Activision. Blizzard. ESports?
The gigantic Santa Monica video game company Activision Blizzard Inc. announced Thursday the addition of a third division alongside game distributor Activision Publishing and developer Blizzard Entertainment. The new, yet-to-be named group will focus on the booming competitive gaming industry known as eSports and be chaired by former ESPN and NFL Network Chief Executive Steve Bornstein.
Many gamers credit Blizzard’s “Starcraft” game for, in the 1990s, kick-starting a number of eSports leagues in which players gather online and offline to play games in hopes of winning trophies and cash prizes. The organized competitions are on the verge of becoming a $1-billion global industry because of sponsorship, ticket, merchandise and broadcast fees.
Gamemakers have supported companies that operate leagues by, for example, building features into games that make them easier to broadcast gameplay online. But few have devoted significant resources to eSports, let alone tried to profit directly from competitions. At most, they’ve seen increased sales of in-game digital goods from the extra playtime.
In a prepared statement, Activision didn’t explain how the new division would further “development of its esports ecosystem.” Executives declined to comment beyond the statement, citing a legally mandated quiet period before releasing financial results Nov. 3. But the announcement tees Activision to elaborate at its annual Blizzcon fan convention Nov. 6-7 in Anaheim. About $4 million will be awarded in gaming competitions there.
In September, the company announced the “Call of Duty” World League, which will dole out $3 million to pros and amateurs. Strong digital revenue, growth in China and other factors have pushed Activision shares to record highs this year, and analysts at R.W. Baird expect eSports to push earnings per share up as much as 35 cents within five years.
Bornstein, who worked at both ESPN and NFL Network from their foundings, has advised Activision for several months after acknowledging that eSports would play a major role in the future of sports, according to a person familiar with the matter but not authorized to comment. Bornstein said in a statement that eSports would come to rival traditional sports’ revenues; already, the 13-billion hours people spent on Activision games last year surpassed “all other sports,” he claimed.
He’s a dealmaker and a programming expert that could help bring in new eSports viewers. Possibilities include Activision co-producing eSports television content or launching an online gaming channel. At ESPN, Bornstein helped devise popular shows such as “SportsCenter,” “NFL PrimeTime” and “Outside the Lines.” Then at the NFL, he led negotiations on TV deals and sponsorships worth billions of dollars.
Adding eSports spectators is key to ramping up prizes and salaries because most revenue-generating deals are based on audience size. Analysts estimate about 200 million people annually watch eSports online or in person, but there’s room to grow. The figure accounts for about 10% of all people worldwide who play video games. For instance, just over 50% of people who play “Call of Duty” participate in eSports, according to a recent report by gaming research firm EEDAR. Some games see eSports involvement closer to 70%.
Last month, the new division also hired as senior vice president Mike Sepso, who just left as president of eSports events company and broadcaster Major League Gaming.
Chat with me on Twitter @peard33