In this segment, we discuss esports team Ninjas in Pyjamas merging with a Chinese esports team.
The Business Of Esports brings you news, debates, and all the information you need to know about the gaming sector, the world’s fastest-growing market. With Paul “The Profit” Dawalibi leading the charge, and a variety of special guests, BoE TV is the only place to find insider information on the esports industry!
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Paul Dawalibi 57:31
All right, let’s, this was kind of a silly one. Let’s move on to something more serious. Let’s talk about Ninjas in Pyjamas. Like actually Ninjas in Pyjamas, not the gaming, not the esports. org. No, I’m just kidding. eSports powerhouse Ninjas in Pyjamas, agrees to merge with Chinese team. And so Ninjas in Pyjamas, which is based in Sweden, very well known eSports team, they’ve merged with a team called ESV5 , I have not heard of this team. And they they stream on. It’s a it’s an Esports team. And they’re merging with this counterpart to form a new entity, which will be listed in the US. They’re saying by year end, which is pretty pretty soon, if it’s going to be listed on NASDAQ. They’re saying it’ll be the first eSports team in the US. And the combined revenue will be about $61 million for 2021. neither party commented. So I don’t know how true this rumor is. But it seems like it’s coming from reputable sources. I guess my question for you guys is, is this a path we’re going to see where a lot of Esports teams needing liquidity are going to see public markets as a serious option. And but to get there, they need scale. And so you’re gonna see a ton of consolidation. Like it’s weird to me to see Ninjas in Pyjamas, which is, you know, top tier eSports org
Jimmy Mondal 59:36
used to be at least
Paul Dawalibi 59:37
Yeah, merge with. At least I have never heard of them. I’m not saying I’m up to speed on every eSports Oregon in China, but like, I had never heard of this org. Is this just sort of a way to get scale to go public? Like what is the what is the play here?
William Collis 59:55
I mean, am I allowed to say I called this there’s like there’s almost zero incentive. In the team market not to be aggregating because scale is like there’s there’s nothing to stop scale aggregation from reducing costs and driving revenues. And in fact, there’s every incentive you read the book literally read The Book of Esports. Like, I don’t think it’s anything to do with getting to the public markets. I think this is just like, why not? You have teams with some teams in North America, some teams in China, I think what you’re gonna discover is this Chinese team is a lot bigger than we realize we’re just not up on all the Chinese proteins, because there’s regional differentiation, just like I can’t tell you the biggest, you know, sports teams in China, right? I can’t tell you the biggest eSports teams in China. They put this together. It’s a bigger org with more reach, you know what I mean? They did it.
Jeff Cohen 1:00:42
William Collis 1:00:43
And, and I think the apartment market is a nice bonus
Jeff Cohen 1:00:46
question for you. What’s the scale? The scale makes perfect sense to me, if you’re in the same physical location, right, you can share facilities share, you know, a chef, or whatever these eSports teams have. But if one’s in China, ones in Sweden, you know, I don’t necessarily see as much like cost savings or synergy. I mean, I guess where, where am I? missing?
William Collis 1:01:11
Jimmy Mondal 1:01:11
I think it’s Sorry, go ahead.
William Collis 1:01:12
No you go Jimmy,
Jimmy Mondal 1:01:14
I was just gonna say like, I think it’s an opportunity to reach an entirely new market and, NIP, specifically, like Ninjas in Pyjamas used to be huge world championship level teams, super reputable, but in the past five years, haven’t done anything anywhere, in any game. And so maybe it’s a way for them to keep the brand alive. You know, at some point, like, Hey, we have a powerful brand, semi powerful, let’s merge with this team. Maybe it gives them access to our audience, which is massive, but kind of waning and still revitalizes our brand is the thing that I want to Well, I’m most curious about his naming rights and the rest, like how is it going to go for an IP in the future is is the end of one of the most legacy teams in eSports? Or what like, what does this mean for the future of the space?
Paul Dawalibi 1:02:00
So just to be clear, NIP has teams in historically Counter Strike was their biggest it’s what their most famous for? They have teams in VALORANT, Rainbow Six and FIFA? Okay, well, ESV5, has competes in League of Legends and Honor of Kings. So there’s no overlap in the teams that they field. I just, I’m sort of not buying the reasons beyond. We need scale to go public. And we need to go public to get to access capital.
Jeff Cohen 1:02:37
William Collis 1:02:38
Well, I mean, like, let’s go over like all the benefits of adding scale, right. So now I have a larger audience, which I can sell my sponsorships and my merchandise. And however else I have my revenue drivers to write, I have incremental audience across language. And I can take a game where I was only exposing, say, in English language or in Western markets, and now I can add equivalent exposure in Asian markets, right? I can cross sell programs. So now I can have whereas before I can only do North American sponsorship or European sponsored machmood Global sponsor. So there’s huge synergies on the revenue side, right? On the cost side, like let’s say I’m ESV5 or whatever there and I’m not in VALORANT. Right. Do I need to start a VALORANT? team? It’s a relevant game, probably. Right? Like so in certain certain sense. It’s eliminating costs through duplication again, I mean, like, I can keep going, but read the book, like I really, I’m
Jeff Cohen 1:03:31
more of an opportunity cost than an actual.
William Collis 1:03:34
Well, it’ll cost you duplication, right, like eliminating an opportunity cost is still eliminating your cost. Like that’s why it’s white as costing it. It’s not just opportunity, right? Like,
Jimmy Baratta 1:03:46
Jeff Cohen 1:03:47
Jimmy Mondal 1:03:49
Jimmy Baratta 1:03:53
I think it might make sense on paper. But I just disagree that those synergies in sponsorship, for example, really overlap that much. The Chinese audience is not worth what an American audiences to the right sponsor. I took this, I have mixed reviews here because I felt this way for a long time. And I took this type of issue deal, what have you to a few different top tier one orgs. And they all rejected it for the same reason that their sponsors didn’t care about an audience overseas that they couldn’t sell to. Right. So in essence, yes, maybe Coca Cola on a global level might have an interest in multi multiple different areas. But the sponsor that you’re talking to that sponsors, your North American team, under the Coca Cola umbrella is very different than the Coca Cola that sponsors a Chinese team under that Coca Cola umbrella. So, you know, again, mixed reviews because I love tapping into I love eSports becoming global, I love teams becoming global and having presences across different markets, but I think they’re so segregated that in name they might be, they might be one thing but in practice, again, the audiences are so different different. The sponsors are difference. So, again, mixed reviews for me, I don’t really see a lot of value here, just because I’ve had personal failures with it.
Paul Dawalibi 1:05:08
It sort of fits though the narrative of like, Ninjas has not really done much in the last few years. This may be truly not desperations too strong of a word, but it’s like, Hey, we need to do something. What, you know, we’re maybe tapped out from our, you know, investor base, what what can we do? Well, going public is sexy. Lots of lots of opportunity there. And they may have seen this as an obvious path. It’s a good story. I think it’s a good NASDAQ public market story better than it is, I think, a good business decision.
Jeff Cohen 1:05:44
I, I really hope that this isn’t the first eSports team that goes public, because that’ll just be another disappointing eSports public company. There’s so many better ones. Like I know, I guess there’s
Paul Dawalibi 1:05:58
But in the US,
Jeff Cohen 1:05:58
Canada that just got off and no one on the yet no one on the US exchange. So I just, I hope that the first one is one that really has something to bring to the table. Not to, you know, slander Ninjas in Pyjamas, but it like you like we all kind of agreed it’s a little bit of a tired brand and maybe a little bit more nostalgic than then really popular currently. And then you add a Chinese brand like, to me, it just has the recipe of like a deal that people will get somewhat excited for. And then very quickly, like the buzz will fade and it’ll be another disappointing eSports listing, which we don’t need right now.
Paul Dawalibi 1:06:37
And I think if they do manage to go public, like I actually do think they can probably make this work right. Because if they have access to sufficient enough capital through their public, you know, vehicle. No reason why Ninjas in Pyjamas couldn’t go by other eSports orgs in the US. Right. And and there there’s more synergy. There’s more obvious I think synergy there and cost savings there. Oh, I don’t know. Yeah. Right. Maybe
Jimmy Mondal 1:07:05
they turn them into a winning team for once like,
Paul Dawalibi 1:07:07
Yeah, true. Sign your sign great players.
Jeff Cohen 1:07:10
Don’t get me wrong. I’m bullish on an Esports. Team going public. I just
Jimmy Mondal 1:07:13
No. Right, right.
Jeff Cohen 1:07:14
better if it was one that
Jimmy Mondal 1:07:15
has some sort of drawl ready?
Jeff Cohen 1:07:18
Paul Dawalibi 1:07:18
Like we want to see 100 Thieves or FaZe. I
Jeff Cohen 1:07:21
think 100 Thieves would do really well being public.
Jimmy Mondal 1:07:23
Jeff Cohen 1:07:24
Jimmy Mondal 1:07:24
William Collis 1:07:25
I want to do it. Is there anything in the $61 million revenue number? Because that is pretty that’s combined, right? William? Yeah. But everyone is sort of saying Oh, like eSports teams don’t earn money. And I think no one is holding up Ninjas in Pyjamas is like, the ultimate, you know, like, you know, value and, and, you know, I don’t know what ESV5 is bring to the table, but I’m looking at that 61 million. I’m like, hey, that’s a business. You know what I mean?
Paul Dawalibi 1:07:53
William Collis 1:07:56
I think it might be time for us to rethink some of the expectations around team’s ability to generate revenues and I think as we see more things like I think look there already I think Astralis Group has some interesting financials. I think I forgot the other ones. They’re public, but I think like as you look into them, like the revenue numbers are more interesting than you would think. Right.
Paul Dawalibi 1:08:16
Fred says Mischief mentioned on stream that Tips and he have suggested they’re taking OTK public that’s interesting. It’s not like at that point. What are they taking public? It’s literally more just like a stream team. Right? Like it’s not a
Jimmy Mondal 1:08:32
Paul Dawalibi 1:08:33
They’re not competing, right? oT I don’t think TK competes in any games. I don’t think they own any franchise spots. I would be curious if that if they could take literally just an aggregation of streamers and influencers. Public Trent says EEG and Game are already public tickers. Don’t they? Both own teams?
Jimmy Mondal 1:08:54
Technically. Yeah, right.
Paul Dawalibi 1:08:55
EEG does not. game. Does didn’t GameSquare by this GameSquare? Didn’t they buy the assets of biocity?
Jeff Cohen 1:09:07
In that they bought or game just bought? Some? What’s the one in tech? The jerry jones
Paul Dawalibi 1:09:15
Jimmy Mondal 1:09:15
William Collis 1:09:17
Yeah. Yeah. Isn’t that technically the first public on the NASDAQ? Right?
Jeff Cohen 1:09:22
In Canada In Canada?
William Collis 1:09:24
Paul Dawalibi 1:09:25
Oh, you could argue Enthusiast was the first because they own Luminosity. And they’re not that when they went they up listed to NASDAQ.
Jeff Cohen 1:09:32
It’s funny the amount of like so when I first started looking at Enthusiast, it’s probably almost two years ago at this point, like a big part of their investor story was that they own these teams. And it’s amazing to see when you look at their deck now you have to like, literally try to find them talking about that. And I think they do a good job. Like when Adrian was on the podcast, I think he did a good job explaining why they own those teams and how they view them as like building communities. But it’s funny that it’s not really a A big part of their investor story. And I think, to their credit, I think it makes sense what they’re doing. Oh, game is Engine Media and realize that Engine Media, do they own teams?
Paul Dawalibi 1:10:11
I don’t think they own teams Tork doesn’t feel any teams, do they?
Jimmy Mondal 1:10:16
I’m not familiar with engineering.
Jeff Cohen 1:10:18
I don’t think they just went public. They just went on to NASDAQ. I think last week or something.
Paul Dawalibi 1:10:23
Yeah, yeah. Another Toronto based company. Robert says, Why go public when you can sell your name to a crypto exchange for 210 million. Robert, that’s that’s
Jeff Cohen 1:10:35
Paul Dawalibi 1:10:35
one of the smartest comments today. That’s so true.
Lindsay Poss 1:10:39
Paul Dawalibi 1:10:40
Why all the headaches of a public listing and public reporting and public governance and all these kinds of headaches when you just go to rename yourself to TSM FTX? I’m surprised we haven’t seen on this note, guys. Interesting. I’m surprised we haven’t seen more naming deals coming fast and furious.
William Collis 1:11:03
It probably is. It’s just delayed because I think there was a fear of if it’s acceptable or not. And now that they’re I think there are two in market because wasn’t there one that got out a little bit
Jeff Cohen 1:11:13
The General NRG?
Jimmy Mondal 1:11:15
Yeah. Dignitas QNTMPAY.
William Collis 1:11:18
Paul Dawalibi 1:11:19
William Collis 1:11:19
Yeah. Good. Good one, Jimmy, like i think i think it’s just like, the floodgates are opening and they’re just the first ones have come out and it’s only been like two weeks and like we’re all of them. I think they’re all getting in now. You know?