The esports industry has found an ideal market for growth in Canada. These Canadian esports companies are leading the charge.
Canada’s role in the esports industry is on the rise. According to the Entertainment Software Association of Canada (ESAC), 23 million Canadians were considered gamers in 2020, and the gaming industry added C$4.5 billion to the country’s gross domestic product in 2019.
As a whole, the country’s esports industry and Canadian esports stocks are showing considerable magnitude and impact. In its research, ESAC found that 35 percent of adults and 29 percent of kids and teens engaged in esports in the 2019 to 2020 period. What’s more, an increasing number of Canadians are participating in esports as spectators, with 40 percent of gamers involved in game streaming.
“All game segments saw an increase in engagement and revenues as a result of the COVID-19 measures, but mobile gaming saw the biggest increase,” Newzoo said about the global games market in 2020. The firm’s market analysis shows that gaming revenues worldwide could surpass US$200 billion by 2023.
Esports investment is growing as well, spurred on by the diversification of revenue in the gaming sector. The addition of add ons, expansions, in-game purchases and monthly subscription services has led to multiple revenue streams for esports companies and their investors. The rise of live-streaming games and league tournaments are also key factors driving esports market growth.
While the US and Asian esports industries are among the largest worldwide, the impact of Canadian esports stocks and the country’s esports industry are far from insignificant.
“The Canadian capital markets have played a fundamental role in contributing to the global esports boom,” according to Evan Kubes, president and co-founder of MKM Group. “Similar to what happened in cannabis and blockchain, many esports companies — both internationally and domestically — are taking advantage of the CSE and TSXV, which afford easy accessibility to the public markets.”
Here the Investing News Network looks at the three top Canadian esports stocks based on market cap. The list below was generated using TradingView’s stock screener on May 19, 2021.
1. Enthusiast Gaming (TSX:EGLX)
Market cap: C$822.62 million; current share price: C$7.62
Founded in 2014, Enthusiast Gaming is a Canadian digital media company that is focused on building the largest gaming media platform. While the US is its biggest audience and revenue source, Enthusiast Gaming reaches more than 300 million gamers and esports fans on a monthly basis through its gaming communities across YouTube, as well as brands and gaming websites.
The company’s 2020 pro forma revenue came in at C$127.6 million, spread across media and content, subscriptions and esports and entertainment. Enthusiast Gaming had 122,000 subscribers at the time.
2. Score Media and Gaming (TSX:SCR)
Market cap: C$731.17 million; current share price: C$16.81
Sports media company Score Media and Gaming offers esports and gaming enthusiasts several platforms for engaging in their passion.
The company’s mobile sports application theScore delivers customizable news, scores, stats and notifications for various leagues and sports. theScore Esports produces and shares original video content pieces — such as highlights, interviews and features on high-profile teams, games and players — across its web and social platforms. The company also provides theScore Bet, a mobile sports betting platform that offers various pre-game and in-game markets and betting options.
Total revenue for the Canadian esports stock’s 2020 fiscal year was C$20.7 million compared to C$31.1 million for the same period the previous year. Score Media and Gaming attributed the decline to impacts to its sports calendar due to COVID-19.
3. Engine Media Holdings (TSXV:GAME)
Market cap: C$135.19 million; current share price: C$9.60
Engine Media Holdings, another Canadian esports stock, was formed after the combination of Torque Esports, Frankly and WinView. Its goal is to accelerate new, live, immersive esports and interactive gaming experiences for consumers through its partnerships with traditional and emerging media companies. Its clients have included more than 1,200 television, print and radio brands.
The company reported year-on-year revenue growth of 163 percent for its 2020 fiscal year. Its Q4 revenue came in at US$7.2 million, which according to Engine Media includes contributions from its three way merger in May 2020. It had a quarterly revenue exit run rate of over US$28 million.
This is an updated version of an article first published by the Investing News Network in 2019.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.