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Rivalry Issues 2023 Business Update

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Rivalry Corp., an internationally regulated sports betting, media, and technology company, today issued a letter to shareholders summarizing recent progress and outlining strategic priorities for 2023. The full text of the letter follows. All dollar figures are quoted in Canadian dollars.

Rivalry Corp. 2023 Business Update

To our Shareholders,

Rivalry experienced a breakout year in 2022, with exceedingly strong performance across the business.The early indicators of sustainable and profitable growth that we demonstrated in October are a positive sign of what’s to come as the business continues to execute its strategic priorities. Having achieved record results every quarter, we believe the prospects for our business are as strong as ever as we kick off 2023.

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In 2022 we delivered triple-digit year-over-year growth in both revenue and betting handle, with average month-over-month revenue growth accelerating to 32% through the first 10 months of the year. At the same time, we reduced bonus/promotional spend relative to revenue by over 50% year-over-year, and achieved our first-ever profitable month in October. These results were underpinned by greater product diversification that reduced the impact of seasonality. We’re proud to have finished the year strong and look forward to reporting our full Q4 results.

We have high expectations for 2023, and are confident that it will be another year of record achievements. This shareholder letter provides an update on our business, our place in the industry, and some of the things we’re excited about for Rivalry in 2023.

We are executing against a generational opportunity, and our vision remains clear:

  1. Become the leader in betting and entertainment globally for the next generation.

  2. Build the most engaged brand and portfolio of IP in esports betting (original games, content, creators, and more).

  3. Leverage our technology to innovate on product at every turn, creating a proprietary, interactive, and entertaining betting experience customers won’t find elsewhere.

With an ever-evolving gaming industry and a product suite still in the early stages of fulfilling our vision, we see a huge amount of market opportunity as we continue to trailblaze in this category. We are eager to continue executing on our strategy with financial discipline and scaling purposefully toward profitability.

2022 highlights

We’re proud of our 2022 accomplishments, including:

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  • Delivering significant growth, including year-to-date betting handle increasing 181% YoY to $186 million, and revenue increasing 130% YoY to $21.7 million in Q3 2022.2

  • Continued to build upon the most engaged esports betting brand globally.

  • Demonstrating our market leadership in esports betting with 90% of sportsbook handle driven by esports.

  • Increasing market share ownership of Millennial and Gen Z consumers, represented by 82% of our active user base being under 30-years old, and an average customer age of 25, approximately a decade younger than legacy sportsbooks.

  • Expanding our esports betting product, including the introduction of mobile game titles in March, which has already contributed a meaningful amount of betting handle and strong signs it will carry its momentum throughout 2023.

  • Successful expansion into a new product category with the launch of Casino.exe, our proprietary casino interface, which drove immediate impact, contributing 30% of betting handle and 15% of revenue in Q3 2022 with minimal marketing efforts.

  • Launching in two new regulated markets: the province of Ontario, Canada, and Australia.

  • Best-in-class creative execution, leveraging 100+ brand partners in more than a dozen markets and 20+ owned social media channels to deepen brand awareness and engagement among our target audience, while enhancing customer acquisition and retention.

Notably, these results and signals of sustainable growth are all organic, driven by an overarching strategy that prioritizes great consumer products and brand engagement over flash-in-the-pan trends and promotional spend.

Rivalry’s growing role in betting, esports, and entertainment

Rivalry has created a truly differentiated position within the betting industry that we believe will make a meaningful impact on our financial performance as we scale the business.

The global sports betting industry eclipsed $83 billion in 2022 and is set to grow at a CAGR of 10.2%. Meanwhile, the $197 billion global video game industry is experiencing similar growth with an expected CAGR of 12.9% and expanded generational significance, seeing 87% of Gen Z playing video games weekly among a larger population of 3.1 billion gamers globally. It is at this valuable intersection where Rivalry lives.

Our approach toward attracting the next generation of consumers is different from legacy operators. We scale through word of mouth and organic market entrenchment of brand equity that allows us to operate without a dependency on excess bonusing and player subsidies. This approach helped drive a 50% reduction year-over-year in bonus/promotional spend relative to our revenue, supporting our below-market cost of customer acquisition and further reducing our reliance on linear net new spend for growth. This is continuing to create the operating leverage that has set Rivalry on a path toward profitability.

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Gaming and internet culture guides this successful player acquisition strategy, and allows us to engage with a deeply valuable and nuanced demographic of users that legacy operators aren’t equipped to serve. There is tremendous value gained by participating in these communities and cultures, building lasting brand affinity among gaming fans who are quickly emerging as the consumer economy of the future, and similarly by attaching ourselves to the pervasiveness and virality of the internet.

In a world where live-service games are the standard and long-term player engagement is the new benchmark for success, Rivalry is poised to play a prominent role in the future of esports. Betting activity translates into the enhanced viewership, engagement, and economics that are directly aligned with the KPIs of esports and gaming stakeholders, and those represent significant long-term tailwinds for our business.

We believe an intimate understanding of these audiences and cultures will shape the next generation of great consumer products. It is with this understanding that Rivalry is able to tap into a global gaming audience and drive betting activity among the 532 million esports viewers worldwide.

We will continue making strategic and measured investments in key areas of the business that we believe set the stage for further growth in 2023, and beyond, with objectives that should ensure our current momentum toward profitability remains intact. Some of the initiatives we expect to drive continued growth in 2023 include:

  • Expanding our esports offering with new titles and markets to deepen our core product and attract new customers.

  • Continued evolution of our proprietary Casino.exe platform and release of additional in-house developed and third-party games that cater to our core demographic and further establish a gaming experience unique to Rivalry.

  • Launch of a mobile app in our regulated markets to increase accessibility of our product.

  • Geographic expansion to increase our addressable market and customer base.

  • Expanded content and creator partner program to deepen our ability to reach and engage customers, solidifying Rivalry’s leadership position in the esports betting industry.

  • Continuing to grow our investor base through proactive capital markets outreach.

These initiatives are designed to advance us toward consistent profitability, through measurable outcomes including:

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  • Increased product depth and diversity creates greater margin stability and reduces seasonality while increasing average customer spend.

  • Increased TAM through new market launches builds greater intrinsic value capture for Rivalry, and thus upside for our investor base.

  • Enhanced brand engagement cultivates a dedicated customer base, which organically improves retention and lowers cost of customer acquisition.

I’m extremely proud of the differentiated approach Rivalry has taken from day one and what it has enabled us to achieve, creating a truly distinct product and brand that is driving operating leverage and  bearing fruit across the business. As we move into 2023, we’re eager to continue demonstrating the same operational excellence which has enabled us to stand out in a deeply competitive industry.

With that, I wish everyone a happy, successful, and healthy year.

Steven Salz

Co-Founder & CEO

Rivalry Corp.

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Canada

Soft2Bet granted Ontario Certification of Registration and readies for imminent launch

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Ontario Certificate is hugely promising as Soft2Bet continues its regulatory expansion

Soft2Bet, a leading provider of online betting and gaming solutions to regulated operators worldwide, is delighted to announce that it has been granted a Certificate of Registration in Ontario, Canada’s largest province, moving it one step closer to being able to launch its Tooniebet.com iGaming brand.

Obtaining its Certificate of Registration (Nbr: OPIG1280338) from the Alcohol and Gaming Commission of Ontario (AGCO) will enable Soft2Bet to continue its expansion into the world’s largest regulated jurisdictions.

Ontario has been a major success story for regulated online sports betting and casino in North America in the past two years. The province launched its regulations in April 2022 and latest figures for the fourth quarter of 2023 showed that operators recorded a 21% rise in wagers to CA$17.2bn and a 22% increase in gross gaming revenues to CA$658m, the highest ever revenue total in Ontario’s wagering history. Online casino was the main driver of this growth and generated CA$13.7bn of the total stakes and CA$471m in GGR.

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Elisabeth Isaksson, Head of Regulatory Compliance at Soft2Bet, commented: “Being registered with the AGCO in Ontario is testament to the work our compliance and regulatory teams are doing daily to enable our continued expansion in the world’s largest regulated markets. We’re immensely excited about taking our first steps in North America and look forward to licensing and launching in more jurisdictions in the region.”

Chief Business Development Officer Martin Collins added: “This Ontario certification is another significant and important step in our corporate expansion plans. It fits perfectly with our stated aim of growing our regulatory footprint and we very much look forward to continuing forward on this path.”

Soft2Bet is also actively working to obtain a licence in New Jersey and continue its expansion in the Americas. This activity comes after the group obtained B2C licences in Italy, Greece and Romania in 2023.

 

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Hacksaw Gaming and DraftKings Score Again in Ontario

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2023 saw Hacksaw Gaming go live in West Virginia and New Jersey and now we have made our long-awaited entry in Ontario, Canada. Securing this trio has hit new heights and hopes for further successes throughout the rest of this year.

DraftKings Casino entered the iGaming market in Ontario in May of 2022 and partnered with Hacksaw Gaming in the back end of the same year. As Ontario’s regulated iGaming market only went live in April of 2022, the pair have given an outstanding performance with effective launch strategies and expansive footing in North America.

Apart from gaining an unprecedented reach across regulated markets, the mobile-friendly format of Hacksaw Gaming games can be visited on phone or tablet via the DraftKings Casino app. Boasting an impressive online casino’s selection of over 300 games, DraftKings now welcomes Hacksaw Gaming favourites such as Chaos Crew, Mines, Omnom and Boxes.

“The benchmarks we have set as a partnership are remarkable and we are ready to take on more challenges continuing into 2024,” the Chief Executive Officer for Hacksaw Gaming, Marcus Cordes, said.

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BetVictor

Exploring Canada’s video Game Market: Survey Insights

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Technology has become a great source of entertainment to many. Video games particularly have garnered interest from all demographics. In Canada, the gaming industry has experienced significant growth, fuelled by increased accessibility to gaming platforms and the growth of online gaming communities.

Statistics indicate that a large percentage of Canadians are engaged in gaming activities, whether it be playing console or PC games, mobile games, or online multiplayer games. The popularity of video games extends beyond leisure pastimes, with many Canadians participating in gaming competitions, attending gaming conventions, and consuming gaming-related content on platforms like Twitch and YouTube.

The number of video game users in Canada reflects how broad the sector is, from mobile games to digital video games, download games and live streaming. In 2024, the gaming sector will see millions of users in each of these categories. Statista projects 13.38 million users for digital video games and 7.35 million users for online games respectively. It estimates that revenue in the Canadian video game market is expected to reach US$3,925.00m in 2024, so it is no surprise to observe the increasing popularity of the sector.

Well-known online casino provider BetVictor has compiled some key points from major surveys detailing the video game market to give further insight into its makeup and potential. The gaming culture in Canada is growing, which means the type of games and genres will grow along with the sector. Statista recently conducted a survey of 1 576 respondents aged 18 – 64 who are avid video game players, with telling results. ​​In December 2023, a survey about preferred video game genres in Canada revealed the top four genres as being Action, Action – adventure, Adventure and casual games accounting for 31% of respondents’ preferences.

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David Winter, Marketing Manager at BetVictor notes that “We’ve seen a steady increase in the popularity of action-themed and adventure-themed slots and many providers are exploring how to expand further into this market.”

The popularity of Action games such as platform and fighting games can be attributed to various factors, such as: social interaction, accessibility and inclusivity, social appeal, and cultural influence. With such a diverse audience, all these factors are crucial to understand the appeal of Action games.

In the digital age, gaming has transcended mere entertainment to become a cornerstone of culture, and nowhere is this more evident than in Canada. From coast to coast, a diverse community of gamers is thriving, reflecting the country’s inclusive spirit and passion for technology. Whether it’s the casual gamer enjoying a quick session on their smartphone or the dedicated enthusiast meticulously building a custom gaming PC, Canada offers a welcome haven for all kinds of gamers.

Diving deeper into the Statista results, Strategy games accounted for 29%. This shows us that players have a strong interest in tactical and decision-making games. While role-playing (RPG) and sports games garnered 22% each, simulation and shooters trailed slightly behind at 21% and 20% respectively.

MMO (massively multiplayer online games), as well as MMORPGs (massively multiplayer online role-playing games) and MOBA (multi online battle arenas) came in at 13% and 8% respectively, representing a significant but niche following. With such a diverse array of preferences, the survey underscores the multifaceted nature of interests among Canadian gamers. It highlights the need for game developers to cater for a wide range of genres and gameplaying styles in the Canadian market.

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From action shooter games to role-playing adventures, the industry has something for every gaming enthusiast in the Canadian market. Overall, the popularity of video games in Canada reflects a growing cultural phenomenon, where gaming has become a mainstream form of entertainment and a significant aspect of modern-day leisure activities.

Statistics anticipate a compound annual growth rate (CAGR) of 7.10% for 2022-2027, resulting in a projected market volume of US$24.52bn by 2027. Canada’s online gaming market is experiencing a surge in popularity, with a surging number of Canadian players engaging in immersive virtual reality experiences.

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