Chicago, IL -- November 6, 2015 -- InvestorsHub NewsWire -- CMG
Holdings Group, Inc. (OTCQB:
CMGO) today announces that we continue to move towards our
vision of the future a streamlined holding company creating and
enhancing shareholder value.
Specifically, the Company has signed an agreement to spinout its
majority owned subsidiary, Good Gaming, Inc., into a publicly
traded entity currently operating as "HDS International Corp.
(HDSI/OTC)". The transaction is designed to allow Good Gaming to
achieve its potential as a standalone, pure play cash tournament
gaming platform, targeting the 200MM+ eSports players and
participants worldwide. These gamers represent the mass market of
amateurs yearning to compete for cash and prizes, both individually
and as team members, against other contestants with a goal of
honing their skills, elevating their play to professional leagues,
and profiting from the insatiable demand to participate in this
high growth, emerging paradigm of eSports.
Management believes the establishment of Good Gaming as its own
public entity better positions the business to raise substantial
capital, reignite growth, and achieve a significant enterprise
value based on recent transactions executed in the gaming vertical
by fantasy sports platforms, such as Fan Duel and Draft Kings,
which have commanded prices in excess of 1 Billion Dollars. Under
the transaction, as a first step, CMG has signed a strategic
expansion agreement, whereby current management of HDSI has
assigned its block of Series B Preferred shares to CMG, giving the
Company control and responsibility for the entity. All assets of
HDSI's SirenGPS business, including intellectual property, software
code, trademarks and customer lists, will be removed from HDSI,
resulting in the elimination of $6.5 million of seller notes,
several billion diluted shares upon potential conversion of those
notes and current assets and liabilities associated with the
SirenGPS business.
A new management team and Board will be formulated and
implemented over the next 10 business days, which will manage HDSI.
Paul Rauner, current CEO and Director of HDSI, will resign his
position after a brief transition period, with SirenGPS and its
employees retaining a small equity ownership in the public entity.
As a second step, after this transition period, HDSI will complete
an asset purchase of the Good Gaming platform, intellectual
property, software code, and other Company assets. Additionally,
CMG intends to cancel the proposed 130 reverse split previously
petitioned in HDSI's form 14c, and will amend that petition for a
new name and ticker change following the completion of the APA
later this month.
The Global Industry Problem
While the competitive gaming phenomenon has been well established
in Asia, it has now gained a tremendous economic boost by
establishing a foothold in the West. By 2013, professional gamers
were earning and competing for multimillion dollar prizes and
filling stadiums with spectators that traditional sporting events
typically dominated. By 2014, professional eSports had eclipsed
events like the MLB World Series, the NCAA championship, and NBA
game 7 viewership totals. The speed with which professional eSports
has been growing is rapid, but leaves a void for the millions of
gamers that fall between the professional level and the casual
gamer. An Analogy: imagine having the Super bowl, Stanley Cup or
World Series with no correlating collegiate or high school level
athletics programs. There is one major difference in this analogy
though: the number of potential gamers is over 100 times larger
than all the eligible players in traditional sports due to the
nature of the Internet and its worldwide connectivity and access.
The addressable market is immense, to the tune of billions of
dollars of potential annual spend.
The Good Gaming Solution
Good Gaming is a multigame, multiconsole platform that hosts
amateur and semiprofessional tournaments around the world. Good
Gaming provides access to the same kind of fun and challenges that
professional eSports players enjoy, but at the amateur gamer level.
In addition, by building the infrastructure from the ground up for
the "Middle Class" of gaming, Good Gaming's platform will be an
additional revenue stream for game publishers, advertisers, and
third party vendors that are anticipated to drive billions of
dollars of economic activity in the future.
Good Gaming's technology is designed with the goal of serving
serious gamers who do not have the means or capabilities to compete
at a professional level but desire to achieve this status. It is
designed to scale as demand increases and open new avenues of
competition and interaction for the competitive gaming community.
The technology has the unique ability to create a first ever cross
platform, multigame economic structure for gamers to barter and
trade their time and skills. The technology is also designed to
address forthcoming changes that have not made their way from Asia
to North America yet.
After hosting tournaments last winter with Activision Blizzard's
"Hearthstone: Heroes of Warcraft," Good Gaming has established a
foothold in the market with one of the world's largest publishers.
Having been featured on Activision Blizzard's game launcher (which
had never been done before), the tournaments generated 300,000
hits, 27,000 submissions of user credentials and credit card
information, and 1,250+ entries based on USA demand alone,
surpassing an internal goal of 1,000 participants. Management
believes this is an overwhelming confirmation that serious gamers
who do not have the means or ability to compete in eSports at a
professional level have the desire to compete at an amateur level.
As evidenced by this tournament, amateur gamers are willing to pay
for that experience and have shown great enthusiasm for the
concepts and products we are building. With sufficient time and
resources, Good Gaming can become the dominant provider for the
200MM+ competitive gamers worldwide.
The Market Opportunity
Research company Newzoo expects the size of the eSports market to
more than double from $194MM in 2014 to $465MM in 2017. Today,
about a third of that revenue comes from advertisers. Most of the
remaining revenue comes from direct investments from game
publishers, which recoup hosting expenses through game sales.
Newzoo estimates that as the eSports market matures, companies will
buy more ads, while more networks like Amazon's Twitch will pay for
broadcast rights. This could cause the revenue mix of the eSports
industry to shift closer to traditional sports, which generated 57%
of its revenue from sponsorships and media rights last year.
Still, the growth of the industry should not solely be measured
in advertising potential or media rights revenue. That is because
the events and their streams are potent forms of advertising that
are tough to quantify. Between 2012-2014, the number of eSports
viewers worldwide surged from 58MM to 89MM, an annual growth rate
of 21%. A total of 205MM people either watched an eSport stream or
actively participated last year.
For publishers, these events generate much more publicity per
dollar than traditional ads since they convince more spectators to
buy or continue playing the featured games. For Activision
Blizzard, hosting eSports events can boost the longevity of aging
core franchises like Call of Duty, which still generates a large
percentage of the publisher's revenue, over a decade after the
game's first release.
To put the skyrocketing of eSports viewership into perspective,
a recent League of Legends Season 3 World Championship garnered
32MM viewers, surpassing both the BCS National Championship and
Game 7 of the NBA Finals by approximately 7MM viewers, with more
than double the viewership of Major League Baseball's World Series.
Further, last week's professional League of Legends tournament
generated 33MM viewers, far more than the NFL's telecast from
London's Wembley Stadium, which generated approximately 15MM
viewers.
By 2018 eSports is expected to eclipse all viewership records
establishing its dominance worldwide over all forms of traditional
sports, including football, baseball, soccer, tennis, and hockey.
Similarly, it is projected that by 2018 eSports will surpass the
movie and music industry in revenue.
- eSports viewers watch events over 19x a month with a session
length of 2.2 hours which is 63% higher than traditional media
channels.
- eSports is a key marketing vehicle and revenue driver for
online game publishers. Companies like Activision, Riot Games,
Wargaming, Valve and Ubisoft are all placing bets on competitive
gaming in 2015 and beyond.
- eSports has been popular in Asia, particularly in Korea, for
the last 10 years. Due to the increased popularity of eSports in
the West, growth is now accelerating both in terms of audience
(CAGR +20%) and revenues (CAGR +29%).
Management Commentary
Said Glenn Laken, CEO of CMG Holdings:
Since inception we have invested thousands of man hours and
hundreds of thousands of dollars into the refinement and
development of Good Gaming. Based on last year's initial success
and recent conversations we have had with alliance partners in the
publishing world, we believe the time for Good Gaming to stand
alone is now. Good Gaming successfully ran the largest eSports
tournament of its kind last winter. After exceeding our internal
goals by a large margin on the first major worldwide tournament,
Good Gaming reviewed the significant feedback it received from the
gaming community before creating the next generation of the Good
Gaming Platform. For Good Gaming, launches of cash tournaments for
major titles is expected to create a substantial business,
generating recurring subscription revenues, transactional revenues
for events, advertising revenues, ecommerce revenues, and other
revenue streams in the communications and social networking markets
that can be monetized quickly. Altogether, these opportunities will
create a highly differentiated, unique ecosystem and a focal point
for activity for eSports players around the world. We are currently
in discussions with institutional and high net worth investors to
capitalize this business, and will not close the transaction until
adequate funding commitments have been secured. We intend to launch
an initial series of tournaments with our partners within 45-60
days, just in time for the holidays, which should generate dramatic
interest and activity in our business. Looking ahead, we intend to
fully automate the platform to enable largescale tournaments of
10,000-100,000 participants, sign additional publishers, bring the
business into the mobile world, and develop B2B modules that will
allow businesses and institutions to launch their own tournaments
for competition at the local, regional and/or national level. Think
of local bars hosting eSports competitions with other
establishments, no different than today's system for competition
for billiards or darts. Imagine intercollegiate competitions, both
within conferences, between conferences, and for national titles. I
envision a future where March Madness can be followed by April
Madness, allowing amateur gamers to experience the thrill of
competition just as collegiate athletes compete in the real world.
The NFL can be followed by the EFL -- "Electronic Football League",
the NBA by the "EBA", etc. The permutations are simply endless, and
we are ready to deliver on that vision today. The future is bright
for Good Gaming and CMG, and simply put, I have never been more
excited about the opportunities facing our family of companies and
our loyal employees. With regard to our plans to cancel the HDSI
proposed reverse split, we believe it is in the best interests of
our new shareholders at HDSI. I do not think HDSI shareholders
should be punished for their loyalty to the former HDSI business,
while promises made to HDSI by counterparties did not materialize.
Upon the successful launch of Good Gaming 2.0, hosting several
major tournaments and achievement of positive cash flow, we may
revisit this issue in order to uplist the stock to a major
exchange. Once the Good Gaming spinout transaction has been closed,
we intend to host an investor conference call and roadshow in order
to further deliver our message and outline our plans to our
constituents and shareholders.
About CMG Holdings Group, Inc. CMG Holdings Group, Inc. is a
holding company aimed at creating shareholder value by investing in
special situations businesses. The Company is headquartered in
Chicago, IL and intends to build significant scope and scale
through a series of mergers and acquisitions. Safe Harbor
Statement: CMGO cautions that statements made in press releases
constitute forward-looking statements, and make no guarantees of
future performances and actual results/developments may differ
materially from projections in forward-looking statements.
Forward-looking statements are based on estimates and opinions of
management at the time statements are made.
Contact Information
Investor Relations
CMG Holdings Group, Inc.
(773) 698-6047