M+E Connections

Activision Blizzard will be significantly expanding its eSports initiatives this year after seeing strong results from that business in its fourth quarter and fiscal year, ended Dec. 31, according to company executives.

The game company already “accelerated” its eSports efforts with its purchase of Major League Gaming (MLG) for about $46 million last year, the formation of the “Call of Duty” World League, and the recent creation of an “Overwatch” League for the first-person shooter game of the same name published by its Blizzard Entertainment division, Activision Blizzard CEO Robert Kotick pointed out Feb. 9 on an earnings call.

During 2016, MLG extended its viewer reach on social networks including Facebook and Instagram by 50% compared to 2015, COO Thomas Tippl told analysts. Other milestones that MLG achieved last year included hosting tournaments for the games “Call of Duty,” “Overwatch” and “World of Warcraft,” launching an enhanced viewing experience, integrating the MLG.tv player into “Call of Duty,” and increasing player engagement by more than 60% compared to 2015, he said.

The “Call of Duty” World League, meanwhile, “sparked strong growth” for eSports related to the company’s popular game series, he said, adding Activision doubled the 2016 prize pool to more than $3.5 million across 16 hosted events. “Millions of fans were drawn to the action with the 2016 season delivering 120 million video views and more than twice the time spent viewing” compared to the prior year’s season, he told analysts.

The company’s “ambition is to create nothing less than the eSports equivalent of the world’s established major professional leagues,” Kotick said. “To this end, in 2017, we plan to start the process of selling teams and commercializing media rights for the ‘Overwatch’ League. We look forward to welcoming team owners with the expertise, skills and investment required to build the professional league together,” he said.

Activision Blizzard’s King Digital Entertainment social game division, meanwhile, “made meaningful progress” with its advertising initiatives last year, he said. Referring to growth initiatives including ads and eSports, he said the company intends to invest in those “long-term growth pillars further in 2017 and expect them to have even greater impact in 2018 and beyond.”

Although Activision Blizzard will have a “lighter release slate” of games in 2017 than it did in 2016, CFO Dennis Durkin said its “strong business platform, combined with promising emerging opportunities like eSports, advertising and consumer products provides us with a compelling opportunity for growth in 2018 and beyond.”

Shares in the company were up 16.59% at $46.32 in afternoon trading Feb. 10 after reporting stronger fourth-quarter results than it did in the same quarter a year earlier. Revenue jumped from $1.35 billion to $2.01 billion, Activision Blizzard said, calling that an “all-time record” in the news release. Profit grew to $254 million (33 cents a share) from $159 million (21 cents a share).

The company “delivered large EPS upside on modest revenue upside,” Wedbush Securities analyst Michael Pachter said in a research note Feb. 10. Despite “broad strength” from Blizzard titles, sales of “Call of Duty: Infinite Warfare” – released in November — were “disappointing,” he said.

Activision Blizzard rival Electronic Arts said Jan. 31 that it, too, planned to boost its eSports initiatives in its next fiscal year.