During the December quarter ended 31st December 2018, Emerge Gaming Limited (ASX: EM1) has inked a distribution agreement with Singapore-based cloud gaming company, Cloudzen, for their online gaming ‘GameCloud’ technology platform. The agreement will see Emerge using intellectual properties of GameCloud under an exclusive license obtained for the term of two-year.
Platform as a service provider, Cloudzen has revolutionized game streaming through its GameCloud technology platform regarded as the “Netflix of Gaming” for a potential 2 billion gamers. GameCloud provides gamers with a one-stop online portal to play AAA rated 3D graphic games or have access to live streaming at any time from handheld devices or smart TVs without having to download the game or any further hardware.
Emerge intends to enter into first world gaming markets for the promotion of its Arcade X eSports Tournament platform using GameCloud’s technology. It targets to generate revenue through monthly subscription fees with an initial rollout into Africa, Australia, South America, India, United States of America and the United Kingdom.
The company further agreed to market its flagship Arcade X platform in four new countries with exposure to up to 140 million potential subscribers. This translates a revenue share distribution agreement signed with Mauritius-based content provider Petrimex during the quarter. Since Petrimex is a leading partner with an Africa focused Orange Telecom mobile Value Added Services solution, Emerge’s Arcade X will get an entry in four new countries of Africa, i.e. Cameroon, Ivory Coast, Rwanda, and DRC.
On the financial front, the company is targeting a cash outflow of ~$140,000 per month to maintain its operations. However, in the current quarter, the Company’s cash outflow was ~$184,000 as extra development work was required to adopt the platform for launch in tier 1 countries. As at 31 December 2018, Emerge’s cash balance stood at $2.36 million.
eSports capabilities provider Emerge Gaming Limited has earlier inked a Memorandum of Understanding with AfricaMob (Pty) Ltd. Under the proposed licensing agreement, Emerge would reportedly be entitled a share of net carrier billing revenue after the mobile network and carrier costs generated from white labeled and rebranded Arcade X platforms. However, the Company has yet to agree on commercial terms for a licensing agreement with AfricaMob.
In the June quarter, the company announced a partnership with Detonator Media Group in South Africa for the provision of media services including Prizes for targeted gamers, Arcade X Gaming Tournament Platform, and Arcade X Gaming Tournament Platform among others.
Looking forward, Emerge presents three different revenue model to its competitors with three main streams. First, that subscription fees that can be linked to the gamers’ telecommunications provider bill. Second, Revenue from companies from the management of corporate online tournament services, and sponsorships and advertising powered by advanced data analytics and targeting capability. Third and last, advertising revenue from companies engaging users of the lifestyle portal.
EM1 last traded at A$0.007 on 25 January 2019. The stock has witnessed a negative performance change of 66.67% over the past 12 months.
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