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.
038 – February 28, 2021
In this week’s Business of Esports Minute: HP Buys HyperX, $500M Stadium, and Shopify Esports.
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, HP announced their plans to purchase gaming peripherals manufacturer and Kingston subsidiary HyperX for $425M. Without any details on HyperX’s financials, it’s hard to say if this is a good buy for HP. All of the big PC manufacturers have their hands in gaming. HP has the OMEN brand. Lenovo has Legion. Dell has Alienware. What’s common to all three is none have a good peripherals / accessories business. It’s mostly low quality products they bundle with their PCs. HP is potentially creating a distinct competitive advantage for themselves by beefing up their peripherals business. The big question for me though is why would Kingston sell? They’re a $10B revenue company so they probably don’t need the cash. And they have their hands in gaming with other products (like SSDs). Why carve out a high-growth business at this stage?
Populous, a global design firm, and OverActive Media announced this week their plans to build a $500M arena in downtown Toronto. The arena will be used for entertainment shows and to host esports events. The management at OverActive Media has 2 big problems in their Activision Blizzard franchises. They’ve been completely unable to do anything positive with them and have essentially failed as an esports company. Announcing a very cool looking stadium and pivoting to “entertainment” definitely helps to change the narrative around their failures. While the stadium looks very cool and will surely be a fun place to attend events, the numbers here don’t make sense. 7000 seats is too few to attract any major talent or event. Let’s face it. League won’t be holding Worlds there. $500M is also very expensive for only 7000 seats. While I might be a customer of this venue, it’s ill-conceived and has weak management behind it. I would stay far away as an investor.
Finally, ecommerce platform Shopify unveiled their own esports org, the Shopify Rebellion. The name is clever as Shopify’s customers are direct competitors (or rebels in this case) fighting against Amazon’s dominance. Shopify has hired a few StarCraft II pros, as the company’s founder is a long-time Starcraft fan. This is great marketing for Shopify, at very low cost, and surely makes the company’s CEO happy getting to play in a space he loves.
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