Activision Could Wait Years for Promised Esports Profits
A global esports audience is expected to reach nearly 700 million by 2022 and be worth multiple billions in the next three years. Overwatch creator Activision Blizzard has been investing heavily into the promised success of esports, but experts believe it could take years for the company to realize esports profits.
According to The Motley Fool, Activision has sold 20 esports teams since launching the Overwatch League in January 2018. It has also signed broadcast deals with Twitch, ESPN, Disney XD, and ABC, as well as gaining huge sponsorship deals.
New business, high investment, and healthy competition in esports
All that said, esports is still new business for Activision Blizzard and its not yet delivering profits for the company. Blizzard has seen a 25% decline in revenue from Overwatch League in the first six months of 2019 faced with strong competition from World of Warcraft: Battle of Azeroth. The company also committed a $50 million investment into esports last year, spending on staff, facilities and equipment, for esports broadcasting and its online games portfolio.
Activision Blizzard has seen “double-digit” growth in its second season of Overwatch League though, based on average minute audience. Overwatch Season Two’s Grand Finals saw an average minute audience figure rise 16% year over year with 1.12 million esports fans watching the ultimate final.
Call of Duty could also deliver for Activision Blizzard. The game saw a 50% year-on-year increase in viewers for two events earlier in 2019.
Related Article: Activision Blizzard’s last earnings report surprised investors
Events, local fans, and better viewing experiences will deliver success to the nascent industry
Two elements might accelerate success for Activision. Firstly, esports events and local fan bases, bringing esports into the wider limelight like traditional sports, will contribute to esports growth. Overwatch League “watch parties” drive merchandise sales and games hosted in Dallas and Atlanta saw excellent turnout.
Secondly, for a wider esports audience, companies like Activision need to focus on delivering a better viewing experience. Though this is difficult with fast-paced, first person, games like Overwatch. After all, like with traditional sports, it’s the viewers that will deliver bottom-line profits both through ticket sales and encouraging advertisers and sponsors.
Activision’s chief financial officer Dennis Durkin is reported as saying:
“There’s still a lot of room for further improvement in the viewing experience, and this is a key focus area for us as we think it’s critical to continuing to make the broadcast not only compelling but easily digestible for mass-market audiences.”
CEO Bobby Kotick also told CNBC that he’s considering esports profits “on a 10-year time horizon.”
There are good indicators for the esports industry, however. Esports player salaries have been “doubling every two to three years since 2010,” writes The Motley Fool. As well as team sales, Activision Blizzard has signed a co-marketing deal with Kellogg that will see Cheez-It and Pringles packaging with Overwatch League branding.
The Overwatch League itself is delivering shake-ups as exciting for fans as NFL and UK Premiership moves, further demonstrating the potential of the industry to engage its growing audience.