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Activision Blizzard buys Major League Gaming with plans for the ESPN of e-sports

Activision Blizzard Inc. announced a small acquisition Monday that kickstarts big plans to develop a broadcast empire around electronic sports (aka video games) that rivals what ESPN has done for contact sports.

The Santa Monica video game maker purchased Major League Gaming, an online broadcaster and events producer founded in 2002. MLG was among the first to recognize that watching others play video games was something that people would spend hours doing. Key to Activision Blizzard are MLG’s video streaming technology, relationships with rival video game companies and a workforce that’s spent more than a decade organizing shows it wants to put on as well.

“If you’re trying to build the ESPN of e-sports, you have to have the best ability to produce content and the best ability to broadcast content,” said Mike Sepso, an MLG co-founder who joined Activision Blizzard a few months ago.

Sepso is president of Activision Blizzard’s recently launched Media Networks division, charged with making franchises like “fnatic” and “Dignitas” as familiar as “Lakers” and “Yankees.”

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Tens of millions of people watch e-sports contests online each week, but Activision Blizzard and others must significantly boost that number to earn a good return on investments. Experts see billions of dollars in potential revenue, but where it comes from is an open question. Activision Blizzard, for instance, is still figuring out how to distribute e-sports, with television, Twitch and its own apps among possibilities.

Sepso declined to reveal the cost of the deal. But legal documents leaked to trade publication ESports Observer last week said New York City-based MLG received $46 million, several million dollars less than it raised from venture capitalists over the last decade. Chief Executive Sundance DiGiovanni will lead event and show creation for the media networks division, while MLG’s online streaming service, leagues and tournaments will continue. In April, MLG expects thousands of fans to attend a championship for the game “Counter-Strike: Global Offensive” at Nationwide Arena, normally home to the NHL team in Columbus, Ohio.

Partners of MLG may be skittish now that it’s under Activision Blizzard’s umbrella, Sepso acknowledged. But he said rival executives know that Activision Blizzard divisions are run autonomously and that MLG will now have increased staying power.

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