The esports market’s three big players

As we prepare for the International Casino Exhibition (ICE) 2024, iGB brings you a comprehensive analysis of the key developments in the gambling and esports sectors since last year’s event. This series aims to equip you with the insights needed for navigating this dynamic landscape.

The esports industry has experienced a remarkable resurgence since 2020, settling into a competitive framework that prominently features three principal players: Entain, Esports Entertainment Group (EEG), and Rivalry. This article will explore the contrasting fortunes of these companies throughout 2023, particularly highlighting how Rivalry has emerged as a leader in the sector.

Entain and Esports Entertainment Group: A Year of Mixed Fortunes

Entain and Unikrn launched ambitious initiatives in early 2023, with a vision for global expansion that was set in motion with the relaunch of Unikrn in December 2022. This vibrant rebranding was expected to catapult the company towards increased market share.

However, the anticipated momentum has faltered; nearly a year post-relaunch, progress has been minimal. In a recent communication to iGB, Entain disclosed its decision to scale back direct-to-consumer operations under the Unikrn banner, signifying a significant shift in strategy aimed at regaining focus and profitability.

Meanwhile, Esports Entertainment Group has faced formidable challenges over the same period. After expressing serious doubts about its financial viability in mid-2022, EEG struggled to recover, complicating its efforts to maintain a foothold in the competitive esports market. The sale of its Bethard online casino and sportsbook for €9.5 million in February illustrates the company’s difficulties in realigning its operational focus.

Despite a widening net loss, EEG’s CEO remains optimistic about a potential resurgence in 2024, but substantive changes will be critical to ensuring the company’s survival and future growth.

Rivalry: A Bright Spot in a Challenging Landscape

In stark contrast, Rivalry has not only filled the void left by Entain and EEG but also surpassed expectations in terms of growth and innovation. The Toronto-based operator’s recent financing round of £5.9 million drew significant attention, with key stakeholders like Pinnacle noting its potential to redefine the esports betting landscape.

Rivalry has consistently exceeded revenue forecasts, benefiting from a targeted approach that resonates with younger demographics. A striking statistic reveals that approximately 80% of its user base is under the age of 30, indicating a strong alignment with the Gen Z and millennial markets. This demographic focus has been accentuated by marketing strategies that incorporate trending internet culture, influencers, and a relatable brand voice.

The Profit Challenge: A Hurdle for Rivalry’s Continued Success

Despite its success in revenue generation, Rivalry is grappling with the challenge of achieving profitability. Its latest earnings report revealed a net loss in Q3, even while it recorded an impressive revenue of $8.7 million (£6.9 million/€7.9 million). The company’s comprehensive loss deepened, highlighting the pressing need for effective cost management strategies to accompany revenue growth.

Increased operational expenses and unfavorable exchange rate impacts have hampered the company’s profit margins, resulting in a comprehensive loss for Q3 of $6.0 million, slightly up from $5.6 million the previous year. Co-founder and CEO Steven Salz acknowledged these challenges but expressed confidence in Rivalry’s strategic direction and resilient performance amidst a turbulent capital market environment. His optimism suggests that the company is poised for further growth as it looks towards Q4 and beyond.

Looking ahead, Rivalry’s ability to navigate its current challenges while capitalizing on its robust growth metrics will be pivotal for sustaining its competitive edge in the evolving esports betting landscape. The coming year will undoubtedly test its strategies, but stakeholders are keenly watching to see how this brand continues to innovate and engage its core audience.