Activision Blizzard Inc. (ATVI - Free Report) is leaving no stone unturned to make Overwatch League a success. The video-game developer and publisher recently announced a two-year deal with Twitch, under which the social video service provider will stream every match of the world’s first global city-based e-sports league.
The professionally run Overwatch League comprise teams from 12 cities including London and Shanghai. Activision sold the franchises for $20 million each. Some of the prominent franchise heads include Los Angeles Rams owner Stanley Kroenke and the New England Patriots’ Robert Kraft.
Twitch will stream matches in English, Korean and French. Except in China, the service will be available globally. The Overwatch league will be free to watch, supported by advertising. Moreover, the league is sponsored by the likes of HP and Intel Corporation.
The first game of the e-sports league is set to be held on Jan 10, 2018.
Activision Blizzard, Inc Price and Consensus
Growing E-Sports Market - Key Catalyst
E-sports, which are live video game tournaments, are fast emerging as lucrative business opportunity. Like traditional sports, e-sports tournaments are held at stadiums and televised or broadcast online. Importantly, these tournaments have alluring prize money.
With consistent increase in viewership, corporate sponsorships and growing media coverage, e-sports is here to stay. Activision’s partnership with Twitch is a trendsetter in this regard. The companies are also planning to offer innovative rewards for fans, which will further boost attraction of the league.
Activision has long been undertaking efforts to build its presence in this arena. In fact, the company has set up an exclusive e-sports unit spearheaded by former ESPN CEO Steve Bornstein. Also, it acquired MLG, a leading e-sports organization for an estimated $46 million. Activision has already established Call of Duty World League.
Per the latest report from Newzoo, in 2017, revenues from e-sports are expected to rise 34% to $660 million. From 2015 to 2020, revenues are likely to record a CAGR of 35.9% to $1.50 billion.
Portfolio Strength Drives Growth
Activision’s shares have gained 68.9% in the past 12 months, substantially outperforming the 42.8% rally of the industry.
Activision’s expanding franchise portfolio that includes offerings like StarCraft, World of Warcraft, Diablo, Hearthstone, Heroes of the Storm, Call of Duty: WWII and Destiny 2 will drive growth in the long haul.
These titles provide the company a competitive edge over the likes of Electronic Arts (EA - Free Report) and Take-Two Interactive Software Inc. (TTWO - Free Report) who are stepping up their efforts to match Activision’s growing dominance.
EA partnered with the National Football League (NFL) to organize the Madden NFL Club Championship. In February 2017, Take Two inked a deal with NBA to launch NBA 2K eLeague, which will be functional in 2018.
Zacks Rank & Key Pick
Activision has a Zacks Rank #3 (Hold).
Nintendo (NTDOY - Free Report) is a stock worth considering in the same sector, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nintendo's fiscal 2018 earnings inched up by a penny to $1.23 in the last 60 days.
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