Azubu Inc. is taking on Twitch and YouTube. Those two huge online distributors of video about video games have deep pockets. Still, investors see potential.
Sherman Oaks-based Azubu announced Wednesday that it raised nearly $60 million in cash by selling debt to British investment firm Sapinda Group and Swiss bank Sallfort Privatbank. The bonds later could be converted into shares in Azubu, which received $34.5 million last year by selling shares to wealthy individuals.
Azubu needs the cash to quickly expand into Brazil, India and other countries and strike partnerships ahead of its rivals. The company aims to be the top online destination for watching video game competitions, or eSports. With a tight focus on eSports, Azubu is betting that it can appeal to tournament organizers, advertisers and viewers who seek an undiluted eSports experience. Amazon.com Inc.-owned Twitch and Google Inc.-owned YouTube carry eSports, but for them it’s a small part of a much larger entertainment universe.
But eSports is growing fast, expected to reach $1 billion in global revenue in the next couple of years. In August, two big competitions brought 2 million simultaneous viewers to Twitch, a record for the company.
“We’re clearly up against two big titans in the form of Amazon and Google, but they [let] anyone pretty much stream anything,” Azubu Chief Executive Ian Sharpe said. “We think there’s an opportunity in eSports.... There’s a real passion that we want to tap into.”
The tight focus, Sharpe says, enables the company to create special features for its customers: For advertisers, interactive promos that directly tie into what’s happening in a game. For viewers, integrated displays of game statistics and other background information. For broadcasters, better customer service.
Azubu won’t manage competitions or develop games, Sharpe said. So its challenge will be generating profits when other online video providers like YouTube have struggled to do so.
Four-year-old Azubu was founded in South Korea. Sharpe, who held senior positions at Electronic Arts and Atari, was brought in two years by investors at Sapinda Group to move Azubu to Los Angeles and focus on distribution.
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