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Gaming Streams Outdraw Most Cable Programs as Nearly 9 Million Watch Friday Fortnite
More than 8.8 million unique viewers live streamed Week 4 of Friday Fortnite, an invite-only tournament for prize money hosted by well-known streamers (see: Ninja, Keemstar) and sponsored by UMG; making it the most watched gaming competition to date. To put that figure in perspective, 5.3 million people tuned into coverage of the 1st Round of 2018 NFL Draft, the 2017 MLB LCS averaged 6.3 million viewers, 7.9 million people watched the season finale of AMC’s “The Walking Dead” and the 2nd most watched NBA Conference Finals in 16 years drew just over 9 million fans. Moving forward, it’s expected that esports/gaming competition will continue to regularly outdraw traditional television programming; Statista projects the number of gaming viewers worldwide to reach 743 million people by 2019, up +22% from 609 million in 2016.
Howie Long-Short: Back in March, we wrote about Fortnite experiencing a “cultural moment”; Drake (rapper), JuJu Smith-Schuster (Steelers WR), Travis Scott (rapper) and Ninja (a pro gamer) set the all-time, non-tournament, record for concurrent viewers on a single individual’s Twitch channel (628,000, previous record 388,000) as they streamed themselves playing the game between 1-5a EST.
Both the live streaming video platform and the popular online survival game (45 million players) have only grown in popularity since that early morning in mid-March. Twitch now boasts of 3.2 million broadcasters (+60% since ‘17), with 49% of all broadcasts (less than 1% existed in Sept. ’17) on the platform built around “Fortnite” content. That’s a noteworthy stat, as no other game has controlled more than 40% of Twitch channels dating back to 2016. Of course, it’s not just Twitch benefiting from the Fortnite craze; the game now also “holds the record for the most video game-related uploads in a single month on YouTube.”
Fortnite was developed by Epic Games, a privately-held company that Tencent (TCEHY) maintains a 40% stake in. TCEHY reported in May that Q1 ’18 net profit rose 61% YoY (to $3.6 billion) on $11.5 billion in revenue (+48% YoY), with mobile (revenue +68% YoY) gaming and video streaming (revenue +75%) driving the growth. PC gaming revenues were flat, but that’s mostly indicative of impressive Q1 ’17 figures and the fact the company has yet to monetize “PlayerUnknown’s Battlegrounds” or Fortnite in China. Tencent plans to launch the games in the country in the coming months (see: upside). It’s worth pointing out that TCEHY is Asia’s 2nd most valuable publicly traded entity. As for Ninja, he’s making at least $500,000/mo. from subscription fees, game sales, brand deals and donations on Twitch.
Fan Marino: Epic Games has invested $100 million to fund Fortnite tournament prize pools, with the competition set to debut later this year; so, interest surrounding the last-man-standing, “battle royale” game is only going to increase. At $100 million, the prize pool is more than 4x greater than the 2nd largest sum ever offered in a competitive gaming prize pool, which was $23 million for DotA 2’s 2017 esports tournament. Of course, $100 million is just 1/3 of a single month’s revenue for Fortnite – the game generated $296 million in April, up a staggering 134% since February.
Yankees Seek to Re-Acquire YES Network, Hold Buyback Option
The New York Yankees have expressed interested in re-acquiring the 80% of the YES Network controlled by 21st Century Fox (FOXA), if FOXA is to proceed with the sale of its film and TV assets (including 22 RSNs). The team reportedly holds a buyback option in the event the network (the most valued/viewed RSN among FOXA lot) goes up for sale. Last week, we wrote that Comcast (CMCSA) had submitted a $65 billion all-cash offer for 21st Century Fox’s (FOXA) assets that trumped the $52.4 billion all-stock offer that The Walt Disney Company (DIS) placed in December; DIS is expected to submit a counter bid. Yankee Global Enterprises, the holding company that owns the baseball club and NYCFC, controls the remaining 20% of YES.
Howie Long-Short: FOXA initially purchased a 49% stake in the YES Network for $1.862 billion in 2012. In 2014, the company acquired an additional 31% at roughly the same $3.8 billion valuation. The 1st place Yankees are drawing the network’s highest ratings since ‘12 and YES also controls the rights to broadcast both Brooklyn Nets and NYCFC games, so it’s certainly not unreasonable to expect FOXA to sell the asset at a valuation north of $4 billion. This means the team would be re-acquiring the network at a loss. That may not be of concern for the franchise though, as they likely value the ability to own/distribute their content with the recent proliferation of direct to consumer platforms/services.
According to Moody’s Investor Service, if Comcast were to acquire FOXA assets the combined entity would carry +/- $170 billion in pro-forma debt; more than every company in the world not named AT&T/Time Warner (which just completed a $85 billion merger).
Fan Marino: Back in April, Forbes released its rankings of the most valuable Major League Baseball teams. The Yankees topped the list with a $4 billion valuation, making them the 2nd most valuable team in all of sports; behind only the Dallas Cowboys ($4.2 billion). The team generated $619 million in revenue last year, 96.5% more than the league average ($315 million). Forbes has the NYY valued at +/- 6.5x revenue, slightly higher than what the Houston Rockets sold for in 2017; for comparison purposes, the Carolina Panthers recently sold for less than 6x revenue. I continue to maintain that David Tepper got a good deal.
The Yankees have signed the PBP voice of the YES Network (for Yankee games) to a 3-year extension (network option for 2 more years) worth more than $1 million/year. The deal makes Michael Kay the highest paid local broadcaster in MLB. Kay takes home a higher annual salary than some of the team’s biggest stars; Luis Severino, Gary Sanchez and Aaron Judge will make $604K, $620K and $622K respectively this season.
Fun Fact: The value of the NYY has compounded 15% annually since George Steinbrenner group bought the team for $8.8 million in 1973.
What is JohnWallStreet?
JohnWallStreet, located at the intersection of sports and finance, is a destination for the educated sports fan.
While we won’t be publishing “hot takes” on LeBron’s relative greatness to Jordan, we will be offering up the most relevant sports related business news, in easily digestible bites, with commentary from both the sports money and sports fanatic perspectives.
We’ll cover publicly traded professional teams & stadiums (MSG, RCI, BATRA, MANU), television networks (DIS, FOXA, CMCSA, CBS, TWX, MSGN), apparel & footwear companies (NKE, UAA, ADDYY, FL, LULU), equipment companies (GOLF, ELY, FIT), ticketing companies (EBAY, LYV) content and facilities providers (CHDN, DVD, ISCA,TRK, LMCA). If it trades on Wall Street, and has a sports angle, it’s in our wheel house.
Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Securities & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star, blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.