As 2020 drew to a close, we took a look back at the esports industry’s investments in December. The Esports Observer tracked 16 investments raised by esports-relevant companies during December.
After esports investments slowed down significantly around April due to the economic uncertainty brought on by the global COVID-19 pandemic, the latter half of the year saw increased esports investment activity. This trend continued throughout December, which was one of the highest in esports investment activity in 2020.
In addition to several acquisitions, such as Nenking Group’s acquisition of League of Legends Pro League (LPL) franchise eStar Gaming and Tencent’s acquisition of game developer-focused holding Leyou Technologies, Discord raised its second $100M USD financing round of the year. At the same time, Electronic Arts outbid Take-Two Interactive’s offer to acquire racing game developer and publisher Codemasters.
Disclosed investments during December amounted to $1.63B, bringing the total sum of disclosed investments in 2020 to $8.07B. Financial terms were not disclosed for any deals highlighted in this article.
EA Outbids Take-Two Trying to Acquire Codemasters
Nasdaq-listed game developer and publisher Electronic Arts (EA) reached an acquisition agreement with the board of directors of U.K.-based racing game developer and publisher Codemasters. With the agreement, EA trumps its also Nasdaq-traded competitor Take-Two Interactive Software, which previously came to an agreement with Codemasters on preliminary acquisition terms. The acquisition is anticipated to be completed in Q1 2021.
While Take-Two’s offer put Codemasters’ valuation at approximately $980M, Codemasters’ new agreement with EA raises its implied enterprise value to roughly $1.2B as Codemasters’ existing shareholders will be entitled to receive £6.04 GBP ($8.08) in cash for each ordinary share of the company.
Codemasters is primarily known for its racing games, including the officially licensed F1 game franchise, driver journey-focused simulator Project Cars 3, and recently launched story-driven off-road racing game DIRT 5. The acquisition will add Codemasters’ racing games to EA’s racing game portfolio, including several arcade racing games such as the Need for Speed franchise.
Social media personalities Griffin Johnson and Josh Richards joined the ownership group of esports company ReKTGlobal. As part of their involvement with the company, Johnson and Richards are supposed to develop content, merchandise collaborations, and promotions for ReKTGlobal’s esports team Rogue and its Call of Duty League (CDL) franchise London Royal Ravens.
Chengdu-based esports organization All Gamers secured a multi-million dollar strategic investment from Chinese game company 37 Interactive Entertainment. The esports organization, which was founded in 2009, previously raised an undisclosed multi-million dollar Series A financing round in August 2020 led by Shanghai Real Power Capital.
The owner of Overwatch League (OWL) franchise Guangzhou Charge, the Nenking Group, acquired League of Legends Pro League (LPL) franchise eStar Gaming. The two esports franchises are part of Nenking Group’s extensive sports teams portfolio, including Eastern Long Lions F.C., Hong Kong Eastern, FC Sochaux-Montbéliard, and Guangzhou Loong Lions.
Danish gaming peripherals and accessories manufacturer SteelSeries acquired Atlanta-based controller accessories maker KontrolFreek. The KontrolFreek brand will be continued within the SteelSeries organization as a wholly-owned subsidiary.
Tencent Holdings expanded its investment portfolio of game developers and publishers, including Riot Games, Supercell, and Epic Games, with the acquisition of the Chinese holding group Leyou Technologies. Tencent paid an acquisition price of $1.5B for the deal, which was finalized on Dec. 11. Through the transaction, Tencent adds developers such as Splash Damage, Digital Extremes, and Certain Affinity to its investment portfolio.
Swedish online gaming community operator M.O.B.A. Network acquired massive multiplayer online role-playing game (MMORPG) genre-focused gaming community MMORPG.com. M.O.B.A. Network expects the site, for which it paid $1.25M, to generate approximately $500K in sales in 2020 and an earnings before interest and taxes (EBIT) margin of roughly 50%.
Crowd Equity Campaigns
During December, two British esports companies closed their crowd equity funding campaigns on the British crowdfunding platform Crowdcube. Esports organization Fnatic concluded its crowd equity campaign raising a total of £1.78M ($2.42M), while esports career platform Hitmarker raised £562K ($764K) through its campaign. Although both campaigns are closed, the actual investment amount the companies will receive is likely to be slightly lower due to investors who committed to the financing rounds failing Crowdcube’s due diligence process.
French esports talent management agency Prodigy Agency raised €1M EUR ($1.21M) from French esports venture capital fund Trust Esport. Prodigy revealed that it plans to use the investment proceeds to invest in player health and performance, marketing and image development of its players, and recruiting to expand its team, including talent agent, marketing, and sales and sponsorship positions. Furthermore, the agency is looking to financially support its global expansion with a focus on the U.S., South Korea, and China.
Gfinity sold its 33% stake in the Esports Awards for £500K ($665K), yielding the company a 362% return on investment as Gfinity acquired the stake for £138K ($184K) in 2017. The sale valued Esports Awards Ltd at £1.52M ($2.02M). Gfinity stated that it would use the proceeds from the sale to further accelerate growth across Gfinity’s three strategic pillars.
Messaging and VoIP platform Discord raised a $100M Series H investment led by existing investor Greenoaks Capital. The funding was raised at a $7B valuation, doubling its $3.55B valuation at which the company raised its previous $100M Series G investment round at the end of June. The investment proceeds will be used to continue improving Discord’s services for its free and premium users. The app currently has more than 140M monthly active users.
Tournament tool developer BoomTV raised an undisclosed investment from Intel’s investment arm Intel Capital. Intel, which is also invested in ESL and Overwolf, anticipates a pipeline will develop for esports in the same way that a pipeline for traditional sports has created broader interest in sports and a constant flow of new talent into traditional sports.
Game coaching platform Metafy closed a $3M seed financing round led by Forerunner Ventures. Further investors who participated in the funding round include Tekton Ventures, M25, executives at Facebook and Microsoft, and the founders of esports teams Tempo Storm and Tribe Gaming. Metafy intends to use the investment proceeds “to invest in continued product design and development, with a goal of simplifying the transition from great players to great teachers.”
Fantasy esports platform Esports One secured a $4M financing round led by XSeed Capital, Eniac Ventures, and Chestnut Street Ventures. Esports One revealed that it plans to use the investment proceeds to expand its platform access to global event organizers and support new game titles such as Rainbow Six Siege, Rocket League, Valorant, and Fortnite with customized fantasy games. The company is also looking to focus on monetization and accessibility. Furthermore, Esports One will continue to scale internally, using the funds received for team growth and globalization.
Los Angeles-based publisher and developer of fan-focused mobile games and social experiences GreenPark Sports raised a $14M Series A financing round led by Galaxy Interactive. Further participants in the investment round include ADvantage, John Burbank (Passport Capital), Steve Chen (co-founder of YouTube), Courtney Reum (M13), Sinclair Broadcasting, and existing investors SignalFire and Sapphire Sport. The company plans to use the investment proceeds for development, expansion across leagues, and global publishing.
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