Engine to sell UMG to Harena Data
The acquisition: The decision to sell the business came as a surprise to some.
- Engine and Harena Data have entered an agreement that's set to close in the company's fourth fiscal quarter.
- A release reveals that selling UMG will save Engine approximately $16M in expenses on an annual basis as it works towards breaking even with its run rate.
- The value of the transaction, which will see Harena Data take control of UMG's daily online tournaments, has not been disclosed at the time of publication.
- Based on a tweet from UMG's Director of Business Development, John DeHart, all but two of the brand's employees have been laid off. Their last working day will be June 30.
A wider lens: There are tough times ahead for most companies in the esports industry.
- Engine Media has made it clear that it doesn't believe it can generate a financial return from operating UMG in the near future.
- With its prioritization of working towards breaking even, it's offloading the company as the economy continues to provide a rocky terrain for many. For the three-month period ending February 28, 2022, it posted an adjusted EBITDA of -$6.4M.
- "Earlier this year, we began a comprehensive portfolio review to identify cost savings opportunities," said Engine Gaming and Media CEO Lou Schwartz. "This is part of an overall effort to relieve the Company of the more significant cash expenditures necessary to support B2C gaming businesses."
- Harena Data considers itself the "leading esports community aggregator" so adding an online tournament platform to its portfolio makes a lot of sense on paper, though it'll evidently have to do something different to Engine should it want to make money from the brand.