Luminosity Gaming takes on 100 Thieves during the Call of Duty World League in June 2019 in Anaheim, ... [+]
The Canadian-based esports organization Enthusiast Gaming announced today that it had acquired Los Angeles-based Omnia Media—producer of hundreds of YouTube gamer channels including the Sidemen’s and talent representatives for gaming influencers including Pokimane, Anomaly, and previously Shroud and MrBeast—for $38 million (approximately CDN $50 million) in cash and stock.
The purchase gives Enthusiast access to 90 million gamers, boosting its reach to a total of 300 million gamers monthly and making it the largest gaming media platform in North America, according to measurement firm Comscore.
“Gaming is the new social network, and we’re building it,” Enthusiast CEO Adrian Montgomery says in an interview, adding that the company’s combined platform will now have 500 gaming influencers that reach about 25% of all YouTube.
Omnia, owned by Canadian-company Blue Ant, is also expected to add $53 million (CDN $70 million) to Enthusiast’s top line. The combined companies’ revenue is projected to be $83 million (CDN $110 million) this year, twice what the most valuable esports companies generated last year.
The purchase is a bargain find for Enthusiast, which has gobbled up 12 gaming companies in the last three years, including paying $20 million for The Sims Resource, one of the largest female gaming destinations. TSR is visited by over 2 million monthly users who, on average, visit more than once a week to download custom content for the Electronic Arts
“If you have a business that requires you to reach Gen Z or millennials, you cannot avoid gaming or us,” Montgomery says, adding that two-thirds of those aged 18 to 34 are playing video games every month and that, when they aren’t gaming, they’re watching gaming—figures backed by Nielsen. “We are amassing turnstiles all those businesses have to pass through to get to this demographic.”
While doing so, the company has been operating at a loss, with its most recent financials showing a quarterly loss of $4.2 million (CDN $5.6 million) and a cumulative deficit of $63.7 million (CDN $84.5 million). Its balance sheet shows long-term debt of $15.5 million (CDN $20.6 million), and this acquisition will use up its cash. On top of that, the coronavirus pandemic has resulted in industry-wide revenue hits this year because of canceled spectator events and is pushing 2021 lower-than-expected projections in 2021 because of uncertainty in marketing budgets.
But Enthusiast not only remains positive, it has future acquisitions in the pipeline. One reason: It has seen a 30% increase in users across its platforms since the pandemic hit.
“We anticipate we will be EBITDA positive almost immediately,” Enthusiast’s president, Menashe Kestenbaum, adds on the acquisition of Omnia. “But our end goal is not to keep cash in the bank. It is to be acquisitive, so we can aggressively own as much market share as possible.”
Through this acquisition, Blue Ant will get a board seat and own about 18% of Enthusiast, the only publicly traded esports company. In January, it graduated from the TSX Venture Exchange to the Toronto Stock Exchange. Next stop: the Nasdaq. The company is in line to uplist to the U.S. stock market but was unable to provide specifics on the timing.
The company has a current market value of $90 million and is in contention to join the ranks of Forbes’ most valuable esports companies this year.
