RE: Break and hold .254 Jan 2021 12:23
Guild Esports (LSE:GILD) became the first esports team company to list on any of the world’s major exchanges in October, raising £20m with a market capitalisation of £41m.
Esports are digital sports in which professional players compete on online platforms such as League of Legends, Dota, Rocket League, Fortnite, and Counter-Strike, before both physical and digital audiences. Their popularity has already surpassed traditional sports like basketball, ice hockey and baseball, drawing in an estimated global audience of 443m in 2019, which is expected to grow to some 650m by 2023. Esports followers currently generate revenues of around £4 per head, behind traditional sports at £28-£68, but through 2016-19 that rate grew at a compound of 15pc a year. The top esports teams are worth up to £300m.
Guild plans to develop a global franchise by building esports teams that will compete in all the major international esports tournaments, and by establishing a player training and scouting infrastructure modelled on the talent academies pioneered by Premier League football teams. The company has recruited David Beckham, who holds a 5pc stake, and graphic designer Fergus Purcell – known for his work on the Palace skatewear label – to promote the Guild brand.
Since listing Guild has signed a £3.6m three-year sponsorship deal with a European fintech company, which will promote its brand and logo on team jerseys and other marketing devices. The company has also released its first digital product range through an in-game customisation feature that will allow Rocket League players to personalise the skin of their in-game vehicles with the Guild brand. Direct-to-consumer sales of in-game items are an increasingly important revenue stream in the esports industry, expected to be the fastest growing esports revenue segment with growth forecast to increase from $7.1m in 2020 to $17.2m by 2023.
Guild is also signing leading esports players to the brand on the model of a Premier League football team. The company has announced its entry into the Fornite battle royal online multiplayer game with the signing of the top-ranked professional Nikolaj Andreas Frøslev (‘Flikk’), and signed a top-tier squad to compete in Valorant, a major new 5v5 multiplayer tactical shooter game launched by Riot Games in June this year.
Guild, whose shares are currently trading at 5.6p, is one to watch for those open to exposure to a growing market with which many investors will be unfamiliar.
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