The playful new market niche otherwise known as eSports is buzzing this morning, with the news that venture capital firm Fatfish Internet Group (ASX: FFG) has entered a definitive agreement to a 3% stake in breakthrough eSports hub ‘eSports.com’.
Fatfish agreed to acquire 3% of eSports.com, in exchange for its 45.6 million shareholding in gaming company iCandy Interactive (ASX: ICI) in a bid to take its initial steps and obtain exposure to the world of eSports – currently one of the most intriguing market niches that is taking both consumers and investors by storm.
As part of the deal, German-based eSports.com will buy 16.5 million new shares in iCandy for A$1.32 million (A$0.08 per share). The companies have agreed for the fee to be paid in five tranches commencing almost immediately, with all funds expected to be fully paid by the end of Q1 2019.
Upon completion of the deal, eSports.com will own around 19.5% in iCandy, thereby further consolidating its growing stake in the gaming company.
The trifecta of companies involved in the transaction (Fatfish, iCandy and eSports.com) are all vying for different strands of the gaming market that has transformed from simple console gaming to now include online and mobile versions. The evolution of gaming as an industry and a form of entertainment has welcomed users from all demographics and helped to raise gaming participation to as high as 45% in countries such as Australia, the US and Europe.
There is a clear commercial overlap between gaming and eSports with iCandy and eSports.com likely to find strong synergies within their respective market positions. As a venture capital firm, Fatfish intends to obtain exposure to the growth in eSports.
eSports and gaming
eSports is a coming together of sports and online gaming and gaming fans have jumped at the chance to watch professional players compete on a weekly basis.
According to analyst estimates, eSports as an industry turned over US$655 million in 2017 – a 32% increase on the previous year. Gaming companies are expecting the annual revenue haul to climb as high as US$1.5 billion by 2020 and compound annual growth rates to reach as high as 55% in the next five years.
As a means of capitalising on this growing trend, several ASX companies have emerged to commercialise gaming and eSports including the likes of iCandy and Fatfish.
Other potential contenders include direct eSports market players such as Esports Mogul (ASX: ESH) and Emerge Gaming (ASX: EM1) – both companies have hatched ambitious plans to take early stakes in the global eSports market and there’s even a major tournament coming to Melbourne next month.
Previous shows in Sydney have attracted tens of thousands of visitors and the likelihood is that eSports extravaganzas may become a staple part of modern entertainment in Australia over the coming decade.
Fatfish’s share price had dipped 3.4% to reach A$0.028 by midday.