Activision Blizzard gunning for NFL-scale eSports revenue

CEO Bobby Kotick sees opportunity equivalent to, "the NFL, the Premier League, the NBA, Major League Baseball or NHL"

When Activision Blizzard looks at the future of its eSports it sees billions of dollars in annual revenue, comparable to the NFL and the world's other major sports leagues.

In a call with investors following the publication of the company's full-year results, Activision Blizzard's executives laid out the scale of their ambitions for the eSports division the company started last year. Bobby Kotick, the company's CEO, first put it in terms of engagement: 14 billion games were played in Activision Blizzard's games last year, with spectators watching 1.5 billion hours of video content as a result. The 2014/15 season of the NFL, on the other hand, led to about 7 billion spectator hours.

"Those televised games generated approximately $7 billion of broadcast rights fees for the NFL and another $4 billion in other revenues including sponsorships, merchandise and ticket sales," Kotick said. "When we think about our franchises, we view our responsibilities to our fans and the associated business opportunity through the lens of these leagues like the NFL, the Premier League, the NBA, Major League Baseball or NHL."

Right now, Kotick said, the revenue generated by Activision Blizzard's eSports activities isn't "meaningful" in the context of the company's balance sheet, but the investment is similarly small. Kotick described it as, "really less than a couple of pennies," in terms of the company's earnings per share, with most of its activities funded by, "organized competition ticket fees." Going forward, the level of investment will increase, but then so will the revenue - ana Kotick isn't shy about speculating on how high that could go.

"What we step back and look at is ESPN," he said. "And when you look at ESPN with 80 million subscribers and you see the flight of some of the subscribers. The opportunities that we see there is roughly $5 billion of operating profit, $4 billion of league payments for the broadcast rights. We have 80 million of our own players."

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Latest comments (2)

they really think watching a NFL game is comparable to watching some people play a video game? I love the NFL and I love video games, but lets be serious, watching some people play Madden is not the same as watching a NFL game. These guys are deluded.

Edited 1 times. Last edit by Todd Weidner on 14th February 2016 7:45pm

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Dan Tubb Investment manager, Edge5 years ago
Todd, I think I might share in a bit of that delusion myself.

Admittedly the only sport Iíve ever watched is boxing (and does poker count?), Iíve never been a fan of football or the others so I may not be representative. But I have got into watching the pro-games of the MOBA that I play. Being able to watch top level players is great. In a MOBA the action is not focused around a ball, each player is a focal point of action, so on a 5v5 game there is so much more going on. And the action is waaaay faster than in traditional sports. The games are also punchier, usually 20-30 minutes, and then youíre into the next one of a best of 5.

Now yes, itís unlikely that anytime soon esports will hold the same sway as the major league games in any one country (that isnít Korea). But the audience of esports are usually international, while trad-sports can dominate a particular country. An Esport only need to pick up 1.16bn viewing hours per continent to rival the NFL, while the NFL is looking to get its 7bn viewing hours mostly* from 1 country.

Investing a small proportion of your cost base into esports now for the big publishers is sensible from their point of view. And I suspect that it is realistic that within 20 years the best international esports will trump the viewership of the best (mostly*) national sports.

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