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- Shares in gaming tournament business Esports Mogul (ESH) slipped in the ASX today following the release of the company’s latest quarterly financial report
- The company spent around $1 million over the quarter as it revamps its business model, though it only made around $34,000 in customer receipts
- Mogul said the past year has reaffirmed that its previous business model is not financially viable and, as such, the company spent the quarter investing into its business to evolve and stay ahead of the eSports trend
- To do this, Mogul hired some key personnel some global communications, advertising and arts production businesses
- At the same time, Mogul launched a new business-to-business website targeting brands looking to get involved in the eSports scene
- Mogul helped run an eSports tournament for first-person shooter game Halo 5, sponsored by Kellogg’s, over the March quarter
- Nevertheless, while Mogul management said it is “extremely excited” about the future of the company, the market didn’t share the excitement
- Shares in ESH closed 7.69 per cent lower this afternoon at 1.2 cents each.
Shares in gaming tournament business Esports Mogul (ESH) slipped in the ASX today following the release of the company’s latest quarterly financial report.
The company highlighted around $1 million in net cash outflows as it revamps its business model for its eSports tournament management platform.
Mogul said 2020 reaffirmed that its previous business model just wasn’t working.
“A business model placing revenue generation solely on the shoulders of the gamer and organiser is not financially viable,” Mogul CEO Michael Rubinelli said.
“Today’s gamer and organiser have an expectation that tournaments remain free and accessible to all.”
In light of this, Michael said the company has been working to evolve and stay ahead of the trend.
A quarter of investment
Part of the company’s plans to evolve its business has been to make some key hires as it enhances its eSports tournament platform.
Mogul management said it hired personnel from global communications firm Omnicom, marketing and advertising business Crispin Porter Bogusky and arts production company Meow Wolf.
Meanwhile, Mogul launched a new business-to-business website to focus more on brands and businesses that are looking to get involved in the eSports market.
An example of this is snack and cereal business Kellogg’s sponsoring an eSports tournament for the popular first-person shooter game, Halo 5.
Mogul worked with U.S.-based Esport Arena to put the tournament on, which was advertised through Kellogg’s 4.2 million product packages and offered gamers a US$25,000 (around A$32,000) price.
ESH’s financial position
Mogul only made $34,000 in customer receipts over the quarter — not enough to offset the $1 million in operating expenses.
This took the company’s cash position to around $7 million worth of funding at the end of March.
Based on this rate of cash burn, Mogul can still continue to operate as it is for another 20 months without taking into account any revenue growth.
Nevertheless, while Mogul management said it is “extremely excited” about the future of the company and the eSports sector, it seems some investors didn’t want to stick around.
Shares in ESH closed 7.69 per cent lower this afternoon at 1.2 cents each. Mogul has a $45 million market cap.
