EA Joins the eSports Fight

December 11, 2015, 2:46 PM UTC
Credit: Electronic Arts

Two months after archrival Activision-Blizzard announced plans to focus on eSports, video game giant Electronic Arts (EA) is following suit.

The game publisher unveiled a competitive gaming division late Thursday, and upped the stakes by tapping one of its highest profile executives to run the unit. Peter Moore, EA’s chief operating officer and the former head of Microsoft’s (MSFT) Xbox subsidiary, will oversee the division, which will utilize EA’s biggest franchises—including FIFA, Madden NFL, and Battlefield—in professional gaming events.

“There is no one better in our industry to lead this new effort than Peter,” EA CEO Andrew Wilson said in a blog post. “He was an early pioneer in championing competitive gaming programs, such as the FIFA Interactive World Cup and the EA SPORTS Challenge Series, and Peter’s personal passions for the player experience, sports and competition, make him a tremendous leader for this new division.”

By tapping internal talent for the eSports unit, even someone as widely respected and beloved in the gaming community as Moore, EA is positioning its entry into the field differently than Activision (ATVI).

The publisher of Call of Duty looked outside the company to build its eSports division, luring Steve Bornstein, former CEO of ESPN and the NFL Network, to serve as chairman, with Mike Sepso, co-founder of Major League Gaming, as his right hand. That pointed at a broad media strategy, with a focus on eSports broadcasting.

EA avoided discussing specific plans for its unit, though it did say it planned to pursue broadcast events as well.

While virtual reality has captured more mainstream attention this year, there’s a big push within the gaming industry for eSports. Although there’s not a lot of money in the field at present (compared with overall totals)—and most of that is going to players and Twitch, which broadcasts the majority of the competitions—the potential is vast.

In August, competitors in a tournament for Dota 2 split an $18 million prize pool. And 36 million people watched the finals match for League of Legends in October.

R.W. Baird analyst Colin Sebastian expects eSports revenues to reach $1 billion by 2018—a big leap from an expected $200 million this year. There are significant opportunities with tournaments, advertising and sponsorships, broadcast contracts, and wagering.

“For EA, we estimate that revenue and engagement opportunities from eSports could add 20 to 30 cents in EPS over the next few years,” Sebastian says.

Just as important, eSports is a marketing gold mine. The promotional value of the games played in tournaments is immense. According to Newzoo, there are 226 million eSports fans around the globe today and that number will increase to 323 million by 2018. And those fans want to play what the pros play.

That made EA’s entry into the field a fait accompli once Activision went public with its eSports plans. Failing to do so would essentially have given the Call of Duty franchise a free ride to continue dominating the sales charts.

While EA has been involved in eSports perhaps longer than any other publisher, it has failed to capitalize on that history and remained a small player in the market.

The choice of Moore to head the division is being widely praised. He was a prominent figure at Sega during that company’s launch of the heralded Dreamcast, eventually being promoted to president and COO of Sega of America. While at Microsoft, he helped position the Xbox 360 as the dominant console brand, steering the unit through what could have been a disastrous start when engineering problems resulted in many early units to overheat and lock up.

Since joining EA in 2007, he has run the company’s sports division and occupied the COO role, but has also helped mend the publisher’s reputation with gamers, who were frustrated with the quality of many of its games in the early 2000s.

“In our view, Peter Moore, as a long-term top executive, brings the necessary vision, legitimacy, and visibility to set the division up for success,” says Sebastian.

Find out how tech execs, including EA’s Andrew Wilson, unplug from work in this Fortune video:

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