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How eSports Growth Will Benefit Activision Blizzard

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eSports industry set to cross $1 billion in 2019

Gaming research company Newzoo expects the global esports industry to breach the $1 billion revenue mark in 2019. Newzoo expects esports revenue to rise 26.7% YoY (year-over-year) to $1.1 billion in 2019. Over 80.0% of these sales are expected to come from media rights, advertising, and sponsorships. Sponsorship will account for the majority of sales at $456.7 million, while the fastest-growing segment will be media rights.

The global esports audience is also estimated to grow 15.0% YoY to 453.8 million. Digital broadcasters such as YouTube (GOOGL) and Twitch (AMZN), as well as TV media companies, are competing for esports broadcasts.

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Overwatch League

Activision Blizzard (ATVI) was one of the first movers in the esports segment with the launch of the Overwatch League last year. ATVI sold 12 teams for $20 million each, which meant sales of $240 million for the company. The Overwatch League now has 20 teams and will eventually expand to 28.

While the first 12 teams were sold for $20 million each, the next 16 teams are being sold for anywhere between $30 million and $60 million. A midpoint of $45 million per team translates to revenue of $720 million.

Further, the league will continue to generate recurring revenue from advertising and sponsorships. Last year, ATVI claimed that broadcast and sponsorship sales topped $100 million. Overwatch League sponsors include Intel (INTC), T-Mobile (TMUS), and HP (HPQ).

Between 2018 and 2020, ATVI will most likely generate over $1 billion in team sales and media rights from its first esports league. During its last earnings call, the company also stated that it had started the sales process for the Call of Duty esports league and had experienced strong interest.

ATVI has sold five franchises for Call of Duty to owners from Atlanta, Dallas, Paris, Toronto, and New York. ATVI has partnered with existing Overwatch League team owners, as they’re in sync with the company’s esports vision and capabilities.

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