Mike Ashley’s Game sells esports network to US start-up for $50m
Mike Ashley’s Game Digital is selling its competitive gaming venues to a US start-up founded by two esports pioneers that is betting people will continue congregating to play despite the coronavirus pandemic.
New York-based Vindex will buy Belong Gaming in a deal with the UK retailer that values the network of gaming sites at about $50m, according to people close to the transaction.
They said Vindex, which raised $80m when it launched last October, is committed to investing $300m in Belong to help it expand over the next five years.
The acquisition underlines the rapid expansion of esports, which has continued its surge in popularity as viewers turned to streaming platforms such as Google’s YouTube and Amazon’s Twitch to watch competitive gamers’ exploits during lockdown.
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I can’t imagine how they will make money from day one but if it starts it will be like a snowball and the commercials will follow
It aims to open more than 500 esports venues in the US and another 1,000 in other countries, focusing on Europe.
Backers include US hedge fund manager Joel Greenblatt and former ESPN chief executive Steve Bornstein, both of whom sit on the Vindex board.
Despite government bans on mass gatherings, and social-distancing measures that limit leisure activities such as cinemas and concerts, Vindex said it believed amateur gamers preferred to leave their bedrooms to play titles such as Fortnite and Fifa, rather than competing online.
Mr Ashley, whose Sports Direct store chain has hosted Belong “arenas” since 2018, acquired Game Digital last year in a £52m transaction.Martyn Gibbs, the retailer’s chief executive who is moving to Vindex as part of the deal, said the company was aiming to open new gaming “arenas” this year.
“Think about Belong being a tennis club or squash club, really somewhere where whatever level you want to participate at you can,” he said.
The company plans to open initially in New York, Dallas and Columbus, Ohio.Game Digital will continue to operate Belong venues in the UK and Spain under licence from Vindex.
The rise of esports has attracted the likes of former England football captain David Beckham, who in June backed London-based Guild Esports in a move to create a competitive gaming team and coach emerging talent.
PwC, the consultancy, had forecast that esports revenues will increase to $1.8bn by 2023 from $980m last year.However, since the onset of the pandemic it has said this prediction was “understated”.
The sector commands an audience of roughly half a billion people who are mainly under 35, according to analytics group Newzoo.
Michał Pękała, a senior associate at law firm Linklaters, described the deal as a “bold move” by Vindex.
He said that although amateur gamers were “everywhere”, the challenge would be profiting from their activity.“I can’t imagine how they will make money from day one but if it starts it will be like a snowball and the commercials will follow.”
As shopping centres and malls suffer from reduced footfall and spending because of the coronavirus, Mr Gibbs said Vindex was working with “all the major landlords in the US” and that it was “not short of opportunities” for sites.
Each arena would be 5,000-6,000 square feet and cost about $250,000 to fit out, he added.
Mr Sepso said building the network would be instrumental in expanding the popularity of esports: “It wouldn’t matter if you had the best football coaches in the world if there’s no pitch in your neighbourhood to be able to play.”
This article has been amended to reflect that Vindex is committed to investing $300m in Belong, but has yet to secure that amount.
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