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Activision Blizzard Creates E-Sports League for Hot Video Game

November 4, 2016, 6:58 PM UTC
Crowd waits for video presentation at the Activision booth during the 2014 Electronic Entertainment Expo, known as E3, in Los Angeles
A crowd waits for a video presentation at the Activision booth during the 2014 Electronic Entertainment Expo, known as E3, in Los Angeles, California June 11, 2014. REUTERS/Jonathan Alcorn/File Photo GLOBAL BUSINESS WEEK AHEAD PACKAGE - SEARCH 'BUSINESS WEEK AHEAD 31 OCT' FOR ALL IMAGES - RTX2R4S5
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Activision Blizzard said on Friday it is creating a professional e-sports league based around its popular first-person shooter videogame Overwatch, as it pushes deeper into the fast-growing market for competitive gaming.

E-sports refers to events ranging from virtual warfare games to computer-simulated soccer matches that are often played for big prize money in tournaments.

The company’s Blizzard unit, best known for creating the World of Warcraft franchise, will start the first league in 2017. The teams will be representing major cities across the world.

“We looked at a lot of different models, but ultimately what we came to appreciate is we want our players to be celebrated as local heroes,” Activision Blizzard Chief Executive Bobby Kotick said in an interview.

So far, leagues have typically been created off existing teams that were already competing in e-sports tournaments, but Blizzard is focused on building the teams from the ground up.

At the start of the season, Blizzard will host a combine, an event where players can showcase their gaming skills. Eligible videogame players will be invited to try out for teams and assessed over a range of tests.

About 214 million people are expected to watch gaming competitions worldwide in 2016, according to research firm SuperData. As e-sports becomes more mainstream, it has also attracted attention from cable channels such as TBS and ESPN.

The booming popularity of e-sports is also cannibalizing time people used to spend watching traditional games.

Roughly 76% of e-sports fans say that watching competitive gaming is eating into the hours they used to spend watching regular sports events, according to a survey by research firm Newzoo.

Kotick said the company has had held conversations with prospective owners for more than a year, and that it is primarily focusing on individual entrepreneurs, not companies, to own teams. The company will sell local teams in several markets globally, but declined to disclose which markets yet.

The league is expected to generate broadcast, licensing and sponsorship revenue, which will be split between Activision Blizzard (ATVI) and the teams.

Revenue from e-sports in 2016 is expected to grow to $493 million in 2016 globally and touch $1.1 billion in 2019, according to Newzoo.

Any player picked up by a team during the signing period will be guaranteed a contract that includes a minimum salary and benefits package, Blizzard said in a statement.

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Activision Blizzard has invested heavily in e-sports, creating an in-house e-sports division last October and buying Major League Gaming (MLG), which broadcasts live videogame matches, in January.

Blizzard released “Overwatch” on May 24 to rave reviews. The multi-player futuristic game now has more than 20 million players.

“Our hope was when the team came up with the idea of Overwatch, that this would be the definitive e-sport,” Kotick said.