Free money. It’s great when you can get it, especially if said money happens to be $2.5 million, which is the situation Streamplay Studio (ASX: SP8) finds themselves in.
In November 2022, eSports and gaming tech company Emerge Gaming changed its name to Streamplay Studio in a bid to wash off the ghosts of its past. Little did it know, the ghosts had other plans.
In December 2021, the Company was suspended from trading after the ASX pulled it up for considering divesting its controversial Miggster gaming platform, a white-labelled “e-sports” program that allows gamers to compete for low-value prizes.
That’s because Emerge Gaming generated most of its revenue from the Crowd1 Network, an international multi-level marketing company that was questioned for being a pyramid scheme. Crowd1 got unsuspecting users from developing countries to Miggster, only to have them lose significant amounts of money.
Emerge Gaming then decided to sell MIGGSTER to NIBIRU, a Swedish company that also had connections to Crowd1. Both Crowd1 and Impact Crowd Technology, based in Spain, have faced warnings from numerous global regulators who suspect them of operating a potential pyramid scheme.
This scheme has faced criticism for enticing millions of consumers to invest significant portions of their savings to become millionaires by promoting Crowd1’s simplistic digital products within their networks. Basically, a complex referral program.
Wherever Emerge Gaming went, Crowd1 followed. And even with a new name as Streamplay Studios, things are no different. As the Company was trying to sell MIGGSTER, they finally found a buyer in March 2022 to sell the MIGGSTER business to NIBIRU in a $5 million deal. As per the initial agreement, NIBIRU had paid Streamplay a sum of $2.55 million. However, it failed to pay the remaining $2.45 million within the stipulated settlement period.
As a result, Streamplay has exercised a call option that was included in the original sale agreement, allowing it to take back the MIGGSTER source code, intellectual property (IP), customer base, and related data for a mere $1. Plus, Streamplay retains the $2.55 million previously received from the Purchaser, and they are no longer bound by any further obligations to them.
Streamplay has initiated the process to regain control of its IP and associated assets, with plans to complete the transfer by the end of October 2023. Streamplay had already made provisions for the potential non-payment of the outstanding balance in its Annual Financial Statements for FY23.
In FY23, Streamplay incurred a loss of $3.4 million after earning a profit of $6.8 million in FY22. The Company’s total expenses rose to $5.74 million from $1.64 million, comprising consulting fees ($870k), research and development costs ($1.05 million), allowance for credit losses ($2.66 million) with the balance to admin and other costs ($1.16 million). Though the FY23 report did not mention Crowd1, it did note the failure of payment on NIBIRU’s part for MIGGSTER, which, in the eyes of the public court, has been dubbed a scam.
Moving on from its troubled gaming history, in 2023, Streamplay has been on an expansion spree, launching its other games in Fiji, Palau and the Pacific market. Even so, the fate of MIGGSTER hangs in the balance.
Alinda is a Business Reporter for The Sentiment
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