Here comes the 2nd wave of Esports IPOs - InvestorIntel

Here comes the 2nd wave of
Esports IPOs
While most of the country braces for what could perhaps be an

even stronger 2nd wave of COVID-19 cases in Canada, the esports
industry in Canada has seen a second wave of new companies
this year and a growing pipeline of companies poised to list
in 2021.

The overall gaming industry has seen a huge spike in revenues
with the industry expected to grow 20% in 2020 to reach $175
billion and soar to $218 billion by 2023. Game console sales
and media rights are both soaring as more and more people are
staying home to game.

Esports and the broader video game industry have been very
well represented in 2019 and 2020 saw a new class of entrants
vying for market share from the high growth industry. Let’s
take a look at 3 new esports companies that came to the
markets and several more that are planning their public
listing.

1: TGS Esports Inc. (TSXV: TGS) – Market Cap $10.85M

Based in Vancouver, formerly known as The Gaming Stadium, TGS
has been one of the most active esports companies so far this
year. With a flagship esports arena in Vancouver, they have
built a steady community of casual and competitive fans who
compete in person or online. The recent acquisition of Pepper
Esports, a tournament management platform, helps them bridge
the gap between in-person (LAN events) and online. Another
acquisition of Volcanic Media sets them up to make major in-
roads in the high school gaming scene.

2: YDX Innovation Corp. (TSXV: YDX) – Market Cap $3.039M

Another Vancouver based company with offices in Brazil and the
UK, YDX Innovation is not new to the public markets, but
turned the page in 2020 with a sprint into the esports
industry. Their core business is creating immersive digital
experiences for global brands and has rolled-out a very
successful free-roam VR entertainment product which has been
sold all over the world. Recent acquisitions include
Render.GG, Purple Mage Advisors, Amuka Esports and Shattered
Dreams. This will give YDX the ability to monetize on content
creation, data/analytics, venues/tournaments and competitive
esports teams.

3: ESE Entertainment Inc. (TSXV: ESE) – Market Cap $0.92M

ESE Entertainment, is also based in Vancouver but it’s best
assets are in Europe, a much more mature esports industry. It
fields teams in popular games like League of Legends, APEX
Legends, FIFA and Rocket League. It also runs the Rocketmania
tournament series across several European countries and is
starting to build up its influencer roster.

Coming soon…

The pipeline for new listings is also really strong with
companies such as Luckbox, Tiidal Gaming, Monkey Knife Fight
and Reciprocity potentially joining the markets in 2021.

Themes to watch for 2021 are going to be VR gaming, mobile
gaming, and online tournaments which are verticals that should
see TGS, YDX and ESE thrive and succeed. As more and more
regions get shut down or face increased restrictions, gaming
is going to get it’s time to shine, again.

Console Wars: Holiday Season
2020
Special   InvestorIntel feature, written by contributing
editors Ben Feferman and Nate Trewin

PlayStation 5 vs. Xbox Series X/S vs
Oculus Quest 2
Who doesn’t love a good old fashion console war. Every time
there’s a new console, the war picks up against and this
holiday season we have two stalwarts in the industry going
head-to-head   with   a   third   party   candidate,   picking   up
momentum.

Most pollsters, (and we know they are never accurate) will
tell you, PlayStation 5 is the runaway favorite, even with a
higher price point and supply shortages. But the Xbox Series X
and the Oculus Quest 2, should give our frontrunner a good
fight. Here’s the breakdown on the current candidates:

PlayStation 5 – Sony Corporation (NYSE: SNE)

Sony’s PlayStation 5 was officially released on November 12.
There are two versions that are able to be purchased. There
the standard PS5 at $500 USD ($629 CAD) or there is the new
digital edition at USD$400 (CAD$499). The main difference
between these two systems is that the standard version
includes a disk drive and supports physical copies of games.
Whereas, the digital version does not have a disk drives and
is only compatible with games purchased through the
PlayStation store. Looking at the specs of the PS5, it
possesses as 8-core 3.5 Ghz AMD Zen2 CPU, a 10.3 teraflop AMD
RDNA 2 GPU, has 16 GB GDDR6 RAM, has 825 GB of custom SSD. It
can support up to 8k in resolution, a blue ray drive (on the
standard version only) and up to 120 FPS on certain games.

Regarding the looks of the PS5, its main colour has switched
from the tradition all black to white with black accents. Each
system comes with the one DualSense wireless controller. If
you are looking to buy an extra controller that will be an
additional USD$69 or (CAD$89).

Now that we have looked at the specs, let’s look at the
reasons to buy a PS5. If you have been a PlayStation fan, from
previous generations you expect much of the same. Another
reason besides the consistency on the PlayStation is the great
exclusive games that are available. Some of these key
exclusive games include Spider-Man: Miles Morales, Horizon II:
Forbidden West, Gran Turismo 7. Another reason to purchase the
PS5 is the backwards compatibility. For the first time, almost
all PS4 games, as well as optimized PS4 Pro games are able to
be played on the PS5. This means that you don’t have to sell
all of those old PS4 games as they can be enjoyed for years to
come.

Xbox Series X/S – Microsoft Corporation (NASDAQ: MSFT)

Looking at the new Xbox, there again is two new models, as
with the PS5. There is the Xbox series X which is their
flagship, and there is the series S. Similar to the PS5, both
the Series X and S consoles have backwards compatibility.
This means that you can play you all of your past favourite
games on the present generation. Xbox also has their own line
of exciting exclusive games. Such games include Halo Infinite,
Senua’s Saga: Hellblade 2, Forza Motorsport 8, State of Decay
3. As well there is the new Xbox controller which comes in
three different colourways (Robot white, Shock Blue and Carbon
Black). Both the series X and the S come with one controller
and additional controllers are USD$60 (CAD$74.99).

The new Series X is priced at USD$499 (CAD$599).
Aesthetically, the Series X comes in one colour (black), and

it is a rectangular box that won’t take up too much room. The
specs for the series X are 8-core, 3.8 GHz AMD Zen 2 CPU, 12.0
teraflop AMD RDNA 2. GPU, 16 GB GDDR6 of RAM, 1 TB custom NVMe
SSD. Similar to the PlayStation, it can support up to 8k in
resolution, and up to 120 FPS on certain games. This system
serves as direct competition to both PS5 systems.

There is also the new Series S which is priced at a
surprisingly at USD$299 (CAD$379). Aesthetically, the Series S
comes in a smaller form factor but remains the box shape, but
this time is white. This console is the less powerful little
brother of the Series X. The Series S has the same processor
as its big brother, but it will have slower loading times, a
less powerful GPU and has only 10GB of Ram compared to 16GB.
The Series S targets 1440p gamers rather than the Series X
which is at 4k gamer. It will run some games at 120 FPS, but
it does not possess as much storage. This console has a 512GB
SSD and is digital storage only. However, it does support the
ability to add extra Seagate SSD (but this comes at an
expensive additional cost).

Oculus Quest 2 – Facebook (NASDAQ: FB)

The last item to look at is Facebook’s Oculus Quest 2. This is
the newest Virtual Reality (VR) system. Starting at USD$299
(CAD$399) for the 65 GB and USD$399 (CAD$549) for the 256GB,
these systems allow you to experience VR in the comfort of
your own home. Although these devices require a Facebook
account to log in (hello big brother), they have a ton of
options for use. You can get the best seat in the house to
live concerts, ground-breaking films, exclusive events, and
more from the comfort of your own home. The Quest 2 is also
backwards compatible, so you explore all past titles from
previous models. Now is probably one of the best times to
explore the world of VR. With the coronavirus pandemic and
looming global lockdowns incoming this means not leaving your
house. So instead of watching more regular YouTube, fire up
the Quest and check out YouTube’s their vast 3D and 360 video

catalogue.

The Verdict:

If you’re a hard-core gamer you’re likely not even in this
discussion because you have or are buying a PC. But for
everyone else, there may be enough to convince some Xbox
loyalists to make the move to PS5 but likely it’s a case
preference with the entire ecosystem. Neither are so
revolutionary that they could steal the others fan base to
make the move. If this is your first console, well, my vote
would be for the PS5.

Oculus is ‘wear’ it gets interesting. It really doesn’t
compete with a traditional console and provides a completely
different experience. Given that we maybe at home for longer
than expected and a long winter ahead, might be worth it to
splurge and pick one up as well.

Versus System launches in-
game rewards platform in
China and enters the health
sector   with   ePlay   and
PredictMedix
Versus Systems Inc. (CSE: VS | OTCQB: VRSSF) has made its name
in the gaming world with their proprietary patented in-game
prizing and promotions engine. In 2020, the Company has made
great progress expanding within streaming, within gaming and
also within the wellness sector. A key to the Company’s

success to date has been to reward users who view ads, thereby
achieving much greater interest from potential customers.

Versus Systems platform allows game publishers and developers
to offer in-game and in-app prizing across mobile, console, PC
games, and streaming media. Brands pay to place products in-
game and gamers compete for those prizes.

Versus Systems enters the wellness market

In August of this year Versus Systems announced their first
move into the health and wellness sector with ePlay Digital
Inc. ePlay Digital is a mobile game creator and publisher
specializing in sports, esports and entertainment augmented
reality titles; but they also operate health and wellness
applications and platforms. The announcement states that
“ePlay’s catalog of health, wellness and personal improvement
applications further diversifies Versus’ content offerings for
reward partners in video content platforms and lifestyle
mobile applications.” The global wellness market is valued at
over $4 trillion which certainly gives both ePlay Digital and
Versus Systems plenty of revenue potential.

Craig Finster, President and CFO of Versus Systems, commented:
“When considering health and wellness platforms, with fitness
apps in particular, we are looking at a market size that’s
expected to reach approximately $15 billion in the next five
years. We examined that growth potential and the opportunities
that would bring and realized that scaling our platform into
the wellness category is a no-brainer.”

In a further health theme, PredictMedix (CSE: PMED | OTCQB:
PMEDF) has agreed to use Versus Systems technology to help
reward, motivate, and retain patients in clinical trials. This
may include rewarding patients for joining certain trials, as
well as to promote compliance in testing medical therapies. A
win-win for both companies. These products, for use primarily
by Contract Research Organizations (CROs), academic medical

centers and those in the clinical trials markets, will enter a
market that Fortune Business Insights estimates at US$40
billion annually.

Source

Versus Systems launches OMEN Rewards with HP into the $78
billion revenue Asia Pacific gaming market

In September of this year Versus Systems announced the launch
of its patented in-game rewards platform, OMEN Rewards, in
China. The platform is pre-installed inside HP’s OMEN Command
Center and Pavilion laptops and desktops and is also available
in the Windows App Store. This is a massive step for Versus
Systems in terms of gaining enormous exposure in a rapid
period of time. Looking at the stock price it appears the
commercialization is yet to be factored in. Should the OMEN
Rewards platform prove popular then the potential revenues for
Versus Systems would be very significant. The Asia-Pacific’s
gaming market has approximately 1.4 billion gamers that are
forecast to generate $78.4 billion in gaming revenues in 2020.

Versus Systems is expanding rapidly as they partner to
commercialize their technology globally

Source

Closing remarks

Versus Systems is having a very strong 2020 as they move
rapidly to commercialize their technology. Their base business
of providing fun rewards for players looks set to take off
following 2020 deals with Kast streaming and HP (OMEN
Rewards). Added to this, Versus Systems is now moving into the
very lucrative wellness sector. One example being fitness apps
with ePlay Digital where Versus can offer users rewards/prizes
for viewing ads as they already do in other segments.

Versus Systems core concept remains that a viewer is far more
likely to view an ad if there is a chance at a prize or
reward. Their research shows that 97% of Versus users agree
that adding rewards and prizes makes games more fun. Their
expansion from the gaming and streaming worlds and into the
wellness sector just further expands the potential revenue
opportunity.

Versus Systems currently has a market cap of C$40.5M.

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

Source

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

Source

Enthusiast Gaming continues to partner and grow rapidly

The Company’s recent news highlights the rapid growth:

     May 6, 2020 – Enthusiast Gaming and G FUEL Forge Multi-
     Year Partnership
     April 23, 2020 – Enthusiast Gaming Adds Two Major Global
     Esports Communities to its Advertising Platform
     April 14, 2020 – Enthusiast Gaming and Monkey Knife
     Fight Partner to Bring Fantasy Sports to the Esports
     Gamer Demographic
     April 8, 2020 – Enthusiast Gaming’s Leading B2B Mobile
     Gaming Event, “Pocket Gamer Connects”, Goes Digital
     March 26, 2020 – Enthusiast Gaming Partners with Twitch
     on Twitch Stream Aid, a Global Celebrity Streaming
     Charity Marathon
     March 24, 2020 – Enthusiast Gaming Adds Fextralife
     Community With Over 60 Million Monthly Views to Network
     March 19, 2020 – Enthusiast Gaming Adds Leading
     Minecraft Community to Network, Increase of 28 Million
     Views and 4.5 Million Visitors Monthly

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.

Source

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.