‘All options are on the table’: Why Version1 is seeking a merger with another esports company

By Alexander Lee

As esports winter sets in, another esports organization – Version1 – is beginning to explore alternative paths forward, including a merger with another company in the space.

The mounting recession threatens many growing industries, but esports is in particular trouble due to the industry’s overreliance on brand partnership dollars to stay afloat. As brands like BMW sever their ties with esports teams in favor of a focus on more targeted partnerships with individual influencers, beleaguered esports orgs are starting to realize that the entire industry might need to be rebuilt from the ground up.

More dominoes began to fall last week, when prominent esports org CLG laid off the bulk of its staff before announcing a merger with its fellow North American esports organization NRG. (The companies declined to share specific terms about the deal, but announced that CLG owner Madison Square Garden Sports would become a “major shareholder” in NRG moving forward.)

For embattled orgs like CLG, M&A is simply a logical path forward, allowing some of the company’s most valuable assets — namely, its “League of Legends” roster and its large social following — to continue on. NRG has already absorbed (and renamed) CLG’s Twitter account, adding nearly 400,000 new followers to its own social numbers for inclusion in potential pitch decks or partner activations. Prior to the merger, NRG boasted a total follower count of about 8 million, and CLG of roughly 800,000, according to the gaming and esports data platform GEEIQ. Now, those numbers have been combined.

Recent news makes it clear that CLG will be far from the last esports organization to pursue such a merger. As of today, the esports company Version1, which operates competitive teams in titles such as “Call of Duty” and “Rocket League,” is also exploring alternative options for its future, viewing a merger with another org as its primary target.

Other large esports organizations whose potential buying power could rival NRG’s include 100 Thieves, Team Liquid and Cloud9; any organizations that look to acquire Version1 would likely be organizations that don’t already have a presence in Activision Blizzard’s “Call of Duty” League.

To learn more about the reasoning behind the company’s strategic shift, Digiday reached out to Version1 COO Brett Diamond for a Q&A. Diamond told Digiday that Version1 has already “had several productive conversations” with potential acquisition partners over the past few weeks, but declined to share specific details about the deals in the works.

This interview has been lightly edited and condensed for clarity.

What’s happening with Version1?

We’ve started the process to explore options for the future of the organization. The focus currently is on pursuing a merger with another org that we feel aligns with our view and our ownership group’s view of the esports industry. We think that’s the appropriate step, given what’s going on in the industry as a whole. But it is important to our ownership group that they see a bright future for esports and want to be a part of that and …read more

Source:: Digiday