Shares in Animoca Brands have soared by 75pc this year as investors embrace the company’s growth strategy
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Special Report: The company’s latest strategic acquisition leaves it well positioned for increased exposure to a global network of 60 million gamers.
For mobile and blockchain gaming pioneer Animoca Brands (ASX: AB1), momentum in its global distribution strategy continues to build.
Its latest step is the acquisition of a 100 per cent interest in Gamma Innovations (Gamma) in a US$350,000 deal.
Gamma is the proprietor of the GammaNow computing engine, which lets users leverage the idle processing power in their computer to mine alternative tokens and generate points that can be redeemed for in-game content. Gamma collects a fee of half of all ether mined in this way.
Shares in Animoca Brands shot higher by 16.7 per cent to close at 17.5 cents, bringing its year-to-date gain to 75 per cent.
A key feature of the Gamma acquisition is that it establishes a commercial link for Animoca Brands with Gamma’s partner company, Razer.
Listed on the Hong Kong stock exchange, Razer is a renowned multinational gaming hardware company with offices in Singapore and San Francisco. If you’re into gaming, you either already own Razer products – or you’d like to.
Via a licensing agreement, Gamma white labeled its software to Razer to develop Razer SoftMiner, which like GammaNow uses the idle computing power of its users to mine for ether by solving blockchain algorithms. The RazerSoftMiner platform has driven almost 700,000 downloads of GammaNow.
As part of the licensing agreement, Gamma gets 50 per cent of the ether mined, while users receive Razer Silver loyalty credits to redeem rewards such as Razer products, games, and vouchers on the Razer platform.
Importantly from a strategic perspective, through this acquisition Animoca Brands gains the potential to access Razer’s user base of more than 60 million.
Co-founder and chairman Yat Siu said the company was looking forward to working with both Gamma and Razer to build out its network of engaged gamers and PC users.
That same network also represents “millions of potential candidates for our blockchain gaming products,” Siu said.
In addition to the $US350k acquisition price, the deal terms include a potential earn-out of up to US$2.5m if Gamma meets the following performance hurdles:
– cumulative revenue of $US5m over a three-year period; and
– net profit margin of at least five per cent over that period.
Animoca Brands can also commit a further $350,000 at its discretion to finance costs associated with Gamma’s operations, research & development and potential customer acquisition fees.
Gamma CEO Gabriel Schllinger said the deal gives the company exposure to a broader market for its data-mining software across Animoca Brands’ portfolio of market-leading brands and blockchain games including Crazy Defense Heroes and F1 Delta Time.
Razer co-founder and chief executive Min-Liang Tan said his company was “thrilled that Gamma is joining the dynamic and innovative Animoca Brands family, and we look forward to a fruitful collaboration with both companies”.