levels of gameplay’. ‘Plague Inc.’ was China’s most downloaded App last month.

Plague Inc. – Can you infect the World?


Cloud gaming is just starting now

Cloud gaming involves internet streaming to deliver games on your device of choice. It allows you to play against competitors globally. Key companies in the market are Google Stadia, Microsoft xCloud, Sony Playstation Now, Apple Arcade, Shadow, Vortex, Parsec, and Nvidia’s GeForce Now.

The concept is that for those who want the best games without paying for expensive hardware, then they can login via an internet service to a cloud games provider for a subscription fee. There is also an acronym ‘Gaming as a Service’ (GaaS). A key here is many people cannot afford a quality gaming device but want to access top-quality online gaming via their smartphone.

In recent news, Activision Blizzard removed all its games from NVIDIA’s GeForce Now cloud gaming service earlier this week. The report said that “the games are likely to return subject to a commercial agreement between the two parties”.

Cloud gaming is forecast to take-off


Closing remarks

The gaming world never stands still. The coronavirus may be causing a spike in Chinese gaming, but globally gaming is taking off in many ways. ESports revenues are growing at 25%+ pa with revenues now exceeding US$1b. Smartphone gaming with games such as the super popular ‘Mobile Legends’ is growing massively, especially in Asia where many consumers only own a smartphone. This brings me to the next big thing in gaming, cloud gaming or Gaming as a Service. If it can gain enough scale and competition then subscription prices will fall, and the worlds 3.2 billion plus people who own a smartphone can be possible future subscribers. That number is expected to approach 4 billion by end 2021.

Coronavirus lockdown leads to more gaming and esports

The esports and gaming sector may prove to be a surprise winner as ~45 million plus Chinese are in lockdown to prevent the spread of the coronavirus. The Chinese are huge gamers and love their esports. In terms of users, China is the world’s largest game streaming market, with approximately 4.9 times the monthly active users of the U.S. market in 2018.

Being confined to your home means spending more time and money online, which may prove a boost to the Chinese esports and gaming sector in H1 2020.

China coronavirus lockdown may boost Chinese gaming and esports

Some key stocks and ETFs to benefit from increased gaming and esports in China include:

  • Tencent (OTC: TCEHY) – The China leader in esports game streaming, and the online gaming sector. Tencent acquired Riot Games and now owns the very popular League of Legends game. Tencent owns the number 2 ranked game streaming platform in China named DouYu. DouYu primarily focuses on the live-streaming of games, and had 159.2 MAUs in Q1 2019. Tencent also makes various pc and mobile games.
  • Huya (NYSE: HUYA) – Huya is known as the “Twitch of China”, and is the number 1 ranked game streaming platform in China.
  • NERD and ESPO – For those preferring an esports ETF, then NERD and ESPO are two of the best to consider. They do have broader global esports and gaming exposure with NERD being more aligned to esports.

Enthusiast Gaming continues to fly under the esports radar

A report this week titled: “How a prominent B.C. family business created the biggest e-sports gaming network in North America”, looked at the history of Enthusiast Gaming and the Aquilinis family. Essentially the story describes the Aquilinis family involvement in building a giant esports pure-play company. What is amazing is how fast they have progressed and yet they still fly under most investor’s radar.

Enthusiast Gaming Holdings Inc. (TSXV: EGLX | OTCQB: EGHIF) is one of the fastest-growing esports companies globally, and one of only a few publicly traded, pure-play esports and gaming companies. Enthusiast Gaming has the largest gaming network in North America and the English speaking gaming regions. The long term vision for the Company is to build the largest, vertically integrated esports and gaming company in the world. The Company reaches more gamers than Twitch, IGN, Gamespot in the USA; and reaches over 200 million gamers on a monthly basis, with 1 billion page views.

Atari is opening its own gaming hotels in eight US cities

Atari is best known for its games which began back in the 70’s. But now the Company is responding to the esports phenomenon. Atari plans to open their own chain of branded hotels that will feature spaces for virtual reality and augmented reality, studios for streaming games, and venues for throwing esports events. What a brilliant idea.

Atari hotels focused on gaming and esports streaming and events planned to open in about 2 years


Torque Esports signs a deal with Microsoft Xbox Game Studios

Torque Esports (TSXV: GAME | OTCQB: MLLLF), via its subsidiary UMG Media, has signed a deal with Microsoft’s (NASDAQ: MSFT) Xbox Game Studios to operate and broadcast the Gears 5 Esports Challenger Series Finals. UMG Media is a leading platform for online tournament play and esports entertainment events.

Top esports games 2020

Games Radar took a look at the top esports games in 2020 and the top performers were (in no particular order):

  • Counter-Strike: Global Offensive
  • League of Legends
  • Fortnite
  • Dota 2
  • Call of Duty
  • Overwatch

I would add in Mobile Legends to the list.

Mobile Legends Vs League of Legends – What’s your favorite game?


Wrap Up

As investors look for ways to still make money if the coronavirus remains a concern in H1 2020 the gaming and esports sector is definitely one to consider.

The Atari gaming and esports hotel concept looks to be a big winner and I look forward to visiting an Atari hotel one day.