Courtesy of a reverse takeover, a method of listing on the ASX that’s becoming ever-more popular, Emerge Gaming (ASX: EM1) enters the ASX full of commercial confidence and A$5 million in fresh capital by offering 250 million new shares at A$0.02 per share.
Formerly known as Arrowhead Resources, the new company is venturing away from resource exploration and embracing a digital commercial strategy harnessing the rapid growth of the gaming industry, a sector that now eclipses all other forms of entertainment such as movies and music in terms of revenue.
The listing puts the company into direct eSporting competition in the publicly-listed financial arena with the likes of Esports Mogul (ASX: ESH), but also, other gaming industry companies such as Animoca Brands (ASX: AB1) and iCandy Interactive (ASX: ICI) as a sure sign that the Australian gaming niche is alive and kicking.
“We have received significant interest from institutional and retail investors both domestically and internationally, with a heavily oversubscribed capital raising. This is not surprising as the global eSports market is growing at 6.6%, faster than both the music and film industries. It is expected to reach US$122 billion in global revenue in 2019. Innovative companies like Emerge find that through the ASX they have access to an educated local investment community that understands the way companies like this operate through their expansion phases,” said Bert Mondello, chairman of Emerge.
Emerge comes to the ASX sporting a widely popular eSports platform and “lifestyle hub” that has hosted over 10,000 online tournaments called “Gaming Battleground”.
The platform offers casual, intensive and social gamers the means to play nine different triple-A game titles and more than 300 additional games via their mobile phones, consoles and PCs.
According to Emerge, its platform uses advanced analytics tracking and proprietary algorithms to deliver an optimum tournament gaming experience for users, while providing advertisers with the perfect vehicle for delivery of their messaging to a fully engaged audience.
Furthermore, Emerge wants to take the growing eSports gaming space into new territory by offering an “optimal tournament gaming experience for both users with “integrated mobile games, optical character recognition, brand activations and automisation”.
According to the company, this is made possible by its “unique intellectual property” that powers its direct publisher integration, internal analytics tracking, automated result reporting and live matchmaking through its proprietary algorithms.
The revenue model consists of subscription fees, charged directly from gamers’ telecommunications bills, hosting and management of online tournaments, and advertising sales.
As part of its commercial strategy, Emerge signed a profit-sharing agreement with one of the largest telcos in Africa, MTN Group, under which its subsidiary MTN South Africa will provide Emerge with access to its 31 million subscribers in South Africa.
On a wider scale, Emerge wants to target another 201 million subscribers in 21 countries throughout Africa, which MTN can also provide given its continent-wide coverage.
The partnership with MTN and the “heavily oversubscribed” capital raising places Emerge in a strong position to grow its user-base quickly and further expand into emerging gaming markets like Africa, the Asian sub-continent and Latin America where 74% of the world’s 2.1 billion casual gamers currently reside.
With the ASX listing officially done and dusted, Emerge says it expects first revenues from this agreement to be seen later this quarter.
“Emerge targets the 99.9% of eSports gamers who aren’t professional – but who play against their friends and create their own leagues to win prizes. We are excited to be offering Australian investors the chance to be part of the growing eSports online gaming sector with a company offering revenue opportunities that provide users and sponsor companies with a more engaging experience for everyone,” said Greg Stevens, chief executive officer of Emerge.