Frank Ng, chief executive of Allied Esports Entertainment Inc., says “pop-up” live video gaming competition in shopping malls may be a temporary solution to the disruption caused by the pandemic.
Allied Esports (Nasdaq: AESE), which runs facilities and tournaments for video game enthusiasts, last year developed a strategy to move some live events into fixed locations in shopping malls owned by Brookfield Property Partners LP and Simon Property Group Inc.
Those plans are now on hold and pop-ups may be a stopgap fix. Details, including exact locations at the mall sites, are still to be worked out.
“There are some thoughts with certain partners that they may want to do a pop-up instead of a full-blown location,” Ng told the Business Journal on Aug. 12. “We’re still exploring those options with them right now.”
Gaming Hype
Allied Esports said it intends to proceed with the plans for full-blown locations, and the pause is meant to let participants figure out how and when to roll out the mall program as they seek to capitalize on the “hype” surrounding gaming at shopping malls.
The malls themselves have hit hard times as shoppers were kept away during the crisis.
Meanwhile, Allied Esports is focusing on more online events.
“Our refocus on online actually brings a lot more new opportunity that we didn’t have before because our focus was different,” Ng said.
The company said Aug. 10 that total revenue in the second quarter decreased 38% to $4.6 million from $7.3 million in the same period in 2019, largely due to the COVID-19 disruptions.
Setbacks include the temporary shutdown of its flagship HyperX arena in Las Vegas, leading to large revenue losses in the second quarter that ended June 30. The arena has reopened but with restrictions due to safety concerns.
World Poker
Both the temporary shuttering of the arena and the cancellation or postponement in-person events at the company’s World Poker Tour led to a 78% drop in in-person revenue to $700,000 in the second quarter, compared to the same period in 2019.
Still, the company said WPT and its online activity formed a “big part of our success story of Q2.”
“We started doing a lot more online events,” Ng said, though the company is also eager to get back to more in-person activities filled with player buzz.
Allied Esports Chief Financial Officer Tony Hung said the company’s $10.9 million loss in the second quarter was “a little misleading” because it included two one-time, non-cash expenses.
He emphasized that Allied Esports was able to refinance $14 million of debt and $3.7 million of accrued interest, giving the company more flexibility.
The $1.3 million adjusted loss for EBITDA—earnings before interest, taxes, depreciation and amortization—in the second quarter was the best quarterly result for that category since the company went public a year ago, Hung told the Business Journal.
Among its various online initiatives, Allied Esports on Aug. 3 announced a new North American online tournament format and schedule featuring month-long series and single day pop-up events across various game titles.
