Red Reserve – the first listed esports company in Scandinavia
The Group’s subsidiary Red Reserve is an esports company that has been in existence since 2014, and the company has gradually become an increasingly established brand in the world of esports. The company was aquired by Red Reserve Entertainment (then Community Entertainment) in February 2018 and then became the first listed esports company in Scandinavia.
Red Reserve AB owns and manages their own esports teams in various games such as Counter-Strike Global Offensive (CS:GO), Call of Duty (COD), Hearthstone and Fortnite. Red Reserve is also a major player on social media, with a reach of millions within their channels. The latter is of extra importance when it comes to the esports audience, as they tend to prefer social media to traditional media such as newspapers and television.
The company’s revenues come from several different streams – sponsors, prize money, player sales and merchandise (team-related products), as well as reimbursements from arranging various esports-related events in, for example, malls or dedicated venues.
At the time of writing, Red Reserve is sponsored by Battleriff Gaming, Scuf Gaming, Victrix, KontrolFreek and ULT. Sponsorship revenues are expected to increase considerably in the near future, partly due to the fact that the company has not yet chosen a main sponsor for, or even linked sponsors to, the new CS:GO team acquired mid-June.
Why do companies want to sponsor esports, and Red Reserve in particular?
As we mentioned earlier, the esports industry is growing rapidly, and of course many companies want to take advantage of this boom. The most successful and popular teams in the biggest games are becoming increasingly well known to the general public, and therefore increasingly interesting for many companies to be associated with. Red Reserve is already one of these successful teams in a number of games and we notice how the attractiveness of the company strengthenes for every new success. In 2018 our teams have already taken home around SEK 1 million in prize money.
For media buyers, Red Reserve offers both digital and local visibility. A tournament can, for example, be started in the media buyer’s name. The tournament can be launched in a digital arena, and then progress into a final in the form of an esports event, where the audience can watch the finals of the tournament live. At the physical finals there is an additional opportunity for on-site and streaming PR and marketing events. In addition, Red Reserve can display the media buyer / sponsor’s logo on the team clothing and website, and highlight the media buyer / sponsor in tweets and other social media broadcasts with a reach of millions of followers.
The evolution of esports is more and more taking the shape of that which has taken place, and is still ongoing, within football. The top esports teams will, like the biggest football teams, make large profits from merchandise, sponsorship revenues, sales of players and the ever-growing prize money from big tournaments. Epic Games, owners of Fortnite, have for example recently announced, that they are setting up a $ 100 million prize pool for the 2018/19 season.
The turnover of the esports industry was about USD 700 million in 2017 and is expected to increase to USD 1.5 billion by 2020.
Our goal is to establish Red Reserve in the very elite of esports. To draw another parallel with football, this could be compared to belonging to the exclusive range of clubs that every year go far in the Champions league tournament and get to compete for the victory. Red Reserves team in COD, CS:GO and Hearthstone already belong to the top teams that have the ability to win even the biggest tournaments, and the Fortnite team is expected to reach the same level as soon as Fortnite’s leagues have been properly organised. Our next step is to consolidate these positions and become one of the leading brands, with teams that all others will strive to beat.