On November 23rd, Enthusiast Gaming Holdings Inc. announced it had acquired Outplayed Inc., which is the parent company of U.GG. This deal is approximately worth $44 million in cash and stocks. Earnout incentives could bring an additional $12 million to the deal.
U.GG is one of the world’s largest League of Legends fan communities. The website is expected to generate roughly $8 million in revenues and $3 million in net operating incomes in 2022.
“We are excited to join Enthusiast Gaming as we continue building a go-to destination for League of Legends fans,” said Shinggo Lu, Founder of U.GG. “Alan and I would like to thank the Sixers Innovation Lab for being an integral part of our success to date. We are ready for the next part of our entrepreneurial journey alongside some of the brightest players in gaming and esports.”
Enthusiast Gaming Holdings Inc. was founded in 2014. The organization is currently based in Toronto, Canada.
The Profit‘s Take:
This is a big content acquisition by them. Enthusiast is clearly trying to corner the gaming communities market. I don’t think $44 million is too steep of an asking price. Content is king right now, and everybody knows it. The reality is that the viewers you bring in are worth something. I feel like they could have easily paid ten times this price, and I STILL would have been okay with it. Enthusiast will benefit from these kinds of synergies and crossovers in the long run. Considering the deals we have seen in the past, this seems downright reasonable. I’m pretty sure the stock price went up following this announcement, which basically paid for the deal shortly after it was revealed. Enthusiast is getting up to scale. They are like the Tencent of gaming content communities. This feels like a good consolidation opportunity. When you have access to massive amounts of capital and a team that is successfully executing these types of acquisitions, then I wouldn’t be surprised to see five or six more deals like this from them over the coming months. There are enough communities out there for Enthusiast Gaming to make a ton of moves. We just don’t know what their rollout strategy is yet.
(All information was provided by Enthusiast Gaming, Google, and Yahoo! Finance)
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