While many have suffered in industry and business due to the COVID-19 pandemic, it seemed according to a number of different news reports, that the esports industry had escaped relatively unscathed. However, despite a number of positive stories surrounding the industry, there are plenty of businesses that have struggled during these uncertain and concerning times.
COVID-led Downturn
One such company to experience the full force of the COVID-led downturn is the esports entertainment business Allied Esports Entertainment. For the second quarter of 2020, which is when the pandemic really began to take hold, recently published accounts reveal that the company generated just $4.6 million for the period ending June 30.
That is a drop of 37.6% from the same period in 2019, when the company generated a much healthier $7.3 million.
In-person revenues for the same quarter in 2020 were also decimated, dropping to just $700,000, a decline of 78% from the 2019 figures of $3.2 million recorded in 2019. Part of the issue was that the Allied Sports Entertainment HyperX Esports Arena was largely shut to customers throughout the period, only reopening to customers on June 25.
However, there was more positive news in terms of multiplatform content and interactive services, which saw an increase of 59% and 34% respectively, combining to generate a total of $3.9 million for the company. This money came in from 78 different events, 60 of which were held online, and 18 of which were third-party events in both North American and Europe.
Adding all these figures together, this meant that Allied Esports Entertainment made a net loss of $10.9 million in quarter 2 of 2020, compared to a net loss of $2.8 million in the same period a year before.
“Extremely Challenging Environment”
Speaking about the figures, CEO Frank Ng explained in a press release that “Throughout the second quarter, we continued to operate in an extremely challenging environment arising from the ongoing Covid-19 pandemic.”
“The shelter-in-place orders that extended for the majority of the second quarter resulted in the temporary shut-down of the in-person pillar of our business activities, which negatively affected our second-quarter financial performance.”
DraftKings Figures Also Hit
Another company that has struggled in Q2 of 2020 is DraftKings after it reported a larger-than-anticipated loss on Friday, which saw stocks in the company slump by 10%.
Despite performing better than many analysts expected, DraftKings reported a hefty loss of $161.4 million in Q2 of 2020, much more than the $28.11 million loss that the company reported in the same quarter in 2019.
While the company has worked hard to engage fans with Fantasy sports betting for a number of different sports, this has not offset the loss in income from traditional betting across major betting markets in the United States, notably the NBA, MLB, and NHL., while two big College Football organisations, Big Ten and Pac-12 have cancelled their autumn 2020 seasons.
On a more positive note, the company reckons that it still expects to achieve growth of between 22 and 37% during the second half of the year and its future remains strong with the company having $1.2 billion in cash and no debt on its balance sheet.
So it goes to show that while companies like Luckbox have seen their plans accelerated due to a boom time during the Covid-19 pandemic, not all companies can rely on such rosy figures.
Featured Image Credits: Anton Gvozdikov / Shutterstock.com
