Just this past weekend, video game publisher Activision Blizzard, Inc. (NASDAQ:ATVI) was put front and center within the gaming world. Two of its titles served as the battlegrounds for tournaments. Overwatch just began league play in Los Angeles and Call of Duty competition got underway in Dallas. Will it help ATVI stock?
Truth be told, it’s not as if these two events, or any like them, are going to single-handedly propel ATVI stock higher. On the flipside, whether anyone without a finger on the pulse of video-gaming cares to believe it, this so-called “eSports” movement is a key piece of the future.
Companies like Activision Blizzard and rival Electronic Arts Inc. (NASDAQ:EA) can grow on these. Ignore the trend at your own peril.
Yes, Professional Video Gaming
Ready to be blown away? You can now get paid for playing, well winning, video games. For the top players, the potential isn’t chump change either. Those gamers who play the aforementioned game Overwatch can make $50,000 or more per year in the pro ranks, and that’s just for playing the game.
Not included in the figure is the income those gamers can garner from sponsorships or selling other, ancillary products. Six-figure incomes aren’t unusual in this business. What’s more amazing than the paychecks some of these top gamers can pocket, however, is how organized these leagues are.
In eSports, the “league” is a particular game. Rather than the NFL, fans follow “Call of Duty” players. Instead of keeping tabs on a particular NBA team, enthusiasts will watch their favorite group of gamers play combat simulator Counter-Strike: Global Offensive.
And these teams aren’t ad-hoc assemblies. They’re organized with a standing roster and given team names (and yes, even uniforms). Like their athletic counterparts, they get paid to win.
Even more amazing is that, just like major league baseball or professional football, video gamers will pay to see their favorite pro players compete in an arena. All told, eSports event revenue is projected by NewZoo to reach nearly $700 million this year, with the tally growing to $1.5 billion by 2020.
Like professional sports though, ticket sales are just the beginning. It’s the “everything else” that drives revenue to incalculable levels.
ATVI stock, Front and Center
Enter Activision Blizzard, and would-be owners of ATVI stock. To be honest, what eSports will be and look like five years from now isn’t entirely clear. What is clear is that game developers are better served by being as visible in the business as possible. There’s nothing more visible than your game being the basis for an eSports league.
That’s why this weekend’s launch of this year’s league-play of Overwatch and Call of Duty is such a big deal. While not a big direct money-maker for the game publisher, thousands, and perhaps hundreds of thousands, of wannabe professional players have already purchased those titles, or soon will.
The time is certainly right for such an investment/effort from Activision Blizzard. Last year’s NBA finals, which prominently featured superstar Lebron James, captured nearly 31 million viewers. Not bad.
Thing is, roughly 36 million viewers tuned into last year’s final League of Legends fight; the game that still is the favorite within the eSports industry.
Underscoring the idea that we all need to take eSports very seriously going forward: The Philadelphia 76ers acquired their own eSports team in September of last year, while cable television giant Comcast Corporation (NASDAQ:CMCSA) bought a Philadelphia-based Overwatch team in September of this year in anticipation of the league play that began this past weekend.
That’s an awful lot of interest from organizations that have their finger on the pulse of what types of entertainment sells.
Looking Ahead for ATVI Stock
While eSports as an industry has taken a firmer shape than it’s exhibited in the past, what it is and where it’s going still isn’t perfectly clear. There’s clearly something there though, and it’s better for an organization to help shape the future of these leagues than be shaped by them.
That’s exactly what Activision Blizzard is doing more so than it has in the past, building a league around its Overwatch game. Don’t be surprised to see more titles in the future becoming the centerpiece of an eSports league.
A big chunk of the future value of ATVI stock is going to hinge on what the company makes of itself on this unexpected front.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.
