What AdWords and AdSense have done for Alphabet’s (NASDAQ:GOOG) $656-billion market valuation, a little-known company’s in-game prizing platform could do for brands that have been on a shoot-and-miss trend with the world’s 2.6 billion video gamers.
Brands and products haven’t effectively harnessed the power of advertising to players - one of the biggest and most engaged audiences the world has ever seen.
The gaming market is set to top $108-billion in revenues this year (Newzoo) and a small company is looking to revolutionize advertising in the gaming industry.
The little-known company is Versus Systems Inc. (CSE:VS; OTC:VRSSF), and it’s offering brands a relevant way to access the 2.6 billion people who play PC, console, and mobile games—driving engagement for brands and game developers, while allowing players to play the games they love for real prizes.
Versus’ prizing and promotions platform allows game developers and brands to come together to offer prize-based matches to players, all integrated directly into games.
It’s a rare triple-win for the gaming industry:
- For gamers, it means no more annoying pop-ups, takeovers, or banner ads. It means relevant prizes, gift cards and discounts.
- For brands, it means pure, targeted brand engagement using technology that matches prizes to players, encouraging them to buy more.
- For developers, it means a new advertising revenue stream, and gamers now have more incentives to play longer, and more frequently.
Even better, Versus is protecting its platform with patent filings, which they’ve been doing since 2014.
Patents are essential to the valuation of technology companies. AdWords/AdSense likely represents some 90 percent of the value of giants like Google/Alphabet. That’s because they managed to create a mechanism that integrates everything you search for into advertising.
There’s an immediate revenue driver for Versus: The company recently signed a groundbreaking deal to provide in-game prizing to 704Games, which has an exclusive license to produce video games for NASCAR, the biggest spectator sport in America.
With an online game advertising market projected to reach some $7 billion by 2019 (Statista.com), and over $10 billion annually within five years, if the gaming industry gets it right this time with advertising, it could be worth much more.
Gen-Xers and Millennials were born to game, and Versus was born to bring brands to gamers—and it’s already moving at NASCAR speed.
#1 In-Game Advertising Worth $10 Billion A Year In The Next Five Years
In-game advertising is projected to be worth over $10 billion a year in the next five years, according to the Entertainment Software Association (“ESA “) and KPCB.
Research and Markets estimates that the global video games advertising market will grow nearly 14 percent by 2020, with a boost in female gamers driving much of it.
Video games are already a $100-billion industry that’s growing steadily. In two decades it’s multiplied 26 times.. The market is expected to reach $108.9 billion this year according to a Newzoo Market Intelligence report—a 7.8 percent increase over 2016.
Pokémon Go became a mobile cultural phenomenon overnight last year, and virtual reality systems reached the mass market. This year, mobile apps should take 42 percent of the $108.9 billion referenced in the above chart. Virtual reality games will be an entirely different market segment by 2020, when they are expected to account for $10 billion and nearly 9 percent of the market, according to Digi-Capital research.
This year, digital game revenues are expected to account for $94.4 billion of the global gaming market.
It’s a terrific market for Versus’ interactive media advertising.
- 2.6 billion people play video games worldwide, according to the ESA
- Americans together spend over 50 million hours a day immersed in games
- 1/3 of women surveyed between 20 and 45 have played a video game in the last 24 hours This represents a massive, highly-engaged, very desirable audience that could be worth multi-billions to advertisers all on its own.
But gaming is only one segment of the interactive market Versus targets: Versus is planning to bring the prizing platform to virtual reality, augmented reality, and streaming media in the near future.
- Twitch.tv has 10 million daily streamers broadcasting
- eSports has 161 million viewers per month
- Over 43 million people watched the LCS (League of Legends) finals last year—more than everyone who watched game 7 of the 2016 MLB World Series and all six games of the NHL Stanley Cup Finals combined.
Giant corporations and their brands could all benefit from this. Everyone from Google and Facebook to online retail behemoths Amazon and Walmart could benefit from Versus’ sophisticated system. So, too, could top gaming companies like Activision Blizzard (NYSE:ATVI), Take-Two Interactive Software (NYSE:TTWO), or Tencent (HKG: 0700).
#2 Triple Win For The Gaming Industry
Gamers get prizes. Brands and game developers get engagement. Versus shares revenues.
Americans taken together are already spending 50 million hours a day gaming, but if they were rewarded for doing it,they could conceivably play even more. This is the value-add for gamers that Versus provides; supported by research.
In their research, Versus (CSE:VS; OTC:VRSSF) used media and psychology experts from Yale, Stanford, and UCLA to conduct studies and surveys of thousands of players and consumers, and the data is clear: players will play longer and more often when real prizing is a part of the gaming reward feedback loop. Engagement increases when the stakes are real. Players feel better about prizes that they earn than they do about commercials or free samples.
Women are expected to be major growth drivers. Surveys show that one third of women between 20-45 have played a video game recently—representing a massive market with huge purchasing power. Unlocking brands, coupons, and gift cards for playing mobile games could be a multi-billion-dollar opportunity for that demographic alone.
So gamers get what they want in terms of both fun and prizes, and providing those prizes benefits both brands and game developers/publishers.
For brands, it’s about the exposure you get from real engagement. And there’s plenty of secondary exposure, too. The Versus study suggests that players who win prizes are more likely to share their experience online on Facebook, Snapchat, Twitter, and Instagram—providing authentic earned media for brands.
RockStar Energy Drink has already signed on with Versus; players will compete in-game for exclusive access to Rockstar events, apparel and branded products. Also on board: Han Cholo, the wildly popular retailer of handmade, pop-culture-inspired apparel, whose fans include Kendrick Lamar, Brad Pitt, Miley Cyrus and Snoop Dogg. Gaming accessories designer, developer and manufacturer, Tier 1 Accessories, is another Versus partner, targeting global outreach.
Game developers benefit, too, because they get even more engagement from their gamers, and they get a new revenue stream: Versus splits revenues from prizes 50/50 with developers.
More Fortune 500 companies sponsor NASCAR than any other sport. That means that all those brands will have new ways to engage with gamers through Versus’s collaboration with 704Games.
#3 Bringing Advertising to The Gaming Industry
The platform is fast, flexible, and scalable—opening the gaming world to all kinds of brands from the world’s largest beverage companies to local and niche advertisers. No more annoying popups, no more banner ads, no more pulling the player out of the experience.
Big brands don’t have to spend millions on one-off deals that may or may not work, and smaller brands don’t have to dream of one day reaching the most engaged audience on earth.
It’s all in the unique dashboard. Brands can easily upload prizes into the Versus dashboard—anything from digital goods to gift cards, to event and movie tickets, to haircare, skincare, snacks, energy drinks, and apparel. Those prizes can then be deployed into Versus-enabled games.
The Versus system makes it easy to create campaigns based on time, location, and inventory, and because each game appeals to a unique demographic, working with game developers on specific games will allow brands to reach the exact players that the brand seeks.
Versus also removes the burden of compliance weighing down developers and publishers. The unique system takes care of player verification and dynamic regulatory compliance for in-game prizing.
With Versus, developers can focus on what they do best—making games. And brands are just a few easy clicks away from engaging a huge audience with relevant advertising.
#4 Free To Play, Sponsored By Brands
Versus’ primary business model is ‘free to play, sponsored by brands’. Under the Versus model, Versus will get paid on a per-prize or per-coupon code basis for every prize and/or coupon distributed on the system. Developers also see a major upside with incremental revenue streams and added engagement, because Versus splits the prize revenue with the game developer.
This is how it works:
Prizes can be anything from downloadable content to consumer products, including physical goods and merchandise discounts. A single publisher can mean millions of transactions, when you consider that games like Grand Theft Auto have sold 35 million units.
Versus will integrate into more NASCAR video game titles in 2018, and will add many more products and brands to the platform as new games launch.
But there’s a goldmine of data here, too. Versus collects information that could be valuable to brands and products. Take Rockstar, for instance. They usually don’t know who’s buying their drinks… or why, or even when. With Versus, they know everything. They know where you were when you won the prize they offered, what you were doing when you redeemed your prize, what flavor you like and what prize you wanted.
This is huge data on the marketing playing field—and a hidden potential value for Versus.
It’s also building a powerful IP portfolio. Since 2014, Versus has been filing patents, which are pending, which in the digital era are the foundations of some of the world’s biggest companies. Again, think of major technology companies—all built on strategic patent protection.
Versus has filed U.S. and international patents covering dozens of claims for systems and methods to:
#5 This Is The Next Evolution In Gaming
This is an exciting story, and we’ve only seen the beginning.
At the outset, Versus will launch NASCAR Heat mobile in Q!, 2018.
With NASCAR game developer 704Games, Versus’ debut is with an outstanding partner, , appealing to the biggest brands.
Smart investors realize the next stage of the gaming industry is here. It makes games more fun, advertising more effective, and is expected to turn players into even bigger buyers. It’s rare to find an evolutionary step in this industry that makes every participant in this market happy.
Millennial Esports Corp. (TSX.V:GAME) is a Toronto based gaming and digital media company which provides a multitude of solutions for all things relating to e-sports. The company produces media covering e-sports, event management, and even broadcasting. As the voice of the e-sports community in Canada, Millennial has a leg up on the competition.
With an expected YOY growth of 43%, esports are taking off in a big way and Millennial is looking to take full advantage of it. Savvy investors would be wise to follow this trend, as it is only sure to grow in momentum.
The Descartes Systems Group Inc. (TSX: DSG) (commonly referred to as Descartes) is a Canadian multinational technology company specializing in logistics software, supply chain management software, and cloud-based services for logistics businesses. The company is making waves in the tech industry with its futuristic products and visionary leadership.
As a key stock in Canada’s tech boom, Descartes Systems is a smart choice for investors. The company has a huge market cap of $2.6-billion and the stock has grown by nearly 20% YTD.
Kinaxis Inc (TSX:KXS) is a provider of cloud-based subscription software for supply chain operations. The Company offers RapidResponse as a collection of cloud-based configurable applications. The Company's RapidResponse product provides supply chain planning and analytics capabilities that create the foundation for managing multiple, interconnected supply chain management processes, including demand planning, supply planning, inventory management, order fulfillment and capacity planning.
Kinaxis is a growing company, but the company has already carved out a significant piece of the pie. As a leader in its field, Kinaxis is a force which investors are keeping an eye on.
Computer Modelling Group (TSX:CMG) is a software technology company producing reservoir simulation software for oil and gas companies. Computer Modeling Group LTD. Is a tempting trade for investors as it brings together two essential industries - tech and resources- which are going anywhere any time soon. Especially as the need for security grows, a tech company involved in the oil and gas industry has an incredible opportunity to offer other services.
While Computer Modelling Group focuses on the resource industry, its technology is definitely breaking ground. Founded nearly 40 years ago by Khalid Aziz, a renowned simulation developer, the company has proven that it has staying power. As the resource industry meets technology, this will be a stock to pay attention to.
Shopify Inc (TSX:SHOP) (NYSE:SHOP) is a Canadian e-commerce company with more than 500,000 companies rely on Shopify’s real-time e-commerce, including Tesla, Budweiser and Red Bull, among many others. Shopify manages their e-commerce machines, and its stock is now up to over $106 right now, with a market cap of over $10 billion. CNET called the application “clean, simple, and easy-to-use" in a review of the Shopify platform.
The company’s online presence and sheer reach make it an ideal buy for investors. Shopify makes purchasing goods and services easy for anyone – and in a time where convenience is king, Shopify surely has staying power.
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FORWARD-LOOKING STATEMENTS. Statements in this communication which are not purely historical are forward-looking statements and include statements regarding beliefs, plans, intent, predictions or other statements of future tense. Forward looking statements in this article include that the gaming industry continues to grow; that Versus Systems may have a system that would be accepted by gamers; that its prizing platform will appeal to video gaming companies and will encourage gamers to play more and buy more; that Versus Systems’ patent applications will become patents and that the patents can protects its intellectual property; the size of the potential market and market demographic for gaming prizes; that a lot of brands and prizes are expected to be added to the platform; that new games will join the Versus platform; that data gathered from gamers can be used and can be a potential revenue stream for Versus; that Versus will have a major financial impact when NASCAR Heat Mobile game goes live, expected in Q1 2018; and that Versus can partner with a number of game developers for inclusion of Versus’ platform in new games. Forward looking statements involve known and unknown risks and uncertainties which may not prove to be accurate. Actual results and outcomes may differ materially from what is expressed or forecasted in these forward-looking statements. Matters that may affect the outcome of these forward looking statements include that markets may not materialize as expected; prizes in gaming may not turn out to have as large a market as thought or be as lucrative as thought as a result of competition or other factors; Versus Systems may not be able to diversify or scale up as thought because of potential lack of capital, lack of facilities, regulatory compliance requirements or lack of suitable employees or contacts;; Versus is dependent on the success of game developers; Versus’ patents may not be granted and even if granted, may not adequately protect Versus’ intellectual property rights; Versus is a development stage company and to date has no revenues; and other risks affecting Versus in particular and the gaming industry generally. The forward-looking statements in this document are made as of the date hereof and the Company disclaims any intent or obligation to update such forward-looking statements except as required by applicable securities laws.
Risk factors for the video gaming industry in general which also affect Versus include the following: please also review the risk factors listed in the annual filings of public companies in the gaming industry:
- The business is intensely competitive and “hit” driven. Versus may not deliver “hit” products and services, or consumers may prefer competitors’ products or services.
- The business is dependent on the success and availability of products developed by third parties, as well as Versus’ ability to develop commercially successful platforms for these products.
- Technology changes rapidly in the business and if Versus fails to anticipate or successfully implement new technologies or adopt new business strategies, technologies or methods, the quality, timeliness and competitiveness of its products and services may suffer.
-Versus may experience security breaches and cyber threats.
-Versus’ business could be adversely affected if consumer protection, data privacy and security practices are not adequate, or perceived as being inadequate, to prevent data breaches, or by the application of consumer protection and data privacy laws generally.
- The products or services Versus distributes through its platform may contain defects, which could adversely affect Versus’ reputation.
-Versus’ business partners may be unable to honor their obligations or their actions may put us at risk.
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