Activision Forms E-Sports Unit in Bet You Want to Watch People Play Video Games

Forms New eSports Division

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Fans cheer as Yang Jin Hyeob, left behind glass, wins the final round of the Electronic Arts Sports FIFA Online Championship at the Nexon Co. e-Sports Stadium in Seoul on Oct. 17.
Fans cheer as Yang Jin Hyeob, left behind glass, wins the final round of the Electronic Arts Sports FIFA Online Championship at the Nexon Co. e-Sports Stadium in Seoul on Oct. 17. Credit: Jean Chung/Bloomberg

Activision Blizzard, the largest U.S.- based video game creator, is forming a division to target the fast-growing business of e-sports, where video-game players compete against each other for prizes in front of live and online audiences.

The effort will be led by Steven Bornstein, a former CEO of the NFL Network and ESPN, and Mike Sepso, co-founder of the online e-sports network Major League Gaming, Activision said Thursday.

Activision CEO Bobby Kotick sees an opportunity to create a new global sports business, not unlike major sports. In August, Amazon agreed to buy Twitch Interactive for $970 million, obtaining an online video network focused on gamers.

"There's lots of opportunities for broadcast distribution," Mr. Kotick said in an interview.

Coordinating events for Activision's growing roster of games on a local, national and international basis will attract more sponsors and make events "more compelling to watch," Mr. Kotick said. For years, the company has hosted tournaments, such as its annual BlizzCon convention, set for next month in Anaheim, California.

In e-sports, contestants play games such as "League of Legends," from Riot Games, Valve Corp.'s "Dota 2" and Activision's "Call of Duty" in tournaments, many of which are broadcast online or on TV.

The business originated in South Korea, where dedicated TV channels Ongamenet and MBC Game air regularly scheduled competitions, according to an Oct. 5 report from the brokerage firm Robert W. Baird & Co.

E-sports, which now attract some 200 million viewers around the world, could become a $1 billion business by 2020, according to Baird. That's up from $300 million this year.

Advertising and sponsorships are the main sources of revenue, followed by ticket sales and merchandise. For game publishers, the tournaments also increase awareness and purchases of their products.

In the U.S., e-sports contests appear on Amazon's Twitch network, as well as Google's YouTube channels. Time Warner's Turner Broadcasting division said last month it will air competitions on the TBS network on Friday nights starting next year. The first will feature "Valve's Counter-Strike: Global Offensive," a combat game.

Mr. Bornstein said his decision to focus on this business, rather than traditional sports, was based in part on his own 11- year-old boys who play "Destiny," a game published by Activision, and watch eSports.

"There are a lot of great entities in this space," Mr. Bornstein said in an interview. "Now it's time to try to figure out how to focus it and make it bigger."

BlizzCon, now in its 10th year, draws about 26,000 fans to the Anaheim Convention Center where it will run Nov. 6 and Nov. 7. Tickets cost $199 and online viewing is priced at $40. The tournaments offer $4 million in prizes.

-- Bloomberg News

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