MSM Corporation reaffirms partnership with Riva Group, streamlines eSports market strategy

MSM Corporation International ASX Riva Technology Galaxy Racer Esports Megastar
MSMCI will receive a total of US$2 million for the continued development, gamification and localisation of the Megastar Version 2.0 platform with an agreed royalty of 5%.

Online entertainment company MSM Corporation International (ASX: MSM), or MSMCI, has reaffirmed its working relationship with business partner The Riva Group after receiving the second tranche of a total of five so-called “waterfall” loan payments.

The second tranche of US$100,000 (A$143,000) will be followed up by three additional payments and a further US$1.5 million (A$2.15 million) to fund the continued development of Megastar Version 2.0 with a more gamified and interactive experience skill-based competition with eSports and mobile gaming.

Last month, MSMCI revealed Galaxy Racer Esports, one of the fastest-growing eSports organisations in the world, will manage its eSports content with today’s announcement making the development pathway “clearer”, it said.

Riva Group partnership

The Riva Group’s subsidiary, Riva Technology and Entertainment (RTE), entered into an agreement with Galaxy Racer Esports for it to manage its entire suite of eSports platforms and tournaments.

The organisation has a growing roster of teams and regularly manages major eSports events with tens of millions of viewers.

RTE has confirmed MSMCI will receive US$100,000 as the first instalment of a US$1.5 million loan note with regular quarterly repayments to follow.

The capital infusions are intended to provide MSMCI with ample working capital to continue development and maintain its growth trajectory.

MSMCI said it will receive a total of five milestone payments of US$100,000 from Riva Digital FZ for the continued development, gamification and localisation of the platform.

Upon MSMCI completing the delivery of Megastar Version 2.0, the company will be eligible to receive an annual royalty payment equal to 5% of gross revenue with a minimum annual guarantee of US$500,000 (A$718,000).

Deal progress

Today’s announcement follows the signing of a heads of agreement (HoA) in July 2019.

Earlier on Monday, The Riva Group and MSM said they had modified the milestones of the agreement with both parties confirming they are “committed to clear strategic priorities to maximise user engagement and monetisation opportunities to optimise the user experience”.

“We are very pleased to have reaffirmed the strategic partnership with The Riva Group. Along with Firefly Games and Galaxy Racer Esports, we are aligned in our belief that we are well-placed to benefit from the opportunities evolving in the digital entertainment sector – in particular, the rapidly evolving eSports industry,” MSMCI chairman Antoine Massad said.

Online gaming demand growth driven by COVID-19

One of the key changes over the past year has been the COVID-19 pandemic, which MSMCI said created some “development delays” with Megastar 2.0.

However, alongside the slowdown in development capability, has been a parallel growth in online gaming and demand for eSports content.

According to MSMCI, the eSports industry has experienced a significant boost in user engagement as a result of COVID-19, accelerating what is already a growth industry.

“Our approach in these changing times as a result of COVID-19 is to remain disciplined and to collaborate with The Riva Group and others to maximise shareholder value,” Mr Massad said.

In recent months, the gaming industry has experienced a significant uptick in demand, with MSMCI stating that higher than average user numbers had resulted in increased monthly download and revenue figures for the Terminator: Dark Fate game with total downloads approaching half a million “with very little marketing spend”.

“The strengthening of the HoA partnership was logical given the developments and alignment that have occurred since its inception. We see significant potential in evolving MSMCI’s robust competition platform to be utilised as an eSports tournament platform,” The Riva Group chairman and chief executive officer, and  founder of Galaxy Racer Esports, Paul Roy said.

“On the Firefly Games and Riva Technologies front, we are focused on marketing and growing revenue in this highly increased period of demand for mobile content.”

“Riva is continually assessing Tier 1 brand [intellectual property] and investments in the digital tech industry to complement its revenue and presence in mobile media and entertainment,” Mr Roy added.