Mentioned in this article
Companies:Allied Esports, BITKRAFT Esports Ventures, Epic Games, Framerate, Immortals Gaming Club, Infinite Esports & Entertainment, Modern Times Group MTG, Nvidia, Overactive Media Group, ReKTGlobal, Roundhill Financial, Tencent Holdings, Turtle Beach, Twitch Interactive
June 2019 brought another sizable number of esports investments and acquisitions, including Immortals Gaming Club’s acquisition of Infinite Esports & Entertainment , the merger of Dignitas and Clutch Gaming , and TV Azteca’s investment in and strategic partnership with Allied Esports .
The Esports Observer has tracked $67.5M USD in disclosed investments for the month, although terms were not disclosed for all of the deals highlighted below. Note: Certain investments in this recap were announced in June but have not yet been completed. As a result, they are not reflected in this total and will be accounted for in the month in which the deals are completed.
Here’s a look at June’s most notable investment activity.
This recap is powered by Roundhill Investments: bringing Esports to the Investing Public.
TV Azteca Allies With Allied
Credit: Allied Esports/TV Azteca
Allied Esports looks to make a big play in the Mexican esports market via a $5M equity investment from—and strategic partnership with—TV Azteca. The companies agreed to collaborate in a number of ways, including establishing a 24-hour digital esports and video game channel for the Mexican market, as well as developing an esports venue and other facilities that will join the Allied Esports Property Network affiliate program.
The companies first announced a partnership earlier this year, with plans at the time to produce live events, esports content, and a content delivery platform across Mexico and Latin America. Allied Esports and TV Azteca recently co-created NATION VS NATION, a PLAYERUNKNOWN’S BATTLEGROUNDS (PUBG) competition featuring teams from the United States and Mexico. More than 2M people saw the broadcast, according to a release.
Related Article: TV Azteca to Invest $5M in Allied Esports, Collaborate on TV Channel and Venue
Black Ridge Acquisition Corporation is currently in the process of acquiring both Allied Esports and World Poker Tour company WPT Enterprises from Ourgame International Holdings Ltd. Once the purchase is completed, which is expected to happen in July, Black Ridge will be renamed Allied Esports Entertainment. The deal is reportedly worth about $150M, with Bloomberg reporting an expected enterprise value of $214M for the new company.
At the end of the month, Black Ridge Acquisition Corporation also announced a planned $5M investment by Simon Equity Development, a subsidiary of Simon Property Group. Simon operates shopping malls and retail real estate internationally, and will collaborate with Allied Esports on “esports venues and experiences” at Simon properties in the United States. The companies will also create a new Simon Cup competition.
Both investments will only happen after the acquisition of Allied Esports and WPT Enterprises is completed by Black Ridge Acquisition Corporation.
Roundhill: Allied Esports continues to ink deals as the company progresses towards its expected listing date. If the proposed deal is consummated, the Black Ridge SPAC, once marketed as a blank check company focused on energy, would provide exposure to a diverse set of esports-related assets for public market investors – namely, the Allied Esports Arena in Las Vegas.
Immortals’ Infinite Expansion
In the month’s largest transaction, Immortals Gaming Club acquired Infinite Esports & Entertainment, the company behind OpTic Gaming and the Houston Outlaws Overwatch League (OWL) team. In a release, Immortals valued the deal at more than $100M in enterprise value. Prior to the official announcement, an ESPN source pegged the deal at $35-45M in equity and cash.
The acquisition will lead to several changes. IGC will sell the Houston Outlaws, as it already owns the Los Angeles Valiant and one organization cannot own multiple OWL teams. Until the sale is completed, IGC will continue to operate the Outlaws as a separate entity with close oversight from the league.
IGC will also divest itself of OpTic Gaming’s Counter-Strike: Global Offensive team, and change the branding of OpTic’s League of Legends Championship Series (LCS) team to Immortals starting with the 2020 season. The OpTic Gaming legacy may continue on through Call of Duty , however, as IGC’s release suggested efforts to secure a spot in Activision Blizzard’s upcoming geolocated, franchised league.
Bloomberg reported that a source close to the deal pegs IGC’s total value at $250M following the transaction.
Roundhill: We expect consolidation to continue amongst esports teams and organizations. At a $250M valuation, IGC is valued at slightly more than the combined standalone valuations for Immortals and OpTic, as per Forbes’ 2018 valuations of $100 and $130M, respectively.
Epic Games Acquires Houseparty
Credit: Epic Games
Fortnite maker Epic Games also acquired its own video company, picking up Life on Air, the maker of social video app Houseparty for mobile devices and desktop computers. The video-based chat and messaging app will remain unchanged in its current form initially, with Epic Games founder and CEO Tim Sweeney writing in a release that the companies can collectively “build even more fun, shared experiences than what could be achieved alone.” Terms of the deal were not disclosed.
This is Epic Games’ second acquisition of 2019, following May’s announcement of plans to purchase Rocket League creator Psyonix Studios.
Roundhill: Epic continues to acquire assets and diversify its portfolio. Could this perhaps be an attempt to attract investors for a future IPO? Remember, single asset gaming properties can be risky (see: King Digital).
BITKRAFT Partners with Roundhill Investments
Credit: BITKRAFT/Roundhill Investments
BITKRAFT Esports Ventures , the first esports-specific alternative investment fund (AIF), has partnered with Roundhill Investments to establish the Roundhill BITKRAFT Esports & Digital Entertainment ETF (or NERD ETF). The exchange-traded fund allows investors to conveniently invest into established companies in and around the esports industry.
The Roundhill BITKRAFT Esports Index portfolio currently includes 25 companies, including Tencent , Activision Blizzard, Turtle Beach , Nvidia , and Modern Times Group . The NERD ETF is publicly traded on the NYSE Arca.
Roundhill: Excited to have partnered with BITKRAFT in launching our ETF on the NYSE. If you’re interested in exploring further, please check out our website: NERDETF.com. For more information about the fund including its holdings, please see below.
Immortals’ purchase of Infinite Esports & Entertainment wasn’t the only significant team tie-up in June. Earlier in the month, Dignitas—owned by Harris Blitzer Sports and Entertainment—announced a merger with Clutch Gaming. The deal will see Clutch Gaming’s LCS team rebranded as Dignitas starting with the 2020 season.
Dignitas was one of the original LCS teams before exiting the league in late 2017 after failing to secure a franchise spot for the following season. With this deal, Dignitas is now the first outside organization to acquire an LCS franchise. Terms for the deal were not announced, although an earlier report in April suggested that Harris Blitzer Sports and Entertainment had agreed to acquire a majority stake in Clutch Gaming for $20M.
Twitch acquired social networking site Bebo in June, which TechCrunch reported was for $25M; Twitch confirmed the acquisition but provided no further details. Twitch will reportedly use the platform to boost its esports initiatives, particularly its Twitch Rivals streamer competition series that has spanned a number of games and awarded $5M total in prizing to date.
ReKTGlobal continued to make moves in June, adding another prominent investor and acquiring a company. The Rogue parent company announced an investment by DJ and music producer Nicky Romero, who has joined the ownership group and will co-host livestreams and create content with Rogue players. ReKTGlobal also acquired Greenlit Content, a company that operates videogame and esports-centric websites such as Twin Galaxies, Prima Games, Shacknews, and GameDaily.Biz.
Canadian communications company Bell has acquired a minority stake in OverActive Media (OAM), the parent company behind Splyce and the Toronto Defiant . The investment is paired with a multi-year strategic partnership that includes content, activations, event planning, and advertising across all of OAM’s Canadian-based franchises and all of Bell’s brands and subsidiaries. Terms were not disclosed.
Also in June, amateur tournament and league operator Super League Gaming acquired Framerate, a social gaming video platform spread across networks such as Instagram and Facebook. Framerate will be integrated into the Super League Gaming platform, and used to share competition highlights and drive awareness of SLG events. VentureBeat reports that the deal is valued at $2.5M.
Roundhill Investments is a registered investment adviser focused on developing innovative financial products designed to offer exposure to investment themes that appeal to the next generation of investors. To learn more about the company, please visit roundhillinvestments.com.
The Roundhill BITKRAFT Esports & Digital Entertainment ETF (“NERD ETF”) is designed to offer retail and institutional investors exposure to esports & digital entertainment by providing investment results that closely correspond, before fees and expenses, to the performance of the Roundhill BITKRAFT Esports Index (“NERD Index”).
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus. Read the prospectus carefully before investing.
For current fund holdings, please click here.
Investing involves risk, including possible loss of principal. Esports gaming companies face intense competition, both domestically and internationally, may have limited product lines, markets, financial resources, or personnel, may have products that face rapid obsolescence, and are heavily dependent on the protection of patent and intellectual property rights. Such factors may adversely affect the profitability and value of video gaming companies. Investments made in small and mid-capitalization companies may be more volatile and less liquid due to limited resources or product lines and more sensitive to economic factors. Fund investments will be concentrated in an industry or group of industries, and the value of Fund shares may rise and fall more than more diversified funds. Foreign investing involves social and political instability, market illiquidity, exchange-rate fluctuation, high volatility and limited regulation risks. Emerging markets involve different and greater risks, as they are smaller, less liquid and more volatile than more developed countries. Depositary receipts involve risks similar to those associated with investments in foreign securities, but may not provide a return that corresponds precisely with that of the underlying shares. Please see the prospectus for details of these and other risks.
The Roundhill BITKRAFT Esports Index is the first rules-based index designed to track the performance of the growing market of electronic sports, or “esports”. The Index consists of a modified equal-weighted portfolio of globally-listed companies who are actively involved in the competitive video gaming industry. This classification includes, but is not limited to: video game publishers, streaming network operators, video game tournament and league operators/owners, competitive team owners, and hardware companies.
An index is unmanaged and is not available for direct investment.
To learn more about the fund, please visit NERDETF.com