How a prominent B.C. family business created the biggest e-sports gaming network in North America

What the Aquilinis discovered was that e-sports had evolved from a niche hobby to a significant industry

February 3, 2020

Electronic sports, a competitive event involving video games that is often considered the province of millennials, has caught the attention of the Aquilinis, one of British Columbia’s most prominent business families.

In e-sports, competitors from different leagues or teams, often geographically-based similar to traditional sports leagues, compete with each other in video games such as Dota 2, Overwatch, Call of Duty, Madden NFL and Fortnite.

Millions of fans attend live events or watch on TV or online, often in real time. According to Influencer MarketingHub, there were 3,489 organized e-sports tournaments in 2018 across the world, featuring more than US$1.5 billion in prize money.

For the Aquilinis, it all began in August 2018 when the Rogers Arena in Vancouver, owned by the Aquilini Investment Group’s Canuck Sports and Entertainment, hosted the International Dota 2 Championships, the most lucrative e-sports tournament in the world.

Dota 2, a wildly popular multiplayer online video game whose official name is Defense of the Ancients 2, has more than 10 million active players worldwide. The championship featured US$25 million in prizes, with over US$11 million going to the winning team. The six-day event sold out the 20,000-seat venue and some 15 million viewers streamed the action online.

“It was eye-opening because we had no idea that fans would fill the arena for an entire week, and with a level of engagement that was amazing,” said Trent Caroll, the Vancouver-based COO of Canucks Sports & Entertainment, whose assets include the Vancouver Canucks in the National Hockey League, the Vancouver Warriors of the National Lacrosse League, and the Rogers Arena in which the teams play.

What the Aquilinis discovered was that e-sports had evolved from a niche hobby to a significant industry. According to Influencer MarketingHub, some 800,000 people had heard about the industry in 2015. By 2019, awareness rose to 1.57 billion globally.

The upshot was a boom in global audiences, which reached 380 million viewers in 2018 and is expected to grow to 557 million by 2021, with an annual growth rate of approximately 14 per cent. The hours that viewers spent watching e-sports rose from 1.3 billion hours in 2012 to 6.6 billion hours in 2018 — an increase of almost 1 billion annually.

Meanwhile, revenue increased by more than 30 per cent annually, rising from US$493 million in 2016 to US$906 million in 2018, with growth expected to reach US$1.6 billion by 2021.

What the Aquilinis also saw was an impressive fit with their sports and entertainment empire.

“Getting into esports and gaming was a unique opportunity that allowed Canuck Sports and Entertainment to be on the front end of a very dynamic environment that presented a real opportunity to transfer our experience in traditional sports environments,” Caroll said. “It also worked the other way, because we can transfer what we learn from our e-sports teams back to our traditional properties.”

E-sports, the Aquilinis realized, also speaks to younger target markets, with some 50 per cent of males aged 18 to 34 describing themselves as gamers.

“E-sports has a sexy feel and represents a convergence of arts, gaming, sports and media in a space where young people spend a lot of time,” says Toronto-based Robert Mason of Norton Rose Fulbright Canada LLP in Toronto, who with colleague Walied Soliman, led the legal team that took the Aquilinis into the e-sports realm.

In the space of 14 months, the Aquilinis, who control a diversified family business, completed a four-way e-sports merger between J55 Capital Corp., Enthusiast Gaming Holdings Inc., Luminosity Gaming Inc. and Aquilini GameCo Inc. that resulted in the formation of the publicly-traded e-sports and gaming media organization Enthusiast Gaming Holdings Inc. (EGLX), a Toronto-based media and technology company specializing in video game advertising, content, media and events.

In January, the Enthusiast stock graduated from the TSX Venture Exchange to the Toronto Stock Exchange. The company was trading just under $2 per share with a market cap of $101 million on Friday.

The company now boasts the largest gaming network in North America and the United Kingdom and one of the largest vertically integrated video game and e-sports companies in the world.

“The deal, which included two acquisitions, four financings, a reverse takeover and a go-public transaction was unique and the first deal of its kind for e-sports in Canada and perhaps in North America,” Mason said.

The company’s e-sports division, Luminosity Gaming, owns and manages seven professional e-sports teams including the Vancouver Titans in the Overwatch league and the Seattle Surge in the Call of Duty league. It has engaged a team of celebrity “global ambassadors”, including San Francisco 49ers cornerback Richard Sherman, hockey stars Max and Tie Domi, and Canadian rapper, singer, songwriter and record producer Tory Lanez.

EGLX’s event business owns and operates Canada’s largest gaming expo, Enthusiast Gaming Live Expo, and PG Connects, a leading global mobile games conference.

As it turns out, the Aquilinis aren’t the only big names who see a promising future in e-sports. Robert Kraft, owner of the New England Patriots; Ted Leonsis, owner of the Washington Capitals; basketball star Magic Johnson, and rappers Drake and Jay-Z are among the high-profile names who have invested in the industry.

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