NEW YORK, January 23, 2019 /PRNewswire/ --
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Analysts are now calling eSports and egaming the greatest
investment opportunity of the past few years, and the proof is in
the threat it poses to competitors. In a recent letter to
shareholders, Netflix (NASDAQ: NFLX) wrote, "We compete with
(and lose to) Fortnite more than HBO." Multiplayer video games like
"Fortnite," which raked in a massive $2.4-billion in digital revenue last year and is
one of the fastest-growing games of all time, have evolved into a
popular spectator sport where gaming enthusiasts spend hours
watching others play online. Major streaming companies such as
Netflix are now in competition for screen time with eSports, and
they're worried that the growing youth demographic is starting to
find their primary source of entertainment from YouTube or
Amazon's (NASDAQ:AMZN) Twitch. Chinese social
media giant Tencent Holdings
Ltd (OTC: TCEHY), which holds a 40% stake in Epic Games
(Fortnite's developer), plans to invest $150-million a year in eSports, a burgeoning
industry that's already generating up to $1-billion in revenue for Activision Blizzard
Inc. (NASDAQ: ATVI). But for those who want to get in early on
the eSports gold rush, investors should look at Enthusiast
Gaming (TSX-V:EGLX) (OTC:EGHIF), who has managed to capture the
largest gaming network in North
America in three short years.
Online networks fuelling the growth of eSports
Huge gaming networks such as Enthusiast Gaming
(TSX-V:EGLX) (OTCQB:EGHIF) are best positioned to cash in on the
upcoming eSports investment rush. Online gaming communities form
the most crucial link within the eSports ecosystem. These networks
are to eSports what the nation's sports bars and living rooms are
to the NFL and MLB - serving as a crucial hub for the growth of a
real community while propelling the eSports engine, driving the
popularity of games such as Fortnite. Let's take professional
sports as an analogy: A first-time viewer watching a baseball game,
for instance, may have no notion of what's happening. Fans and
enthusiasts are an outgrowth of a real community of passionate
people, sharing their love and discussing strategies and
techniques. With the Internet, gamers can now visit these forums
and websites to get research on how to play the game better,
finding like-minded peers to share their enthusiasm and build an
authentic community.
These days, Gen-X, Millennial and Post-Millennial gamers
frequent popular media sites such as Destructoid, Daily eSports,
Operation Sports and the Escapist (all owned by Enthusiast Gaming)
or on Twitch, a streaming network that Amazon (NASDAQ:AMZN)
purchased back in 2014 for $1-billion. Within these networks, gaming
enthusiasts become part of a wider community, sharing their passion
for video games while discussing tips and strategies. This is why
companies like Enthusiast Gaming (TSX-V:EGLX) (OTCQB:EGHIF)
who understand the value of building a network have positioned
themselves at the forefront of the video gaming market.
Cultivating these communities is how Menashe Kestenbaum, founder and CEO of
Enthusiast Gamin, got his start when he began writing for a
then-new gaming site called IGN. Connecting for the first time with
people as passionate about gaming as he was, Kestenbaum went on to
start a passion blog named "Nintendo Enthusiast", taking his
followers with him, and organizing small meetups of gamers at a
local Toronto pub.
It's a testament to the popularity of video gaming and eSports
that over the next three years, this single blog grew into one of
the largest network of gaming enthusiasts in North America. Enthusiast
Gaming (TSX-V:EGLX) (OTCQB:EGHIF) now boasts a network of
80 sites and counting, drawing over 75 million visitors a month.
High-performing sites become targets for buyouts from Enthusiast
Gaming. It's on these online communities, where gamers actually
learn how to excel at multiplayer games such as Fortnite and learn
about their favourite teams and players. This record haul
contributed to pushing digital games revenue up 11% to $109.8 billion last year.
Enthusiast Gaming (TSX:EGLX) (OTCQB:EGHIF) recognize the
opportunity that lies in multiplayer games such as Fortnite,
Overwatch and League of Legends. To truly grasp the size of this
opportunity, we need to first understand that online gamers and the
gaming community are essentially recreating the very thing that
traditionally makes live television into a tremendously profitable
ratings juggernaut. With multiplayer games, we can now have
must-watch live eSports events seen by millions and then sell ads
at these showcases. Currently, these events are streamed online
through sites such as Amazon's Twitch, YouTube Gaming, and the
Microsoft-owned Mixer, but there's been talk about streaming
services such as Netflix (NASDAQ: NFLX) getting into
streaming eSports too.
Live eSports events are now pulling in larger and larger amounts
of marketing and sponsorship budgets, as brands jump at the
opportunity to showcase their brand at events such as Enthusiast
Gaming's (TSX-V:EGLX) (OTCQB:EGHIF) Enthusiast
Gaming Live Expo (EGLX) pulling in over 55,000 attendees in
2018, smashing its own records year after year as the largest
gaming convention in Canada.
Approximately 39% of the total US gaming demographic is in the
25-34 age range, according to Gamescape, with 16% of 18+ viewers
taking in an above-average $50,000-per-year income. This hard-to-target
market is why the sponsorship and advertising funds in eSports
continue to increase annually.
It's now the spectator sport of choice among the youngest
generation-which is why well-known sports industry giants are also
throwing their hats in the live eSports ring. In 2017, Robert Kraft of the New England Patriots and two
of his fellow sports owners, the New York Mets' Jeff Wilpon and LA Rams' Stan Kroenke, all invested tens of millions into
their own franchises within
Activision-Blizzard's (NASDAQ:ATVI) Overwatch
eSports league. Meanwhile, Tencent
Holdings Ltd. (OTCPK: TCEHY), which has plans to create a
$14.6 billion eSports industry in
China, already owns a 40% stake in
Epic Games, which publishes Fortnite, currently the world's most
popular game.
eSports: an iPhone-class industry disruptor
As shown by Enthusiast Gaming's
(TSX-V:EGLX) (OTCQB:EGHIF) ascent, the growth of this industry has
been absolutely staggering. From a small Sunday gathering of 120
gamers, EGLX is now the largest gaming convention in Canada. The live EGLX event also helps to fuel
the growth of Enthusiast Gaming's (TSX-V:EGLX)
(OTCQB:EGHIF) online network, lending it authenticity within the
wider gaming community.
eSports is on the cusp of revolutionizing the gaming industry.
ESPN has signed deals to broadcast hours of gaming on its main
channel and affiliates. 2024 Olympics organizers are now in talks
to include eSports as a "demonstration sport" at the Games in
Paris. According to Newzoo,
eSports is the "biggest disruption to hit the industry since the
launch of the iPhone in 2007."
Meanwhile, Enthusiast Gaming's (TSX-V:EGLX)
(OTCQB:EGHIF) continues to add to its online portfolio at a rapid
pace, having recently announced an exclusive partnership with Blue
Ant Media to represent all the United
States online traffic of the 900-channel Omnia Media
network, the No. 1 network for global gaming in terms of
viewership. With such a diversified network, the company can now
better cater to a fast-growing gaming segment, which allows
advertisers to better target their gaming audience. A current
comScore rank of No. 5 in gaming traffic and climbing puts them
just behind corporate-owned sites such as Twitch, IGN, GameSpot and
Curse. In its latest third quarter results, the company posted
eye-watering YoY revenue growth of 625% year to date, with plenty
of room for growth.
The communities within Enthusiast Gaming's
networks are the birthplace of eSports and will continue to have
the finger on the pulse of which new games will skyrocket in
popularity. Companies such as Enthusiast are well placed to secure
opportunities and position themselves to dominate the video game
and eSports industry far into the future.
For a FREE research report on Enthusiast
Gaming (TSX-V:EGLX) (OTCQB:EGHIF), visit
microsmallcap.com.
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