The Canadian-based esports organization Enthusiast Gaming announced today that it had acquired Los Angeles-based Omnia Media—the producer of hundreds of YouTube gamer channels including Sidemen’s and a media broker for gaming influencers including Shroud, Pokimane 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 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.
“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.
I spent the first half of my life trying to be an athlete so I could become the second woman after Mary Lou Retton to appear on the front of a Wheaties box. I failed at
I spent the first half of my life trying to be an athlete so I could become the second woman after Mary Lou Retton to appear on the front of a Wheaties box. I failed at that, and softball, basketball, volleyball, track, ice skating and cheerleading in the process. Looking back, the only thing amazing about my persistent pursuit of sporting glory was my lack of self-awareness. I only ever made a team after my second time trying out, when I showed up the next year with my much more athletic younger sister. (True story: she played as my proxy on Forbes’ softball team one season.) After my closest attempt at sporting success came in a spelling bee (thank you ESPN for televising and giving that sport cred), I finally decided to take the advice of all those coaches who told me I had the brains and benchwarmer’s big mouth better suited for sideline competition. Now after studying business at Drexel University and journalism at NYU, I compete for bylines, primarily writing about the business of sports. As for my sporting endeavor, I decided to focus on the one where I only compete with myself: running. I can be seen crossing the finish line of my front door celebrating my first place victory a few mornings a week…then eating a bowl of Wheaties, because “that’s what big girls eat.”