By Sarah E. Needleman
Activision Blizzard Inc. on Wednesday plans to unveil a roster
of sports-team owners and videogame-industry veterans involved in
an esports league it pledged to launch before the end of the
year.
The company is building a league around "Overwatch," betting on
a year-old shooter with a cartoonish bent that has more than 30
million registered players but lacks the lineage of a franchise
such as "Call of Duty."
Activision Blizzard, which reported $6.61 billion in revenue
last year, is looking to build on a growth streak that has led its
stock to nearly quadruple in the past five years to around $58 a
share.
"They've aggressively sold this story to Wall Street and the
expectation is that at some point in the next three to five years,
esports will be a meaningful profit contributor," Cowen & Co.
analyst Doug Creutz said.
The rollout of Overwatch League is being closely watched as a
signal for whether publishers can win control of the
multimillion-dollar competitions sprouting around their biggest
games. Two big rivals -- Electronic Arts Inc. and Take-Two
Interactive Software Inc. -- are developing their own leagues.
They are looking to capture a market whose average fan,
according to Newzoo BV, is between the ages of 21 and 35 -- a
coveted demographic for advertisers. Roughly 191 million people
world-wide this year are expected to watch an esports competition
at least once a month, more than double the number in 2012, the
research firm estimates.
In an interview with The Wall Street Journal, Activision
Blizzard Chief Executive Bobby Kotick said the rollout was going
according to plan. The company is banking on city-based teams, a
structure typical of traditional sports leagues, to drive
growth.
"We wanted to introduce that to esports," he said.
Seven teams are on board so far. The buyers paid $20 million
apiece, the going rate this year, according to people familiar with
the matter. The launch draws on a roster of executives, athletes
and locales familiar to sports fans.
Groups backed by New England Patriots owner Robert Kraft and
Mets operating chief Jeff Wilpon bought the rights to teams in
Boston and New York, respectively.
Mr. Kraft said he considers his bet on esports on par with his
backing of Major League Soccer in the 1990s. It took about five
years for his New England Revolution to become profitable, and it
remains so today, he said.
"We're thinking long here," Mr. Kraft said.
Mr. Wilpon said he didn't follow esports until his
venture-capital firm, Sterling.VC, began looking into the
industry.
"We wouldn't make the investment if we didn't think it would be
profitable," he said. There are "good advertisers out there looking
to get in on this demographic."
NRG Esports, an established esports outfit founded by members of
the Sacramento Kings ownership group, has the rights to a team in
San Francisco. NRG counts Alex Rodriguez, Shaquille O'Neal and
Jimmy Rollins among its investors.
Their involvement "absolutely lends credibility," said Tim
O'Shea, an analyst at Jefferies. "They have arenas, local marketing
muscle and know-how to excite a fan base."
Activision Blizzard's publishing partner in China, NetEase Inc.,
will operate a team in Shanghai, and a startup led and self-funded
by game-industry veterans purchased a team in Seoul.
Other teams will be based in Los Angeles and Miami-Orlando.
ESPN previously reported details of the league's launch.
There aren't multiple new sports leagues launching annually, but
dozens of leagues can be created around individual games. As more
esports leagues launch, it could become more difficult to stand
out, said Michael Pachter, an analyst at Wedbush Securities.
The Overwatch League calls for broad revenue sharing between
Activision Blizzard and team owners for local and global
advertising, merchandising, ticket sales, broadcast rights and
other avenues. Teams can host up to five amateur events a year,
keeping all revenue.
Additionally, owners will receive half of revenue from sales of
team-branded virtual goods sold inside "Overwatch."
Many details of the league still aren't known, including other
possible team owners and locations, or the launch date. Activision
Blizzard said it isn't planning to launch at BlizzCon, its annual
showcase in November.
The company expects the league to ultimately field 28 teams. The
first season will be played in a Los Angeles-area venue, though at
some point future contests will take place in teams' respective
cities, Activision Blizzard said. It hasn't yet disclosed its plans
for when or where it will broadcast league events, including
online, television or both.
(END) Dow Jones Newswires
July 12, 2017 08:14 ET (12:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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