Once its SPAC deal closes in Q1 of 2022, FaZe Clan will become the world’s first publicly traded esports organization. Let’s talk about where the industry goes from here.
NASDAQ, meet esports. One of competitive gaming’s premier brands is gearing up to become a publicly-traded company by the middle of 2022.
FaZe Clan, a lifestyle and media platform company focused on esports, gaming, and youth culture, is merging with B. Riley Principal 150 Merger Corp. in a $1 billion SPAC (special-purpose acquisition company) deal, a process that allows businesses to go public without going through the traditional IPO process.
If you’re into esports, then you’re probably already familiar with FaZe Clan and the company’s franchise team Atlanta FaZe, which competes professionally in the Call of Duty League. The gaming brand also has non-franchise teams that compete in Fornite, Counter-Strike : Global Offensive (CS:GO), PlayerUnknown’s Battlegrounds (PUBG), and other notable titles. The organization’s roster consists of 89 players, each of whom boast strong followings across YouTube, Twitch, and beyond.
The merger deal is expected to close in the first quarter of 2022, and when it does, FaZe Clan will become the first publicly traded esports franchise unicorn on the market.
That’s why this isn’t your typical M&A deal, one that comes at a time in which the overall esports industry is poised to reach a $1.6 billion valuation by 2023.
Due to the COVID-19 pandemic, venture capital investments in the esports industry have been pretty skimpy since last spring, but not much changed for esports players — outside of the fact that they started playing from home as opposed to arenas full of rabid fans. Notably, esports viewership didn’t take a dip, as viewers were able to tune in online during isolation uninterrupted.
On the flipside, live streaming platforms are doing better than ever with viewers watching more than 18.5 billion hours of content on Twitch, which is up from the 8.3 billion hours watched on the platform in 2019. YouTube Gaming is in second place with more than 3.8 billion hours of gaming content viewed this year.
Since its inception in 2010, FaZe Clan has raised roughly $118 million through private investment, culminating with the big leap to public status. But the company has big plans to continue growing after realizing its SPAC dreams.
The implications for the broader esports industry promise to be broad.
“The business combination with FaZe Clan represents a tremendous opportunity to invest in the future of media and entertainment,” said BRPM CEO and CFO Dan Shribman. “With unmatched social media reach and Gen Z engagement, and the opportunity to meaningfully expand its global multi-platform presence across content, gaming, entertainment, consumer products, and the metaverse, we believe FaZe Clan is a compelling investment with the potential to create significant value.”
FaZe Clan first announced the merger news in an October press release, stating that it has entered into a definitive merger agreement with the blank-check company. The combined entity, which will eventually change its name to FaZe Holdings Inc., will be valued at approximately $1 billion, including $275 million in cash on hand.
FaZe additionally reported that it could receive up to $291 million to fund its growth as it plans to expand its digital platform and business strategies.
“We are thrilled to announce this important milestone of FaZe Clan’s plans to enter the public market. In our short history, we have evolved from a disruptive content generator to one of the world’s most decorated and successful esports franchises, and now into one of the younger generations’ most recognized and followed brands globally. We believe FaZe Clan is becoming the voice of youth culture, a brand that sits at the nexus of content, gaming, entertainment and lifestyle in the digital-native world,” said FaZe Clan CEO Lee Trink. “This transaction will provide us capital and access to the public markets, which will help us accelerate the expansion of our multi-platform and monetization strategy. We are so grateful to the millions of loyal fans who have helped us take FaZe Clan to the next level, without whom this would not have been possible.”
Getting to the next level is a goal as old as gaming. But what FaZe Clan is in the process of doing — redefining the terms and conventions of what’s possible in the industry it helped put on the map — leaps off the screen like no one’s managed to do before.
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Trink will remain CEO of the following the close of the merger, and he will become chairman of the board as well. Expect to see the new company on the NASDAQ under the symbol $FAZE by the middle of next year.
With the expansion of competitive esports competitions and the growing industry in general, FaZe Clan’s move to go public is a coup. The gaming brand attracts a young audience that’s especially vocal about interacting with its products and personalities on a deeper level. If the SPAC deal ultimately archives the desired result, it almost certainly opens the door for for more esports organizations to go public in the future.
But what does esports investing even look like? The majority of esports revenue today comes from advertising deals, sponsorships, ticket sales, and media rights, so crashing the gates of the NASDAQ is a game-changer not just in spirit, but literally. There are already some big hitters in the gaming world on the NASDAQ already, too, including Zynga, Nvidia, Activision Blizzard, and Take-Two Interactive, but if you’re interested in taking the unprecedented plunge and buying esports stock, you’re about to get your very first chance.
No matter what happens from today forward, FaZe Clan’s attempt to enter the public market will change the esports industry forever. We’ll be tuned in to see what happens with this deal. But even now, it’s a safe bet that both friends and competitors alike will be taking notes and responding accordingly.
