Activision has NFL-like ambitions for eSports

The future of Activision Blizzard is, indeed, all-in for eSports. This is a major direction for the company, and it's part of a bigger strategy than just running tournaments and thereby generating interest and selling more games.

The future of Activision Blizzard is, indeed, all-in for eSports. Some trends emerged in the company's latest results and, particular, its conference call, which suggest that this is a major direction for the company moving forward -- and that it's part of a bigger strategy than just running tournaments and thereby generating interest and selling more games.

The recent acquisition of MLG and the hiring of an ESPN exec are big clues, of course, but CEO Bobby Kotick made a much clearer argument for the direction the company is going in the future.

They brought together to major ideas the company is making much noise about, nowadays:

  1. Looking at its overall monthly active users, across all of its products, and considering these players a network of users. "In the fourth quarter, our monthly active users grew to the highest level ever, to 80 million users," the company's COO, Thomas Tippl, said on the call.
  2. Considering a "year-round player engagement model" to hook players in to the company's franchises and keep them there via a variety of initiatives (including eSports.) This will move more of the company's revenue into the earlier parts of the year, execs promised.

    In a telling example, Activision CFO Dennis Durkin forecasted on the call that Call of Duty sales would fall next year but revenues would actually rise -- thanks to Activision's digital initiatives. "The add-on purchases... are increasingly important and growing incredibly fast," Activision Publishing CEO Eric Hirshberg said.

Execs trumpeted the eSports possibilities of many of the company's upcoming launches: "Of course, our eSports initiatives on Call of Duty are transforming the experience for pro players and fans alike. ... We'll broadcast 750 hours of competitive Call of Duty programming, but more importantly we'll inspire millions of Call of Duty fans to celebrate the game in a whole new way," said Hirshberg, while Blizzard president Mike Morhaime talked up plans for a "robust eSports program" around Overwatch.

Here's a nice slice of Kotick's comments around eSports and the company's overall strategy of viewing itself as an entertainment network comprising its games -- and what that means:

"Upon the expected close of our acquisition of King later this month, we'll have over half a billion monthly active users in 196 countries, which as an entertainment network ranks only behind Facebook, YouTube, and WeChat in monthly active users. We'll have seven times the audience members of Netflix and have a larger audience than Snapchat and Twitter combined."

"Last year our Activision Blizzard games were played for over 14 billion hours, and spectators watched over 1.5 billion hours of video content based on our games. In 2014-2015 season, fans of the NFL watched about 7 billion hours of nationally televised games, which is less than half the time spent engaged with our franchises. Those televised games generated approximately 7 billion dollars of broadcast rights fees for the NFL, and another 4 billion dollars in other revenues, including sponsorships, merchandise, and ticket sales."

"When we think about our franchises, we think about our responsibilities to our fans and the associated business opportunities through the lens of these leagues, like the NFL, the Premier League, the NBA, Major League Baseball, and the NHL."

And Kotick says that this way of looking at things will generate revenue: "Our franchises today generate revenues principally through the sale of interactive content," he observed. Those other monies that sports leagues pull in? That's a wide-open field for Activision Blizzard. "We continue to believe that eSports is another long-term growth pillar for our company," he said.

"When you look at ESPN, with 80 million subscribers and you see the flight of some of those subscribers, and the opportunity that we see there is roughly $5 billion of operating profit there, $4 billion of league payments for the broadcast rights. And we have 80 million of our own players, and over a long period of time we think that watching a video game competition is going to be a tremendous opportunity."

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