Cineplex Entertainment buying into future of eSports

A Cineplex Odeon is pictured in North Vancouver, on May 15, 2012. (Jonathan Hayward / THE CANADIAN PRESS)

TORONTO -- The operator of Canada's largest chain of movie theatres is moving further into the world of competitive electronic gaming, announcing some US$15 million in investments on Thursday.

Cineplex Entertainment Inc. (TSX:CGX) will pay US$10 million to acquire the assets of WorldGaming, which has a platform used for tournaments and leagues for the competitive gaming community.

It will also invest a further US$5 million to created a new competitive gaming league that will operate and oversee future tournaments at Cineplex theatres across the country, with the first competitions beginning in October.

Cineplex CEO Ellis Jacob said the investment will help the company reach a younger demographic whose attention is being pulled away from its movie theatres by the wealth of available digital content.

He said the company wants to make its theatres a destination for all kinds of entertainment, and that the social aspects of competitive gaming make it a perfect fit for Cineplex.

"People want to be face to face with each other and compete, and other people want to watch them play," he said.

Jacob said competitive gaming, also known as eSports, could be a huge market in Canada, pointing to places such as South Korea and Japan where eSports events can sell out stadiums. Cineplex hopes one day that its eSports promotion can sell out the Air Canada Centre.

"It's very big phenomenon and I think that all that is needed in Canada is for a brand like ours to embrace it and work with other companies on promotion," he said.

Cineplex spokeswoman Pat Marshall said the gaming league will involve local tournaments, regional qualifiers and national tournaments for a variety of eSports titles. Details are expected to be announced in the coming weeks.

The worldwide eSports industry, buoyed by the popularity of titles such as League of Legends and Counter-Strike: Global Offensive, is worth around US$613 million, according to SuperData Research.

Advertisers salivate over the demographics of the gaming community, with Coca-Cola signing up to be a leading sponsor of Riot Games' League of Legends tournaments in the United States.

Difference Capital Financial Inc. (TSX:DCF), which is the majority investor in WG Ltd., said it will receive C$6.4 million for its stake. Its shares soared more than 27 per cent, or 16 cents, to closed at 75 cents on the Toronto Stock Exchange.

Cineplex shares rose 24 cents, or half a per cent, to $47.38.

Canaccord Genuity analyst Aravinda Galappatthige said Cineplex is smart to diversify, and that its small investment in competitive gaming could have big returns.

"There's very little money down, very little risk," he said. "You use your name and brand and reach to leverage in Canada on a trend that seems to be quite a phenomenon across the world."

Galappatthige said Cineplex has an opportunity to centralize the fragmented world of eSports promotion and fan base in Canada and increase visibility for competitive gaming.

"With a big name like Cineplex taking leadership, setting up a league and approaching it in a more structured way, you'll probably see more results," he said.

Sten Dragoti, who co-founded Windsor-based eSport Gaming Events in 2013, said the biggest challenge for the industry is being taken seriously by the large corporate sponsors that dominate traditional sports.

"They didn't grow up with this but they're starting to come around," he said.

Dragoti said he often has to explain to executives the importance and popularity of competitive gaming, using examples such as the US$18.5-million prize pool split between the winners at the International tournament for the game Dota II in August.

"You can't ignore that kind of money," he said. "I think eSports isn't just a fad, it's here to stay."