Interview With CEO Grant Johnson
Question: Give us an overview of Esports Entertainment, of your company, the recent developments, and then talk to us about your platform.
Answer: Okay, well Esports Entertainment, we have launched what's referred to as a bet exchange platform. We're the first bet exchange in the esports sector. This is where, in a bet exchange platform the players bets against each other, instead of betting against the house. Because we've made that type of an arrangement, we've been very successful in attracting esport personalities, team owners, streamers to sign up as our affiliates. In fact, we have 111 affiliates signed up to date. So they will be marketing our exchange platform to their client base and their viewers. So that, that's, we're pretty excited about that of course, we've just launched that in March. The affiliate platform fully launched just last week.
Question: How big is the market opportunity for your platform?
Answer: Oh, the, well the esports fan base is growing is growing so quickly, the industry experts can't even keep ahead of it. Back in 2017, the the size of the market eclipsed 350 million in terms of fan base, and it's forecasted to go to 590 million in the next 2 years. So it's increasing tens of millions of people per quarter, which is a huge opportunity, and there's no sign of slowing down. So in terms of the market opportunity, you know, we are talking about an industry that's- nobody's ever seen an industry growing this fast before.
Question: And over the next twelve months, how many players do you believe will be using your platform?
Answer:Well in our initial projections, we we're looking for 50 thousand, we believe 50 thousand people will sign up and make deposits. Based on the early results in the last 90 days of over 55 teams signing up to promote our platform, we may find those numbers to be very conservative.
Question: Well how do you make money, what's the business model?
Answer: Well the business model is, we-we've the exchange, and the players bet against each other. Just like the business model in a poker room, where the poker room sets up the secure environment, makes sure that everybody's money is in the banks, makes sure that everybody is allowed to be in the room, and then we take a percentage from the win. So we don't take exposure in the transaction, like a traditional sports book would, and we don't take a position against the players like a traditional sports book would. So we just make sure that the regulatory environment is in place, and whoever wins it's definitely going to be a player, and they're definitely going to get paid.
Question: And what percentage do you take on the betting? How does that work?
Answer: Okay. We're, our model is that we take 5 percent off the win. Some of the jurisdictions that we operate in in Europe are higher tax jurisdictions. In the event that we are in a high tax jurisdiction, we have to pay the government tax of course, we could see that we need to take a higher amount of 10 percent from the win, but generally our take will be 5 percent.
Question: And are you comfortable with giving any revenue projections? 12, 24 months?
Answer: Well, what I can say that is if I stick to our initial projections, which as I mentioned may turn out to be quite conservative, our projections see us as getting revenue positive in the 18 to 24 month timeline. I like to make sure that I have some hard data from operations before I give some hard projections. So I'm sure we'll be talking frequently, and I'll be able to give you hard projections by the end of the calendar year. But right for now, we see us, ourselves, as being revenue positive by the end of next year.
Question: And how are you different or better than your competitors?
Answer: Well, there's several reasons. One, the exchange. All of our competitors offer a sports book model, and our research, we did 2 years of research deep dive into the esports sector, and what came back resoundingly, was that the esports people, the fan base, do not like the sports book model where they give their money to the house and then play against the house. And the house has to win the majority of the time. Keep in mind the average esport player or esport fan has post secondary education. So they're on average, have a higher educational level than the average sports fan. Just what the market shows us. So, that's the biggest differentiating factor. Second, we're the only esports company that's publicly traded, so we have the oversight of the FCC which shows transparency. These are the two main differentiating factors between us and our competitors, and this is why the affiliates are signing up with us at record numbers.
Question: And how does the recent Supreme Court decision on online gambling and gaming effect your business?
Answer: This is huge as it pertains to the US market in particular. Of course being a US listed public company, it's big for us. The reality is, it'll probably be 18 to 24 months before the regulatory environment is clear as to how we will proceed because esports betting will be managed the same way, and regulated the same way as traditional sports betting. So there's still a little bit of, well quite a bit of work to be done before that takes place. But what it does do, is it gives the confidence to be the marketplace in the United States that this is not an illegal or dirty word industry, this is a legal, regulated industry, and we will operate in a legal, regulated fashion. The US market clearly is huge, and from a stock standpoint, it should make our stock more attractive to US investors.
Question: What is the essential value proposition for investors today? Why should they own the stock?
Answer: Well, the simple fact of the matter of this is the fastest growing sector of the fastest growing industry. So the value proposition is we are the only public company in the sector. If somebody is interested in being involved in the gaming, gambling side of esports, which as I mentioned is the fastest growing section of the entertainment industry, we are not only their best option, we're their only option as this point in time. We also are adding a tournament play platform, which will be rolled out by the end of this calendar year. So we're not just a, the proverbial one trick pony. We are going to have 2 offerings. And the skill play platform, the tournament platform, will be available to American players by the end of this calendar year. So the value proposition is the ability for US investors to get in on a huge market now, instead of waiting until there's many competitors and the market's already well down the road. We're at launch.