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Business of Esports Minute 015 – Razer Gamer Gum, Guild Esports IPO, Skillz SPAC

A week of news covering the intersection of business and gaming / esports, all in about one minute – everything you need to know from the “profit of esports” himself.

015 – September 13, 2020

From the keyboard to the boardroom, this is the Business of Esports Minute! Every single week, I, Paul Dawalibi, the prophet of esports, will be bringing you my hottest takes from the week, basically everything you need to know about the business of esports all in about one minute. Let’s go.

This week, Razer made a big new product announcement with the release of gamer chewing gum. Razer’s new product will be sold under the brand name Respawn and supposedly helps to boost your focus and reaction time in games. While Razer claims that extensive amounts of R&D went into the development of Respawn gum, it’s likely that this is just a simple brand extension for the company, leveraging its affinity with the gamer audience. I really like that Razer continues to experiment with new product categories to sell into their gamer customer base, and have previously mentioned that they are a company to watch going forward. 

In more unfortunate news, the esports organization co-founded by David Beckham, Guild Esports, announced that they plan to list on the London Stock Exchange and hope to raise $26M in the planned IPO. The language in the press release makes it clear that they are looking to prey on investors who are less familiar with the intricacies of esports and make comparisons to the English Premier League, NBA and NFL that strike of hyperbole or a lack of understanding of the esports industry. What is most puzzling is how a company like Guild can raise tens of millions in the public markets at a valuation of roughly $50M when there is basically nothing there. Typically a publicly listed company meets a certain bar of quality – assets, revenue, IP, anything at all. Guild Esports has none of these things and sets a dangerous precedent as the chance of investors getting burned is virtually guaranteed. 

Finally, Skillz, a mobile esports platform, plans to go public via a SPAC. In 2017, Skillz was named the fastest growing company in America by Inc. Magazine. The transaction values Skillz at $3.5 billion, which is 6.3 times estimated 2022 revenue of $555 million. The company expects revenue of $225 million in fiscal 2020, and therefore should trade closer to 15 times their estimated 2020 revenue. While that multiple seems rich, Skillz has an ARPU that is almost 4 times higher than Zynga and the average user spends 62 minutes a day on Skillz, exceeding time spent on TikTok, Facebook, Youtube or Candy Crush. These kinds of numbers should give investors confidence that Skillz has unlocked significant value in the mobile esports space. 

For far more detailed insight and discussion into the business of esports, as well as the most exceptional line-up of guests, please tune in every week to the Business of Esports podcast and every Wednesday evening into the Business of Esports after-show livestream. Also make sure to follow us on Twitter @bizesports and on YouTube at The Business of Esports. 

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