Who is Enthusiast Gaming and what is all the fuss about?

Enthusiast Gaming Holdings Inc. (TSX: EGLX | OTCQB: ENGMF | NASDAQ: Coming Soon) is building the largest media platform for video game and fans to connect and engage worldwide. And with the US as its most prominent source of audience and revenue it only makes sense to enlarge its shareholder base and accelerate the growth strategy witha listing on the Nasdaq exchange which it announced yesterday.

But who is Enthusiast Gaming and what is all the fuss about? Enthusiast was spawned from Menashe Kestenbaum’s lifelong love for video games, having first written for IGN, a large gaming media site at the tender age of 13. After studying and subsequently lecturing at the Institute of Advanced Talmudic Law in Jerusalem for eight years, Menashe returned to his passion for the and launched his first gaming blog, “ Enthusiast”, in 2011. In 2014, he returned to Toronto and incorporated Enthusiast. Then in 2019 Enthusiast amalgamated with GameCo, a publicly traded issuer that had also acquired Luminosity Gaming.

To say “the rest is history” would be an enormous understatement given how quickly both the industry and the company are still growing. Enthusiast is currently reaching over 300 million gamers every month, the Company is a member of the ‘Comscore 100’ ranking of the top Internet Properties in the US and the largest in the Gaming Information category on mobile devices. The company has 100 websites publishing unique content across the video game spectrum, 30 weekly shows and 24+ million subscribers on YouTube, 30 live and virtual gaming events globally, 500 influencers across , YouTube, Twitter, Instagram and TikTok, and 7 professional esports teams. Digging a little further into the numbers and we see its 100 gaming-related websites collectively generate approximately 1 billion page views monthly. Enthusiast’s gaming content division includes 2 of the top 20 gaming media and entertainment video brands with BCC Gaming and Arcade Cloud, reaching more than 50 million unique viewers a month across 9 YouTube pages, 8 Snapchat shows and related Facebook, Instagram and TikTok accounts. The company’s talent division works with nearly 1,000 YouTube creators generating nearly 3 billion views a month.

The corporate mission is to build the world’s largest network of communities for gamers through multi-channel media, original content and events. They want to own the fan experience. By building the social network for gamers the company is looking to capitalize on the “social revolution” and changes in how Gen Zs and Millennials consume content. For context Gen Zs are generally between 6 and 24 years old (roughly 68 million in the U.S.) while Millennials are currently between 25 and 40 years old, give or take (approx. 72 million in the U.S.). Enthusiast has a global market, but focusing on the U.S. alone means their target is over 40% of the entire U.S. population.

The numbers above paint a pretty impressive picture but the question on investor’s minds is how does Enthusiast monetize this incredible reach. For Q4/20, the companyposted its quarterly average revenue per user (ARPU) at $0.52. Through a phased approach the company plans to increase the ARPU to $3.00 by 2023 through strategies including advertising, direct selling, subscriptions, content licensing, an app store and ultimately a marketplace. The company has shown impressive sequential growth in revenue over the last four quarters from $9.2 million in Q4/19 to $42.5 million in Q4/20. They haven’t posted a quarterly profit yet but the bulk of the infrastructure is now in place to start extracting more revenue per user. And after raising $42 million in February of this year the company has plenty of liquidity to execute on their strategies.

An update on the latest news in the esports sector for January 2020

Esports is a booming sector with a growth rate of around 25% per annum. Esports global revenues are estimated to have increased by 27% in 2019, to exceed US$1 billion in revenue for the first time. The esports global audience in 2019 was 454 million, and this is forecast to reach 645 million by 2022.

The latest major news in the esports sector

January 7, 2020 – (OTC: TCEHY) invests in and Vanquish games developer PlatinumGames. Tencent already has investments in Blizzard (NASDAQ: ATVI), Ubisoft Entertainment (FR: UBI), and Epic Games (private) (Epic owns the popular game Fortnite), and owns Riot Games. In other Tencent news on January 22 Tencent bid $148 million for online computer games maker Funcom, well known for their ‘Conan the Barbarian’ games.

Tencent owns Riot Games who makes the hit ‘League of Legends’ game played in esports tournaments LoL & LPL Source

January 7, 2020 – Electronic Sports League (ESL) and DreamHack, both part of the leading international entertainment group Modern Times Group (MTG), announced a three-year-long strategic agreement with Blizzard Entertainment (a subsidiary of Activision Blizzard). The ESL announcement states: “The world’s largest esports company and the premier gaming lifestyle festival organizer will create new ESL Pro Tour formats for both StarCraft® II and ® III: Reforged™, with Blizzard providing a respective prize pool of over US$1.8 million and over US$200,000 for the first season.”

Note: Activision Blizzard’s most popular esports franchises include , , Overwatch, StarCraft, and . They also own the esports platformMajor League Gaming (MLG) and the (OWL).

January 14, 2020 – Simplicity Esports and Gaming Company (OTCQB: WINR) has struck a deal with Flamengo to administer Flamengo’s esports businesses in Brazil and in the USA. Jed Kaplan, CEO of Simplicity Esports stated: “The ownership of a franchise in CBLoL (Brazil League of Legends) would be a monumental step for Simplicity Esports and we believe we are on a direct path toward such ownership in one of the largest esports regions in the world.” Simplicity is already a well established operator of esports gaming centers and an owner/manager of several esports teams.

January 20, 2020 – Whilst not yet an esports threat – Tik Tok owner ByteDance (private) is readying a move into Mobile gaming to take on industry giant Tencent.

January 27, 2020 – Enthusiast Gaming (TSX: EGLX | OTCQB: ENGMF) graduates to the Toronto Stock Exchange (TSX) from the TSX-V exchange. Their ticker remains as ‘EGLX’.

January 29, 2020 – Fan engagement platform GLHF has partnered with Finnish organization ENCE, Swedish organization , and Ukrainian organization . GLHF plans to launch on a global basis in early March 2020. GLHF aggregates facts on teams, match VODs, live streams, events, and other interactive elements for fans to follow their favorite teams; thereby helping the teams to get closer to their fans and grow revenues.

January 30, 2020 – Esports investment company New Wave Esports (OTC: TRMNF) has entered into a non-binding letter of intent to acquire creative management and production services company Activate Entertainment for $1 million.

The top ten esports tournaments ahead in 2020

1. 2. The International 3. League of Legends World Championship 4. BlizzCon 2020 5. Cup 6. International eSports Federation World Championships 7. 8. EVO (Evolution) Championship Series 9. Rocket League Championship 10. The

Fortnite World Cup – One of the most popular esports events globally

Wrap up

Esports and gaming giant Tencent continued its investment spree this past month adding a stake in PlatinumGames and an offer to buy all of Funcom. This furthers Tencent’s leading place in esports dominating game making/publishing and esports streaming (Douyu, Huya, Penguin Esports).

In 2020 the biggest esports events will be the Fortnite World Cup (Epic Games), the International DOTA 2 Championships (Valve Corporation), and the League of Legends World Championship (Tencent).

2020 will indeed be a big year for esports as the sector continues to grow rapidly beyond one billion dollars in revenues. Enthusiast’s Kestenbaum on the ‘biggest moneymaker’ in the $150 billion gaming industry

“I bucket things into four categories — there are teams, there are events, there are game publishers who make the games that other people play, and then there are online platforms such as Twitch and Discord. We don’t make the games but we have teams, events, and platforms. The biggest moneymaker is the platform…online we reach over 200 million gamers, so that provides a lot of the scale…” States Menashe Kestenbaum, President, Founder and Director ofEnthusiast Gaming Holdings Inc. (TSXV: EGLX | OTCQB: ENGMF), in an interview with InvestorIntel’s Peter Clausi.

Menashe adds “There are 700 million people now watching esports content online and that is a huge part of our business.” He then went on to say that gaming is over $150 billion industry right now and there are over 2 billion people who play games. Menashe also said that Enthusiast Gaming has about 120 gaming communities each dedicated to different types of games. The company has multiple revenue streams and has over a billion page views online and about 30 billion ad requests a month. Enthusiast Gaming also owns Canada’s largest gaming convention and is looking to expand to new cities. He added that Enthusiast Gaming has received final approval to graduate from the TSX Venture Exchange to the Toronto Stock Exchange.

To access the complete interview, click here Enthusiast Gaming spectators offer investors an opportunity to capitalize on eSports

The video gaming industry’s media audience goes beyond just the players of video games; there is now a robust audience of non-player spectators as well. This considerably shifts the dynamics of media in the eSports space making it similar to the media ecosystems of traditional sports, and creating correspondingly profitable business opportunities.

Toronto-Based Enthusiast Gaming Holdings Inc. (“Enthusiast Gaming”) (TSXV: EGLX | OTCQB: EGHIF) has taken an ambitious approach to rounding up these audiences between owned and affiliated media, YouTube channels, and a convention that had over 55,000 people attending in 2018, making it one of the market leaders in digital media for video gaming. Its platform represents more than 80 websites reaching 75 million monthly visitors, as well as 900 YouTube channels reaching 50 million additional monthly visitors.

Strategically Partnering with and Acquiring Channels

Enthusiast Gaming has built a respectable portfolio of media assets through partnerships and acquisitions. At the beginning of 2019, Enthusiast Gaming announced a partnership with US- based Omnia Media Inc. (“Omnia”), to exclusively represent all of Omnia’s online gaming traffic in the United States, through Omnia’s multi-channel YouTube network which, across 900 channels, has 50 million monthly visitors and a base of more than 400 million subscribers. In November 2018, Enthusiast Gaming acquired Operation Sports LLC (“Operation Sports”), which operates a leading web portal for eSports and video game content. Under Enthusiast Gaming’s ownership, the subscriber base of Operation Sports grew by more than 100,000 users, bringing the total subscriber base to over one million users as of March 20, 2019.

In-Person Engagement

Part of how Enthusiast Gaming has built its audience organically is by cultivating engagement through its convention Enthusiast Gaming Live Expo (“EGLX”). Its first iteration in 2015 saw 1,700 attendees, growing to 12,000 attendees in 2017, followed by 24,000 attendees in March 2018, and 30,000 attendees in October 2018. EGLX is the largest gaming expo in Canada, and the event has sponsors that include Bell Canada, Nintendo, World Gaming, LG, and eBay. Enthusiast Gaming is contemplating expanding EGLX to other North American cities in light of significant growth in the video gaming sector.

Diversified Base of Revenues

Enthusiast Gaming generates earnings through a number of revenue categories. Video content attracts advertising payments, and EGLX produces revenue from show admissions, exhibitor booths, and show sponsors. Paid user subscriptions are another form of revenue for Enthusiast Gaming. For example, Enthusiast Gaming acquired The Sims Resource in January 2019, which generated approximately CAD $2.8 million in subscription payments in 2018, making up about 40% of its revenue.

Enthusiast Gaming Holdings Inc. has a current market cap of CAD $57.60 million and commenced public trading on the TSX Venture through an IPO on October 4th, 2018 with a closing price of CAD $1.07. TSXV: EGLX closed April 4th 2019 at a price of CAD $1.25, up 16.82% since inception.