John Macone, Former Esports Advisor, for NGame Esports shares his perspective about recent investments and financial transactions in esports.
EVOS Esports closed a Series A funding round of $3.8M. It seems esports organizations are attracting capital as if they are tech startups. Do you think esports organizations are overvalued or undervalued?
As it currently stands in the esports market, I believe that esports organizations are generally overvalued in initial investments, but undervalued in growth. The market risks over saturation with lower level organizations that cannot offer as much incentive as industry mainstays, and such high level investment numbers belies the low potential costs of esports organization start up and maintenance. However, in an effort to stand out in the market, increase revenue, and bring on more partnerships, esports organizations quickly grow into media platforms that provide entertainment, direct engagement with growing fan bases, and even direct event opportunities and tournaments. This presents a unique opportunity for sustained growth in a unique market sector over time, where many investors and organizations focus too heavily on initial fundraising without accounting for this need.
Aquilini Gameco Inc which is owned by Aquilini Investment Group acquired Luminosity Gaming for $18.7M. Do you anticipate more and more investment companies including esports within their investment portfolio?
I do anticipate esports becoming a more necessary part of investment portfolios, but in varying ways. While buyouts and acquisitions are a traditional way to enter a space like this, esports allows a very low barrier to entry as an unregulated industry.
For more eager investors looking to save money and grow brands in a way akin to vertical integration, there is ample opportunity to enter the space on their own without acquisition, especially through opportunities like Overwatch League. The creation of brands, teams and organizations becomes a sustained investment in itself, providing new paths for growth for parent organizations that may have missed that market all together.