Share

Game Digital shares soar as it chases lucrative e-sports revenue

London - Game Digital, the seller of Nintendo, Xbox and PlayStation consoles, is shifting its focus to e-sports in a bid to tap into an increasingly lucrative industry. 

The push towards e-gaming comes as Game Digital posted a sales of £891.7m for the year to July 29, down 2.3% year on year. Shares in Game Digital, based in Basingstoke, England, rose as much as 42.13% early on Wednesday in London, the highest since listing in 2014.

Online gaming has become a fast growing and increasingly lucrative sport. In August the annual Dota 2 International event broke the record for the largest prize pot in e-sports, with Europe’s ‘Team Liquid’ winning the first place prize of $10.8m. Thousands of gamers watched live, while hundreds of thousands tuned in via Twitch, the video-game streaming app acquired by Amazon.com for close to $1bn in 2014.

Neil Campling, analyst at Northern Trust, pointed out in a recent note that the final golf major of the season - the US PGA - posted historically poor viewing figures and although the prize pool was the tournament’s highest, it was less than half the Dota 2 winnings. The PGA winner, Justin Thomas, took home $1.9m. Team Liquid’s winnings were shared between five players and their backroom staff.

Game Digital, historically a retailer selling consoles and computer games, has been struggling with the rise of online stores and what it has described as a “challenging trading environment." On June 20, its shares dropped 24% after it warned that annual sales growth would be below target.

However, the company has been focusing on reducing its retail footprint, and since late 2016 has been launching gaming hubs, where customers can play online games in-store, and take part in tournaments. In August the company revealed that Mike Ashley’s Sports Direct International had bought a 26% stake.

While focusing on e-sports and events, Game Digital is also reviewing strategic options for the Group’s digital enterprise activities, including Multiplay’s Digital division, which covers managed server hosting, augmented reality and digital marketing.

Game Digital acquired Multiplay for £20m in 2015. The new unit’s sales have increased almost 50% to £7.1m over the past year. Unlike the e-sports business, the Multiplay Digital division remains a separate unit.

"Game has a significant opportunity to re-shape its retail footprint and cost base over the coming year," said  Adam Tomlinson, analyst at Liberum, "which should help preserve cash and allow further investment to develop longer-term opportunities, including across its Events and e-sports division."

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:


We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.93
+0.0%
Rand - Pound
23.90
+0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.32
+0.1%
Rand - Yen
0.13
+0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders