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.
028 – December 20, 2020
In this week’s Business of Esports minute, Roblox IPO Delay, In-Person Esports, and Game Dev Acquisitions.
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, Roblox announced they would be delaying their much anticipated IPO. Roblox officials decided that the market debut of Airbnb and DoorDash made it too difficult to determine the right price for the company’s shares. They announced that the listing would be delayed until early next year. Let me translate for you. Roblox realized that markets are so strong and IPO demand so high, that they would probably leave a lot of money on the table even if they priced their stock at the high end of the range. They can’t just re-price and keep the same IPO date as institutional investors have been sold on a specific range. Thus, they are delaying the IPO to be able to restructure and re-price the IPO to get a higher valuation and more dollars in their coffers. I think it’s a huge risk and the wrong move. There’s no guarantee that markets will be as strong next year. Trying to time this perfectly may be a decision they regret, or it may work out.
This week also saw the release of an interesting study that claimed that 77% of North American gamers are keen to attend in-person esports events ASAP. Only 17% of those surveyed have actually been to an event and less than 40% of host venues have hosted esports events. Perhaps most surprising is that 79% of surveyed event venues said they are interested in hosting competitive gaming. That means 21% don’t care about making extra money? While interesting, I believe we can’t infer too much from this study as the pandemic has created a lot of pent up demand for anything in person, not just esports events.
Finally, we continue to see acquisitions of game developers heating up. Tencent bought the makers of Warframe this week for $1.5B in cash, and EA outbid Take-Two Interactive to acquire Codemasters for $1.2B. These are huge numbers, but successful game studios are becoming valuable targets, and as the number of independent large outfits dwindles, the prices will inevitably keep going up. Despite the high valuations, both of these acquisitions are likely to go down in history as good buys.
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