Toronto-based Enthusiast Gaming Holdings Inc., a platform for video game and esports fans, will begin trading on the Nasdaq stock exchange as early as next week to increase its exposure to U.S. investors as it plans to raise capital that it will use to fund acquisitions.
Founded in 2014, Enthusiast Gaming has 300 million active users worldwide who engage with the company’s 100 websites, 1,000 YouTube channels, and its esports team Luminosity Gaming, which competes in online video games such as Fortnite, Call of Duty and Overwatch. Enthusiast has acquired a number of fan communities, which are websites or YouTube pages that offer news, content and strategy guides for video-game franchises. It earns revenue through advertising, content licensing and selling subscriptions to premium content.
The company has been listed on the Toronto Stock Exchange since January, 2020, and it will cross-list its shares on the Nasdaq. Since going public, the stock has risen nearly 350 per cent, giving the company a $1-billion market cap.
Adrian Montgomery, chief executive of Enthusiast, told The Globe and Mail that Americans account for 65 million of the company’s users.
“One out of every two American males between 18 and 34 visits an Enthusiast Gaming property every month, which is a pretty powerful statistic and a statistic a lot of traditional media companies would be envious of,” he said.
While Enthusiast is a “proud Canadian company,” Mr. Montgomery says listing on the Nasdaq would solidify its place as a force in the $200-billion global video-game industry.
“We are a global player in the largest entertainment vertical in the world, and the Nasdaq is the big stage. It’s the big stage where you have access to the deepest pools of capital to the broadest group of shareholders who can support and help grow your business,” he said.
“And to be a little bit immodest, we deserve to be on the big stage, and that’s where we’re going to thrive.”
Mr. Montgomery said the COVID-19 pandemic and its effects, such as school closings, have proven that the video-game industry is a strong competitor to more traditional forms of entertainment such as music and sports.
“Through the pandemic, every parent of a tween and older has seen the same thing, which is if you give a young person an extra hour in the day they’re going to spend it on video games somehow some way,” he said, adding that gaming today is inherently social.
“Video games [allowed] quarantined young people to stay in touch with their friends to make new friends, to have an inherently social experience while playing video games,” he said. “People are migrating away from traditional social media to the new social media of gaming. Half of our 300 million people don’t use Facebook but they play a lot of video games.”
Enthusiast plans to raise new capital shortly after its U.S. listing, which it will use to acquire fan communities. In March, it purchased Icy Veins, an independent fan community for games published by Activision Blizzard, for approximately US$8.3-million. Mr. Montgomery said Enthusiast is the “acquirer of choice” for fan communities, some of which have audiences in the millions.
“We’ve got gaming coursing through our veins,” he said. “When you think of those League of Legends fan sites or YouTube channels that get 100 million page views or video views, I don’t know if the investment bankers around the world would know where to find them, but we know where to find them. We have that inherent advantage of having our own map of these things and there’s no shortage of targets for us.”
The company is also interested in investing in content creators in the video-game space, who, like professional athletes and musicians, have millions of passionate fans.
“These are the new entertainment superstars These are the people that are going to be getting the shoe deals, not the NBA guys,” Mr. Montgomery said.
Mr. Montgomery is confident that there is plenty of runway for the video-game industry to grow, which will benefit companies like his.
“We have a saying in this industry, which is perhaps a little morbid, but every day a Major League Baseball fan dies, and two esports fans are born.”
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