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Activision Acquired Major League Gaming to Enter the e-Sports Segment

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Activision acquired Major League Gaming for $46 million

Earlier this year, Activision Blizzard (ATVI) announced the acquisition of the US-based (SPY) Major League Gaming (or MLG) for $46 million in cash. MLG is a leader in creating and streaming live gaming events and organizing professional competitions and competitive gaming leagues.

The acquisition is expected to help Activision build what it calls a new ESPN of e-sports and enter the business of streaming online e-sports matches. According to MLG, MLG.TV attracts ~25 million viewers per month on mobile devices, computers, and video game consoles.

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Focus on e-sports

In October 2015, Activision created a new e-sports unit and hired MLG’s co-founder, Mike Sespo, and Steve Bornstein, the former president of ABC/Walt Disney (DIS). In December 2015, Electronic Arts (EA) also announced that it intends to create an e-sports unit. Live events attract players and spectators in huge numbers. At these worldwide events, professional gamers can win millions of dollars in prizes.

According to Activision, the e-sports audience comprises more than 100 million viewers and is projected to be bigger than the audience for professional sports leagues. The main driver in this market is the creation of premium content that should increase ticket sales, advertising, licensing, merchandising, and sponsorships.

The e-sports market is projected to have more than 300 million viewers by the end of 2017, according to market researcher Newzoo. “We’ve seen the interest in e-sports grow up faster than the revenue model,” said Evan Wilson, a Pacific Crest Securities analyst.

Activision constitutes 4.2% of the iShares North American Tech-Software ETF (IGV) and 5.4% of the Power Shares Dynamic Software ETF (PSJ).

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