Tech/BioTech

TGS Esports Announces Intent to Acquire Volcanic Media & Expand User Base

  • Juwan Richards

    Juwan's focus is on the intersection of investing and media. Simply defined as a creative with an appreciation for curating content that audiences can both learn from and enjoy. As a buy-and-hold investor, Juwan is a trend-spotter and likes to invest in companies at the ground level. As an avid believer of Web 3.0, his strategy consists of finding companies with a unique competitive advantage and interpreting their market sentiment within the retail audience.

    View all posts

Volcanic Media is a Canadian esports and digital marketing company that created the National Esports Scholastic League (NESL)which is essentially the esports equivalent of the NCAA, for Canada. The NESL has expanded into six school districts across 13 cities within Canada, working with over 1000 students to date. 

Volcanic has helped to create scholastic esports scholarships through tournaments, allowing students to further themselves and their educations using esports. 

Esports are at a massive turning point right now. In the pastmost video games have been the interest of niche groups and subcultures, rather than mainstream entertainment; however, with the global emphasis on online connection this year, video games have experienced hugely increased traffic and attention. As professional esports continue to grow in popularity, the infrastructure around the industry must also develop and mature – part of this process is the formalization of recruitment and scouting. 

Just as most professional athletes are coached and trained from a young age, professional esports players are typically young, growing into their careers as they age. In fact, 30% of all gamers are under the age of 18, with this percentage growing over time. By bringing Volcanic Media into the TGS Esports ecosystem, TGS gains access to an increasingly important demographic for the industry. 

What is the Benefit for TGS? 

Firstly, TGS Esports Inc. is going to enjoy large inflow of traffic from the platform. As part of the acquisition, Volcanic will be able to enter schools and expand their offerings without charging fees for players. With the removal of this barrier, more schools and students/players can take part in the leagues, tournaments, and in-class programs that Volcanic has to offer. 

To quantify this traffic, TGS is anticipating 200,000 new users from the Volcanic acquisition – by utilizing existing revenue streams such as data monetization, payment processing, and subscription revenue, this increased user base could mean a large increase in revenue for TGS. 

To better understand how new users positively affect TGS, let’s look at the largest livestreaming platform in esports: Twitch. This streaming service monetizes their user base through similar methods to TGS, with integrated advertising, payment processing, and subscription revenue creating the bulk of their revenue. Twitch brought in $1.54B US in revenue in 2019 through 15 million daily active users; from these figures, it can be derived that each active user represents approximately $103 US in annual revenue. Using this figure, a 200,000-user increase, even with an industry-average retention rate of only 35%could theoretically represent a $7.2M increase to the topline revenue of TGS. 

Several Chicago area high school basketball legends have also lent their support to the effort, including Jahil Okafor, Kendrick Nunn, Quentin Richardson, Darius Miles, Tim Hardaway, Deon Thomas, Hoop Dreams stars Arthur Agee and William Gates, and Chicago high school legend Linnae Harper. Look for updates on their social media accounts as they cheer on the players

Entry into the tournament is free and open to any Chicagoland High School student. For more information, please visit https://www.thegamingstadium.com/event/chicago-gaming-united/  

TGS Esports Announces Intent to Acquire Canadian Esports and Digital Media Startup, Volcanic Media 

VANCOUVER, BC – October 7, 2020 – TGS Esports Inc. (“TGS” or the “Company”) (TSX-V: TGS) is pleased to announce that it has taken the next step in its growth strategy by executing a letter of intent dated October 1, 2020 (the “LOI”) to acquire Volcanic Media Inc. (“Volcanic”), a leader in scholastic and grassroots Canadian esports (the “Acquisition”). 

Volcanic was founded in 2018 and is the creator of the National Esports Scholastic League, a first of its kind initiative that works directly with school districts and educators to create various esports initiatives. To date Volcanic has worked with over 1000 high school students in 13 different cities spanning 6 school districts. 

Volcanic has been at the forefront of scholastic esports including awarding high school esports scholarships and creating inter-district high school esports leagues, both firsts of their kind in Canada. Volcanic have also started work on indigenous esports efforts, previously working with Binche Keyoh First Nations for pilot esports programs. 

Following the closing of the Acquisition (the “Closing”), TGS is also proud to announce that, as part of this new partnership, all high schools looking to utilize Volcanic will be able to do so absolutely free with no fees paid by schools or students. Interested schools can reach out to Shawn Caldera: [email protected]. 

Subject to the approval of the TSX Venture Exchange (“TSXV”), the Consideration Shares will be issued at a deemed price equal to the Discounted Market Price (as defined in the policies of the TSXV) of the TGS Shares on the date of issuance of the Consideration Shares based on the Volume Weighted Average Price of TSXV’s share price in the ten (10) trading days prior to the relevant payment date. The discount applicable to the Consideration Shares shall be the lesser of 25% and the maximum discount applicable under the policies of the TSXV on the date of issuance of the Consideration Shares. 

On Closing, it is anticipated that each of Shawn Caldera and JP Perez will enter into consulting agreements with TGS pursuant to which they will serve the Company as Scholastic Esports Director and Scholastic Esports Manager respectively. 

The Acquisition is expected to constitute a “Reviewable Transaction” as defined in TSXV Policy 5.3 – Acquisitions and Dispositions of Non-Cash Assets and is therefore subject to the prior approval of the TSXV. No finder’s fees are payable in connection with the Acquisition. Following the Closing, Volcanic will become a wholly owned subsidiary of the Company. 

Completion of the Acquisition remains subject to a number of conditions, including: (i) the approval of the Acquisition by the shareholders of Volcanic, (ii) the completion of satisfactory due diligence, (iii) the approval of the boards of directors of the Company and Volcanic, (iv) the execution of the Definitive Agreement, (v) obtaining all required consents, waivers and approvals, including the approval of the TSXV, and (vi) other closing conditions customary for transactions of this nature. 

Disclaimer: TGS Esports is a communications client of Edge Investments. We have also purchased stock on the open market. 

  • Juwan Richards

    Juwan's focus is on the intersection of investing and media. Simply defined as a creative with an appreciation for curating content that audiences can both learn from and enjoy. As a buy-and-hold investor, Juwan is a trend-spotter and likes to invest in companies at the ground level. As an avid believer of Web 3.0, his strategy consists of finding companies with a unique competitive advantage and interpreting their market sentiment within the retail audience.

    View all posts

Leave a Comment

Get 30+ hours of analyst research directly in your inbox weekly. Sign-up today to stay on top of the market.