Activision Blizzard (ATVI 80.81, +2.20, +2.80%) has announced the
signing of an exclusive multi-year deal with ESPN and Disney XD (DIS) to provide live
television coverage of the Overwatch League, which is the world's first major
city-based esports league. Shares of Activision touched a fresh record high of
$79.88 at the start of today's session before dipping back beneath their
previous record high from mid-March ($79.63). In later trade, share achieved yet another new high at $81.00 and currently trade near that level.
The Overwatch League is a professional esports league for the online, team-based, first-person “hero shooter” video game Overwatch, developed and published by subsidiary Blizzard Entertainment for consoles including Playstation 4, Microsoft Windows, and Xbox One in 2016. The League was founded in late 2016, designed to follow the model used in North American professional sports leagues. The Overwatch League has 12 teams (nine from the U.S., one from South Korea, one from the United Kingdom, and one from China). The teams are tied to major cities, and players sign contracts that entitle them to a salary and to a share of potential winnings.
The first season of the Overwatch League ran from January 2018 through June 2018 with a total prize pool of $3.50 mln. All inaugural season games took place at the Blizzard Arena in Los Angeles and were broadcast online through sources including the Overwatch League website and Major League Gaming, a professional esports organization and tournament host acquired by ATVI in early 2016 that has featured as a component of ATVI’s Blizzard operating segment since the second quarter of 2017.
Activision's agreement with ESPN and Disney XD was announced during yesterday's session, and it calls for immediate coverage of the ongoing playoffs. The playoffs will be concluded with a Grand Finals event at the Barclays Center in New York on July 27-28. $1.4 mln are at stake in the Grand Finals prize pool. Coverage will be available on ESPN and Disney XD, and events will also be streamed for subscribers on network-affiliated apps. The ESPN telecast of the Grand Finals will mark the first time that live competitive gaming has aired on the flagship network during primetime. The deal will carry into next year, providing coverage of Overwatch League’s second season and amounting to hundreds of hours of live and highlight programming for the debutante league across Disney XD, ABC, and ESPN networks.
Broadly speaking, this agreement and the considerable exposure it provides point to the growing popularity of professional gaming. During the first quarter, video game streaming site Twitch (which will continue to broadcast Overwatch League competition in the wake of the ESPN/Disney deal) saw a 20.9% quarter/quarter increase in its viewership to 953,000. Twitch, which is owned by Amazon (AMZN), allows viewers to send tips to streamers. Streamlabs estimates that tipping volume during the first quarter increased 33.0% quarter/quarter to $34.85 mln. However, only 15% of Twitch streamers use Streamlabs software to stream their games, meaning the total tipping volume across the Twitch platform was much higher.
It is estimated that the audience for video game streaming is several times larger than the subscriber base of Netflix (NFLX). Furthermore, Twitch, which began operating in 2011, has a larger audience than some news networks, like CNN and MSNBC.
With the number of players and viewers growing at a sharp rate, it would not be surprising to see more companies become interested in catering to the community, which is still in the early stages of growth. Activision is known as a premiere video game publisher, meaning its involvement in esports should be supportive for the overall popularity of video game streaming.
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