It’s no longer just about Candy Crush and FarmVille, mobile gaming is taking over

After a hard day at the office, a long commute home, making dinner, etc. we’re pretty wiped. That’s when the thought of virtually jumping out of a plane with one hundred other people and fighting till the death becomes so enticing. But you’re faced with two options:

  1. Turn on the computer and swipe away on the mouse pad, which can get quite tiring and uncomfortable.
  2. Jump into a warm, comfortable bed, tap a game and begin playing.

A few years ago, it would have been easier to pick the first option. Most gamers would opt to play on the PC / console, since mobile phones didn’t have the processing power to provide a quality gaming experience. However, in recent years, with advanced mobile and tablet devices, complemented with game publishers becoming committed to the platform, we’ve seen the birth of mobile games that rival their PC/console counterparts in both graphics, speed, and overall experience. Titles like Player Unknown’s Battlegrounds (PUBG) and Fortnite, are two perfect examples of game publishers successfully making the transition to the mobile platform.

In the developed world, the popularity of mobile gaming can be attributed to convenience and affluence. However, in developing nations, they often lack the infrastructure for high-speed internet in the home, complemented with the lower cost of smartphones and the value proposition starts to add up. It’s much easier to play Clash of Clans in the streets of Sao Paulo than it is to find to have an adequate home set-up to play League of Legends.

By the Numbers 

Today, smartphone penetration globally is about 40%, with Samsung and Apple dominating the market with a share of 50.8%. As the number of smartphones increase, so do the number of gaming apps downloaded. In 2019, the global mobile gaming revenue is projected to be US$68.5 billion, growing 10.2% from 2018. Even though this number already makes up 45% of the global gaming revenues, it is forecasted to grow faster than PC and console gaming. In fact, currently mobile gamers outnumber PC gamers 2.53 billion to 1 billion. 

Mobile Esports and the Competitive Scene 

Though PCs still dominate the esports landscape, mobile gaming is quickly approaching the frontier. In 2018, mobile games played in esports brought US$15.3 billion in revenue, reflecting 25% of total mobile gaming revenues. As these games see immense growth, the mobile esports scene will prosper alongside them. This means larger prize pools and increased global attention. In 2018, the total global prize pool was US$25.3 million for mobile esports and is projected to grow to US$30 million by 2019.

Clash Royale Esports League West

Players in Mobile Gaming and Esports 

Tencent Holdings Ltd. (HKG: 0700 | OTC: TCEHY)

Owns rights to some of the biggest mobile esports and gaming applications. Its portfolio includes: 

Arena of Valor: The largest mobile esports, boasting a total prize pool of US$5.1 million and revenues of US$2.5 billion. This game not only tops the charts in mobile esports, but also ranks 8th amongst all esports.

Other large titles include Brawl Stars, Clash Royale, PUBG mobile, Fortnite Mobile, QQ Speed

Millennial Esports Corp. (TSXV: GAME | OTCQB: MLLLF)

Millennial is a Toronto based esports company that holds robust gaming hardware and software assets. This company gives virtual drivers one of the most unique prizes ever, the chance to take their craft into real life. The winner of the 2nd season of Millennial’s World’s Fastest Gamer will race GT cars throughout 2020. Individuals who win the Gear. Club (a mobile game by Millennial’s brand, Eden Games) tournament will get a chance to participate in World’s Fastest Gamer.

Com2uS Corp. (KOSDAQ: 078340)

Com2uS, a South Korean company, is the developer and publisher behind Summoners War, a mobile strategy game with 90 million downloads globally. In 2019, the World Championships will feature a US$210,000 prize pool, almost doubling its 2018 figure of US$110,000.

Razor Inc. (HKG: 1337)

Razor is a gaming hardware and software company that already has a large presence in esports. Recently, Razor has announced a collaboration with Tencent, one of the largest gaming companies in the world, to optimize Tencent’s mobile games on Razer smartphones, mobile controllers and Cortex (multi-purpose gaming applications).

There still exists a stigma in North America that mobile gaming means playing candy crush on the can, but it goes so much further than that. Also, many games have less than sinister intentions as they create games that are pay to win, a common irritant for gamers. As more game publishers make the transition to mobile, like Nintendo recently did with Mario Kart, communities will continue to flourish for both competitive and amateur gamers.

There is no doubt that mobile gaming and mobile esports are the future. So now is the best time to start downloading those returns.




The game is on for a pure-play esports in LATAM

While investors are focused on the booming gaming industry in North America and gaze at the thriving gaming markets in China, the Latin American market is rapidly advancing in their shadow. The LATAM gaming industry is projected to have revenues of US$5.6 billion in 2019, displaying a rise of 11.1% according to Newzoo. We are seeing even stronger growth rates when it comes to esports revenue (different from gaming revenue), which have totalled US$32 million so far this year, up 19.5% from the previous year.

A “Mobile” Industry 

Being an emerging economy, many people still lack household internet, a crucial component in the gaming world. The solution? Mobile internet, which is much cheaper and more accessible in the region. In 2018, mobile gaming captured 41% of the digital gaming revenues in Latin America.

As smartphone penetration is predicted to reach 235 million by 2021, mobile gaming is expected to continue its quest for dominance by acquiring more than 50% of the market share. Add the increased data speeds of 5G networks to the equation, and mobile gaming is set to explode.

MIBR (Made in Brazil) Esports team

Leading the Charge 

Mexico and Brazil emerge as frontrunners, accounting for 60% of gaming revenue this year. Mexico leads the race with the highest gaming revenues of the region (US$1.8 billion), with Brazil following closely behind (US$1.6 billion). For the esports industry, Brazil is heaven, nurturing 9.2 million esports enthusiast, the third most in the world. The mobile gaming market also shows healthy growth in both countries, rising 17% and 18% in Brazil and Mexico respectively. Essentially, the exposure provided by these nations will help bolster the gaming industry in all Latin America for the years to come.

Currently, there isn’t really a pure-play for esports in LATAM, but below is a list of companies with significant exposure to the industry.

América Movil (NYSE: AMX | BMV: AMXL) 

América Movil, a Forbes Global 2000 company, is one of the largest telecommunications organizations in the world. Headquartered in Mexico City, the company recently tapped into the gaming market by opening subsidiaries branded Claro Gaming in Brazil, Argentina and Peru. Claro Gaming will help provide gamers with stable internet connections and pings as well as in and out of game services. Claro will also be responsible for setting up the first professional League of Legends tournament in Peru.

TV Azteca SA de CV (BMV: AZTECACPO) 

TV Azteca, the 2nd largest multimedia conglomerate in Mexico, has recently announced an equity investment in Black Ridge Acquisition Corp (NASDAQ: BRAC) to become a shareholder of Allied Esports Entertainment (NASDAQ: AESE). As part of the collaboration, TV Azteca will create a 24-hour channel dedicated to esports as well as help develop a network of esports talent in Latin America. TV Azteca also has a deal with Riot Games and Cinemex, a Mexican cinema chain, to relocate the LLA (the premier Latin American League of Legends event) to Mexico and set up a venue with a live audience, to provide physical exposure.

Grupo Televisa (NYSE: TV) 

Grupo Televisa is a Mexican multimedia and entertainment company that also wants to capitalize on the esports opportunities. In 2019, following TV Azteca footsteps, Televisa launched a channel called BitMe, marketed to gamers, esports enthusiast and individuals who enjoy technology and anime. The channel broadcasts in 17 Latin American countries.

With September being a rather choppy month for North American esports equities, investors should be taking a more global approach to building an esports portfolio. LATAM provides a unique opportunity to invest in established media and telecommunication companies that that are devouring some of the top esports assets and verticals in the industry.




Esports is all about community, and investors should be looking to venues

There is an underlying irony in the esports industry. While gamers are one of the most tech-savvy groups of people who thrive on creating online communities and spaces; they simultaneously have an insatiable demand for live experiences when it comes to both playing and watching esports.

When it comes to professional sports, the venue is an integral part of the fan experience. What would tennis be without Arthur Ashe Stadium or Wimbledon? Golf without Pebble Beach or Augusta?

While the esports industry doesn’t have a century of history to proliferate their venues, a new breed of gaming stadiums are popping up and the industry is taking note.

Here’s a look at some of the top esports venues in North America and how investors can play the space.

Image credit: Comcast Spectacor

Image credit: Blizzard Entertainment

Major players in Esports venues.

  • Comcast Corporation. (NASDAQ: CMCSA): With a price tag of over $50 million, Comcast is looking to build a world-class esports stadium in South Philly. The 3,500 seat facility, to be named Fusion Arena, will be the home of the eponymous Philadelphia Fusion team in the Overwatch League. It’s scheduled to open in early 2021
  • Activision Blizzard Inc. (NASDAQ: ATVI): Located in Burbank, California the Blizzard Arena is a 450 seat arena designed for watching esports. It served as the home for all of the Overwatch teams in 2019 and will continue to serve a venue for other AB titles including Starcraft, Hearthstone and the Overwatch World Cup.
  • Allied Esports Entertainment Inc. (NASDAQ: AESE): The company is a pure-play on esports venues and facilities. Their flagship location is the Las Vegas based HyperX Esports Arena. With over 30,000 sq ft, broadcast center and studio it can host events in almost every game and serve as a prime destination for some of the industry’s top streamers. 

Much like other segments in the esports industry, it’s hard to get direct access to some of the best assets as many venues are privately held. North America’s largest venue is the Esports Stadium Arlington. A joint venture between Infinite Esports and the city of Arlington, this 100,000 square foot behemoth exemplifies the motto, everything is bigger in Texas.

As the existing esports franchises in League of Legends or Overwatch start to mature, you can be sure that the venue infrastructure won’t be far behind. With Call of Duty now moving to a franchise model, it may start to make sense for companies to start building more dedicated gaming arenas.

Disclaimer: Neither myself nor any related family member has any position in the above stated companies.




The eSports trend is an eye on the prize

eSports is one of the fastest-growing new trends in 2019. eSports involve individuals or teams battling online in multiplayer games to determine a winner. Global eSports 2019 revenues are forecast to rise by 27% on 2018 and are estimated to hit $1.1 billion. Then by 2022 global eSports revenues are forecast to reach US$1.8 billion. To put this simply, as the eSports market takes off so do the affiliated investment markets, just as any mainstream sport has in its history and offers the potential to gain massive rewards for early investors.

Esports popular games 2019

How do eSports make money?

As a guide to how eSports monetize the opportunity you only need to look at the traditional mainstream physical sports for the answer. Take the example of your typical traditional sport. Fans turn up in their thousands to watch the live game alongside the millions who watch the televised event, it’s the same for eSports. Major tournaments are selling out around the world for live eSports events with many more watching the event on a streaming service like Twitch or Huya. They can boast 140 million users every month with eSports fans turning up in droves to watch live programming. Huge online viewers mean large streaming/advertising revenues.

Player prize money starting to eclipse regular sports

In case you need further convincing that eSports is massive, the very recent Dota 2 eSports tournament had US$34.3 million in prize money and 66 million viewers. The winning team OG won $15,603,133 in prizemoney, or about US$3.1 million each. That’s more than the 2019 Wimbledon singles champions Novak Djokovic and Simona Halep took home ($2.9 million each). Furthermore, the Fortnite World Cup had a US$30 million prize pool that is estimated to reach $US40 million next year.

The major eSports companies

Activision Blizzard (NASDAQ: ATVI)

Activision Blizzard owns the popular Overwatch League as well as World of Warcraft, StarCraft, Diablo, and Hearthstone. As of March 2018, it is the largest game company in the Americas and Europe in terms of revenue and market capitalization.

Alphabet Google (NASDAQ: GOOG) 

Alphabet Google’s YouTube Gaming makes money via subscription and advertising.

Amazon (NASDAQ: AMZN)

The online streaming market in the USA is led by Amazon’s Twitch. Still only a small percentage of Amazon’s massive revenue; however a dominant player in the eSports streaming market.

Electronic Arts (NASDAQ: EA)

Electronic Arts is an American video game company headquartered in California. It is the second-largest gaming company in the Americas and Europe by revenue.

Enthusiast Gaming (TSXV: EGLX | OTCQB: EGHIF)/Aquilini GameCo Inc./Luminosity – The merged group will now include seven esports teams (including management of the Vancouver Titans Overwatch League franchise), 40 eSports influencers, 80+ gaming media websites, 900+ YouTube and Twitch channels

Huya (NYSE: HUYA) 

Huya is known as the “Twitch of China”. Streamers can receive virtual gifts from their audiences, purchased from Huya. The Company then shares a portion of revenue from these gifts with broadcasters and associated talent agencies. The sale of these gifts accounted for roughly 95% of the Company’s sales last year, with the remainder coming from advertising.

Take-Two Interactive Software, Inc. (NASDAQ: TTWO)

Take-Two Interactive is an American video game holding company based in New York City. The company owns two major publishing labels, Rockstar Games, and 2K.

Tencent (OTC: TCEHY), DouYu (NASDAQ: DOYU)

Tencent acquired Riot Games and hence owns the very popular League of Legends game, as well as owning King of Glory. Tencent is also a leader in eSports game streaming and the leader in the eSports streaming industry in China. Tencent has their own eGame, and also DouYu (DOYU). DouYu primarily focuses on the live-streaming of games and is huge in China. DouYu had 159.2 MAUs in the Q1 2019. Revenues jumped 93% to $531.5 million last year.

Other companies involved in eSports

Bethseda Softworks (private), Netease (NASDAQ: NTES), Microsoft (NASDAQ: MSFT) (Nintendo), Sony Corporation (NYSE: SNE) (Playstation), Sega (OTC: SGAMY), Ubisoft (OTC: UBSFY), Valve Corporation (private, owns Dota 2), Facebook (NASDAQ: FB), Twitter (NYSE: TWTR), Alibaba (NYSE: BABA,) GameStop Corp. (NYSE: GME),  Glu Mobile Inc. (NASDAQ: GLUU), Nvidia Corporation. (NASDAQ: NVDA), Zynga Inc. (NASDAQ: ZNGA), Super League Gaming Inc. (NASDAQ: SLGG), The Madison Square Garden Company (NYSE: MSG), Esports Entertainment Group, Inc. (OTCQB: GMBL), Logitech International (NASDAQ: LOGI), YDX Innovation Corp. (TSXV: YDX), Turtle Beach Corporation (NASDAQ: HEAR)

and Baidu (NASDAQ: BIDU).

Some smaller Canadian listed eSports and gaming companies

Clearly, eSports is growing very fast and investors need to move quickly to take advantage while still in the early stages of growth.




eSports deal with 153 million monthly users becomes the largest Chinese offering in the US in 2019

Live streaming and eSports are huge trends in 2019. ESports global revenue is forecast to grow at a CAGR of 22.3%, or approximately double between 2018 and 2022. One of the largest beneficiaries of eSports is the streaming platforms that stream live eSports to millions of fans.

eSports forecast to grow at a CAGR of 22.3%

Source

DouYu International Holdings Limited (NASDAQ: DOYU) is the largest game-centric live streaming platform in China and a pioneer in the eSports value chain. DouYu operates on both the mobile app platform and PC. The streaming platform company is backed by Chinese social media and gaming giant, Tencent. DouYu, which translates to “fighting fish” in Mandarin, is often compared to Amazon’s Twitch.

DouYu said in a recent statement: “DouYu brings together a deep pool of top live streamers. By providing a sustainable streamer development system built on advanced technology infrastructure and capabilities, DouYu helps ensure a consistent supply of quality content. Through collaborations with a variety of participants across the eSports value chain, the Company has gained coveted access to a wide variety of premium eSports content, which further attracts viewers and enhances user experience.”

DouYu – Recent IPO on the NASDAQ exchange

On July 17, DouYu commenced trading on the NASDAQ at USD$ 11.50. After pricing its US initial public offering (IPO) the Company stated they had sold $775 million in stock. This valued the entire company at US$3.73 billion at IPO. This deal makes DouYu the largest Chinese offering in the US so far in 2019.

DouYu’s streaming and eSports business

According to its IPO filing DouYu has exclusive streaming rights to 29 major tournaments in China, that include League of Legends, PlayerUnknown’s Battlegrounds, and the very internationally popular DOTA2. DouYu also sponsors many eSports teams and organize its own tournaments. Last year DouYu hosted a video streaming festival in its home town of Wuhan that attracted over 150,000 participants and almost 12 million online viewers, just on the first day.

This is only one example of the fast rise of eSports in China. DouYu is reported to have 153 million monthly active users showing how big eSports is becoming in China. Just like a traditional physical sport, eSports are attracting massive crowds via live streaming of events and tournaments that are offered by DouYu’s exclusive streaming rights. The highest professional eSports earnings come for the three top countries, China, the United States, and South Korea. Collectively they have 11,000 professional gamers.

In the 2018 fiscal year, DouYu took in ~3.7 billion Chinese Yuan (US$532 million) in revenue, which primarily came from advertising sales. Their revenue growth was an amazing ~98% in 2018, after rising 135% in 2017. Despite losses in 2018, DouYu reported a profit of 18.2 million Yuan (~US$2.64m) for the first three months of 2019. Future plans include expanding globally and converting more users into paying clients.

Headquartered in Wuhan, China and founded in 2013, DouYu quickly grew into one of China’s most valuable start-ups, crashing through the billion-dollar mark in 2017.




Two power tools for investors – trending stats and the ii6

“The Trending section is one of our favorite parts of InvestorIntel.com, as it is an incredible information tool for investors wanting to know what most investors are really interested in. (This week: eSports, Gold, Uranium/Sustainability). It usually gives us an indicator of what is hot in the market and what is rising. This week we have a lot of people looking at uranium…They are looking at all critical materials. Uranium is leading the chart. Petition 232, the US-China trade war is definitely drawing a lot of investor’s interest in sustainability, looking at uranium for that very reason.” States Tracy Weslosky, CEO for InvestorIntel Corp., in an interview with InvestorIntel’s Peter Clausi.

Tracy went on the introduce InvestorIntel’s ii6 Summit Series. She said that the ii6 Series will give a company which has the right management team, the right story and is achieving benchmarks in a timely manner, face-to-face time with real investors. 1st ii6 Summit will be taking place at the King Edward on Thursday, August 8th from 930-11AM (registration at 9AM).

To access the complete interview, click here