(Bloomberg) -- Mexican television giant TV Azteca SAB is investing in Allied Esports Entertainment, a company hoping to capitalize on the growing world of competitive video gaming.

Azteca is buying $5 million worth of shares in Black Ridge Acquisition Corp., which will become Allied Esports following its pending acquisition of two closely held brands -- a deal that’s expected to close next month. Allied’s goal is to operate esports arenas, distribute content generated at those venues, and sell viewers on a new online tournament platform to be launched next year.

Controlled by Mexican billionaire Ricardo Salinas, Azteca will be both an investor and a strategic partner, pairing its talent and massive audience with Allied’s esports expertise. The two groups will create a 24-hour digital esports channel in Mexico and help promote gaming across the region -- initiatives aimed at an elusive younger demographic.

“In Latin America, traditional TV is a really big part of the distribution of content,” said Frank Ng, who will serve as chief executive officer of Allied Esports. “It’s a really important format, and TV Azteca is extremely strong on that, particularly in sports.”

Gaming Growth

Competitive video gaming has an audience of more than 380 million people worldwide, and it’s on pace to become a $1 billion industry this year, according to research firm Newzoo. While a lot of that interest and money is focused on Asia and the U.S., Mexico is in the top 10 worldwide in esports enthusiasts, Newzoo estimates. The country has 58.6 million gamers, a larger number than the entire population of South Korea, and an esports audience of 11.2 million.

That global growth has spurred demand to televise esports. In America alone, TV networks from ESPN to TBS to the CW have broadcast esports content -- either live games or produced segments. Azteca’s flagship network carries Mexico’s top soccer league and National Football League games, giving it a number of potential opportunities to cross-promote the esports matches with traditional sports fans.

Allied and Azteca teamed up earlier this year on an event called “Nation vs. Nation,” which featured American gamers taking on Mexican gamers in a title called PlayerUnknown’s Battlegrounds. The Azteca broadcast reached more than 2 million people.

Sharing Revenue

The two sides will share revenue generated by their joint endeavors, Ng said. He added that Allied intends to partner with more strategic investors once the acquisition is finalized.

Salinas isn’t the only Mexican billionaire who’s shown interest in the esports world. German Larrea, who controls mining company Grupo Mexico SAB, has recently opened 13 arenas called “The Place to Play” and plans to add 10 more before the end of year. The arenas were inspired by similar venues in Las Vegas. In Mexico, these are located right next to one of Larrea’s other businesses, movie theaters.

Black Ridge is a special-purpose acquisition company, an entity with no assets that raises money to fund a future purchase. Sponsored by Black Ridge Oil & Gas Inc., it completed its initial public offering in October 2017, raising $138 million.

In December, Black Ridge announced it was purchasing Allied Esports International Inc., an esports entertainment company, and WPT Enterprises, the creator of the World Poker Tour, from Ourgame International Holdings Ltd. for about $150 million. The new company, called Allied Esports Entertainment, will have an enterprise value of about $214 million and trade on the Nasdaq under the ticker AESE.

The deal originated as a discussion about poker assets before expanding into a larger esports deal. As part of the investment, Azteca will receive access to World Poker Tour’s video library to air previous seasons in Mexico, and the two will team up on poker events.

--With assistance from Andrea Navarro.

To contact the reporter on this story: Eben Novy-Williams in New York at enovywilliam@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III

©2019 Bloomberg L.P.