Game Digital (GMD) is aiming to scale up its competitive eSports business through a deal with sportswear specialist Sports Direct (SPD).
The video games seller wants to roll out more of its physical arenas under the BELONG brand allowing avid gamers to compete in tournaments and attend themed events.
Game plans to ‘capitalise on the increasing overlap between sports and eSports fans’ by launching arenas or Game retail stores in select Sports Direct branches.
It could be a successful combination for both parties with Sports Direct acquiring a 50% interest in intellectual property rights for BELONG for £3.5m, while Game will receive a loan of up to £55m.
The money will be used to accelerate the roll-out, covering costs for new venues and the development of the BELONG website.
Under the terms of the deal, Sports Direct will gain a 50% profit share from BELONG in specific venues.
Liberum analyst Adam Tomlinson says the transaction provides ‘significant support’ by accelerating Game’s transformation from a retailer exposed to the gaming console cycle into eSports.
Tomlinson argues the new arenas are anticipated to be larger and more profitable, with flexibility for the video games retailer to choose how it expands.
Shares in Game advanced 8.8% to 41.3p, while Sports Direct was broadly unmoved at 358.6p.
