Online gaming is a fast-growing market attracting more and more investors — but it’s early days for ASX gamer stocks — with only one making money at the moment.

Only mobile gamer Animoca Brands (ASX:AB1) has reported significant customer receipts this past quarter. And though the loot boxes are piling up, its share price is down 16 per cent this quarter.

eSports Mogul (ASX:ESH) is signing up gamers — it now has 300,000 — but it’s still trying to work out how to monetise. Its shares are up 38 per cent this quarter however.

HT&E (ASX:HT1) — the former APN News & Media which has a nascent eSports gaming unit called Gfinity — is also seeing its shares rise though gaming revenue is yet to flow.

eSports Mogul and HT&E hope competitive video gaming will evolve into a lucrative spectator sport.

“eSports is on track to be a $US1.5 billion industry by 2020 as it emulates the business models of major league sports, complete with sponsorships, advertising, media rights, ticket sales and merchandise,” Morgan Stanley said in a January research note.

Other game publishers work towards a “software-as-a-service” businesss model — away from single sales to recurring-revenue models.

They’re building on subscriptions, in-game purchases and franchises like Animoca’s Crazy Defense Heroes.

ASX Code Company Sales Mar quarter Sales Dec quarter Three-month price change Price Apr 30 Market Cap
HT1 HT&E (Gfinity gaming division) gaming not broken out gaming not broken out 0.392330383481 2.36 713.6M
KNM KNEOMEDIA $94,000 $8000 -0.425 0.069 38.5M
AB1 ANIMOCA BRANDS $3.4m $934,000 -0.157142857143 0.059 31.7M
ESH ESPORTS MOGUL $1000 0 0.375 0.022 21.2M
ICI ICANDY INTERACTIVE $298,000 $170,000 -0.64375 0.057 18.0M
EM1 EMERGE GAMING 0 0 -0.181818181818 0.018 11.2M
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Animoca money maker

Animoca looks like it’s throwing off cash everywhere.

But it has slashed its headcount in Hong Kong by 40, bringing staff costs down to just under $1 million.

This quarter it did make $3.4 million in receipts from games like CryptoKitties in China — the blockchain phenomena that began taking over the world earlier this year — and Crazy Defense Heroes.

The latter — a tower defence and card-collecting mobile game — was downloaded 260,000 times in its first week, generating $202,000.

Gaming the news

eSports’ latest quarterly cashflow statement and its accompanying activities report make very different reading.

eSports reported its online gaming platform Mogul Arena had hit an all-time high of 300,000 users. Monthly competitions were being launched in Asia and one of the biggest e-games in the world — League of Legends — was now live on the platform.

But the March cashflow statement shows the gamer banked only $7000 in customer receipts for the quarter. While it has $1.4 million to play with, eSports is planning to spend half that this quarter as it further invests in the market.

Is it a share price chart or one of eSport Mogul’s games? (ASX:ESH)

While eSports Mogul has a big audience, it’s still working on monetising those 300,000 users.

Right now users compete for free to win a $50,000 prize pool playing games such as first-person shooter CS:GO and real-time strategy Dota 2.

The company says it’s been focusing on finding and keeping users over the last quarter while it works on monetisation strategies — and an expansion into Latin America by July.

The sale of this month of German-based esports company Challengeme Esports netted $280,000 up front which it says will keep everything ticking over until that strategy is finalised.

The deal also included a $45,000 payment deferred for two years and $140,000 of shares in US-based Unikrn Inc.

Hitting the major league in eSports

Emerge Gaming (ASX:EM1) raised $5 million to buy privately held eSports play Gaming Battle Ground.

There’s not much going on in its accounts yet — a cash burn of $22,000 and a pre-raise bank balance of $29,000 was all that could be found in there.

But they say the new Arcade X subscription platform has already attracted MTN South Africa (and crucially its 31 million subscribers).

They’ve done a profit-sharing agreement with MTN and will be able to market to those users.

HT&E (ASX:HT1) – formerly known as APN News and Media – has plans to launch a national competitive gaming league with founding teams from most major cities.

Gaming the school system

KNeoMedia (ASX:KNM) follows a different model — making educational games targeted towards special education students in the US.

Its flagship game KneoWorld is set in a futuristic world where students take part in numeracy, literacy, science, arts and memory tasks through a gaming setting.

Feedback is sent to teachers to monitor performance and allow for further targeting.

KNeoMedia had a rapid ramp-up from the December quarter’s $8000 in receipts to last quarter’s $94,000.

They have $3 million in cash and reckon they can get their cash burn right down to $450,000 this quarter, as they eye off extra cash and partnerships in the US.

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