Understanding Activision’s eSports Foray
Legitimacy boost to Overwatch League
Investors took a positive view of the news that Activision Blizzard (ATVI) is venturing into eSports (professional video game competition) through a unique model built around global intercity rivalry. Activision stock rose more than 5.0% on the day the company announced that it had signed on well-connected backers of its Overwatch eSports league.
The company said that Bob Kraft, the owner of the New England Patriots, and Jeff Wilpon, chief operating officer of the New York Mets, had signed on as Overwatch League team owners. The backing of traditional sports heavyweights such as Kraft and Wilpon brings a much-needed legitimacy boost to Activision’s eSports push.
Activision is not the first video game publisher to make a push into professional video game competitions. Its rival Tencent-owned (TCEHY) Riot Games has a parallel eSports tournament called League of Legends. Riot counts Twitter (TWTR) among its eSports partners. Twitter acquired the rights to live-stream League of Legends eSports competitions.
Interested in ATVI? Don't miss the next report.
Receive e-mail alerts for new research on ATVI
Pioneering global intercity eSports competition
Although not the pioneer of eSports, Activision is the first major video game publishers to model its eSports league around city-based global competition so that a team in Boston can play a rival team in Shanghai China (MCHI) (FXI), for instance.
Where’s the money for Activision in eSports?
How does Activision intend to make money off eSports? Activision sees multiple eSports monetization opportunities. First, like traditional sports leagues, the company hopes to sell broadcast rights to its eSports tournaments. Amazon’s (AMZN) Twitch is one of its eSports live-streaming partners.
Ticket sales and advertising are other eSports monetization avenues for Activision. According to research firm IHS Markit, the eSports advertising industry could be worth more than $1.0 billion by 2021, up from about $280.0 million in 2016.