How did E-sports perform during the pandemic; ESH and EM1 shares Zoomed up

Summary

• E-sports had witnessed continuous growth, but viewership and overall interest are explicitly having a moment during the pandemic.
• Dedicated e-sports arenas, huge tournaments, and the migration of traditional sports into the virtual world have proven, it is here to stay.
• Esports Mogul, with its strong partnership pipeline, has in recent times witnessed robust demand for its online tournament hosting due to global restrictions on travel and public gatherings.
• Emerge Gaming’s new generation technology combined with 5G would pave the way for the integration of next-gen services such as AR, AI, robots, automatic cars and IoT.

Video games are not new to this world.

When they first emerged in the 1970s and 1980s, children spent their time playing. However, in the 1990s, a shift was witnessed in the trend and gaming transformed from playing with friends to something much bigger.

With the emergence of online gaming, a lot more players came along with better competition.

People were inclined towards viewing gaming at its maximum levels; opening the door for gamers to earn income via sponsorships, league play, and streaming.

Thus, e-sports came into the picture.

E-what?

E signifies electronic while e-sports represents professional competitive gaming wherein; competitors play video games and are watched by a live audience.

Just like conventional sport, e-sports has professionals, commentators, and celebrities. However, it involves competitions contested individually or among teams on an online battle arena, through multiple video games.

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Traditional sports shuttered down worldwide due to COVID-19 and numerous traditional leagues of professional sports such as NBA, MLB, NHL, MLS, NRL, NBL and many more shocked the world when they decided to either cancel or postpone their leagues.

Amid COVID-19 crisis, courts and stadiums have emptied. However, matches in the gaming world have continued without a hiccup and are flourishing in a physical distant world.

Motor racing led its way virtually, with a new F1 Esports-Virtual Grand Prix series in place of its scheduled events. Globally, during mid-June, this event accomplished a record-breaking 30 million views throughout digital platform and television.

The Overwatch League also played its entire 2020 season online, which began on 28 March 2020, with broadcast of live competition on YouTube.

In Australia, NRL season has been postponed for an indefinite period and round three of the premiership season between the clubs Canterbury-Bankstown Bulldogs and Wests Tigers went ahead with a twist.

On 29 March 2020, the rugby players locked horns on the imaginary battlegrounds of their gaming consoles, and it was streamed live on Facebook.

There are legions of fans already watching gaming competitions and looking forward to numerous tournaments such as Melbourne Esports Open 2020 which is set to begin on 22 August 2020 with the prize amount of US$250,000.

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The pandemic has hit almost every industry negatively. Now many are wondering, what would be the short-term and long-term change in the landscape of e-sport companies.

Let us look at ASX listed players Esports Mogul and Emerge Gaming:

Esports Mogul Limited (ASX:ESH)

ESH runs an e-sports media and software business. The Company owns and operates advanced pure-play online tournament platform known as mogul.gg.

Under this platform, tournament organisers, community groups and influencers can run their own online events, monetise their audience, reduce the operating costs and time in event management and administration.

On 27 May 2020, notified the market with regards to its Board wherein, it mentioned that ESH’s Chairman, Mr Adam Jacoby would be standing down from his current role, and would come into effect when an appointment of NED (non-executive director) is done.

On 30 April 2020, ESH unveiled its robust balance sheet, and held a cash balance of ~AU$3.1 million. It highlighted the launch of high-profile projects with two well-known industry leaders- Microsoft, and Team secret.

Other business highlights for the quarter ended 31 March 2020 (Q1 FY20) are as follows:

• During the quarter, there was a boost in demand for the Company’s online tournament hosting amid pandemic induced global restrictions on travel and public gatherings.
• The Company partnered with Microsoft and launched 12 months tournament series for ‘Age of Empires II’ and ‘Age of Empires II Asia Cup’, which would run till the end of February 2020.
• In partnership with Team secret, the Company launched ‘Secret Stars’, which includes exclusive paid and free to play tournaments, and subscriptions.
• The quarterly net operating cash flow was noted as AU$761 thousand.
• Salaries and fees worth AU$77,000 were paid to ESH’s directors during Q1 FY20.
• Voluntary Reduction in fees and salary of directors by 20 per cent in the near term, which would reflect in the next quarter period.

On 3 July 2020, ESH last traded at AU$0.006, skyrocketing by 50% from its last close. The Company has a market capitalisation of AU$8.17 million, with ~2.04 billion shares outstanding.

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Emerge Gaming (ASX:EM1)

EM1 is an operator of online eSports and games through its own e-sports tournament platform Arcade X.

On 1 July 2020, the Company announced that it successfully demonstrated the GameCloud streaming technology over MTN’s 5G network to a mobile device in South Africa.

EM1 streamed the game via its GameCloud platform to Huawei P40 Pro smartphone.

MTN (EM1 is the gaming partner of MTN) is noted as first online gaming platform operator in the Southern Hemisphere to live stream a AAA game over 5G network.

Source: ASX announcement.

Furthermore, this combination of new GameCloud technology and 5G network would unlock the full capabilities of emerging services such as AR, AI, robots, automatic cars and IoT.

On 19 June 2020, the securities of EM1 were placed under trading halt, awaiting an announcement concerning an agreement with a Mobile Network Operator (MNO) exclusive e-sports gaming platform.

The trading of the shares was resumed on 23 June 2020, upon the release of an announcement to launch “MTN arena” in partnership with MTN in South Africa.

On 30 April 2020, EM1 reported a strengthened balance sheet with cash resources of ~AU$2.3 million for the quarter ended 31 March 2020.

The Company is aiming for a cash outflow of ~ AU140,000 each month to maintain its position for the next quarter period. Moreover, EM1 is progressing strongly with several opportunities with MNOs (mobile network operators) and is looking forward to an exciting end to this year.

On 3 July 2020, ESH last traded at AU$0.024, surging up by 14.286 per cent from its previous close. The Company has a market capitalisation of AU$13.8 million, with ~657.1 million shares outstanding.

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