OCT. 22, 2015 • Seeking to capitalize on its deep stable of competitive game franchises, Activision Blizzard, Inc. is creating a separate esports division alongside its Blizzard Ent. and Activision Publishing arms to produce and distribute top-tier competitive gameplay video worldwide. Hired to run the new division were former ESPN and NFL Network chief executive Steve Bornstein, and Major League Gaming co-founder Mike Sepso. Activision says a major reason for creating an esports division is to add a major driver of growth for the company. In addition to the StarCraft franchise being one of the first titles to be used for competitive game leagues, arena competition is a major feature in World of Warcraft, Heroes of the Storm’s ranked hero league is very popular, the official Call of Duty World League was created last September, and Bungie’s Destiny rates as one of the most watched console titles on Twitch.
Impact: The camel in the tent not mentioned in Activision Blizzard’s announcement is the upcoming team-based shooter, Overwatch. There is plenty of consumer anticipation for the title, especially with a closed beta soon to start, which would make the product a natural to lead Activision Blizzard’s new esports ambitions. That Overwatch was not mentioned likely is due to internal timelines at Blizzard. In an interview with the International Business Times, Blizzard senior esports manager Kim Phan said that the Overwatch team was definitely engaged with esports options but that those efforts were taking a back seat to the priority of launching the game. No doubt Overwatch will play a major role in Activision Blizzard’s aggressive new push into esports, but it is obvious the company does not intend to wait for the title, not when this is a direction the firm has been telegraphing since earlier this year when it started talking up esports for the launch of Heroes of the Storm. However, the hiring of Bornstein and Sepso shows they are really serious about this space.
It should be noted that esports has been around for some time but has gotten an extraordinary amount of hype in the past year with Amazon and Google both going after Twitch. Despite this, the long-term profitability of esports is still debatable. To really make money in esports you need large numbers of eyeballs to drive ad revenues for all involved. Endorsements and related promotional deals are nice but they don’t always result in big money by themselves. It seems Activision is playing on the current momentum and taking a reasonably big stake in esports given the segment is garnering so much publicity and mindshare in the games industry. Thanks to the competitive depth of Blizzard’s franchises, there is good potential for this new esports division. At the same time there is also risk considering the huge competition from Riot, Valve and all of the other players.
The reality is esports is somewhat of a marketing play and a loss leader to help drive excitement among the user base of specific games. So our main question on this new division is how will it coordinate between different products? Esports are often tied to very specific products, and in the case of Activision Blizzard, they not only have multiple products but Blizzard products are very different from Activision products like Call of Duty. So it will be interesting to see how they can gain synergy across different products, which seems to be the goal.
