Expanding its media empire, Activision Blizzard Inc. of Santa Monica last week purchased video-game league and online broadcaster Major League Gaming for $46 million.
Activision aims to use the acquisition to bolster its quest to become the ESPN of e-sports. But industry watchers say the video-game publisher’s recent moves suggest the company isn’t content to stop there and that it could harbor bigger goals more in line with ESPN’s parent, Walt Disney Co.
In terms of the most recent acquisition, plans are already in the works for Activision to develop an e-sports cable channel. In addition, upgrades will be made to MLG’s online broadcast platform, which industry insiders said would be needed to handle larger audiences.
While the reported purchase price for the New York firm is small compared with Activision’s $27 billion market capitalization, the move points to grander ambitions.
“Activision seems to want to be bigger than a game company by moving into movies, action figures, e-sports and mobile games,” said Joost van Dreunen, chief executive of SuperData Research, a New York video-game research firm. “They want to cover everything and be larger than life. They want to be a media conglomerate.”
After relying on console and PC game sales for almost all of its 37-year history, the company has transitioned into the digital realm. In the quarter ended Sept. 30, about 73 percent of Activision’s $960 million in revenue was scored from online distribution channels, according to a filing with the Securities and Exchange Commission. Those purchases came in the form of full-game downloads, expansion packs, subscriptions and virtual goods.
Now the company is moving rapidly to diversify its business, as exhibited by its activity over the last four months.
The company launched an e-sports division, Activision Blizzard Media Networks, in October and a movie studio, Activision Blizzard Studios, in November. Activision also agreed to purchase Irish mobile-game maker King Digital Entertainment in November for $5.9 billion; King created the popular Candy Crush game.
“Activision’s strategy fits into games becoming a much more mainstream form of entertainment,” said van Dreunen.
Much like Hollywood, the video-game industry traditionally has been a hit-driven business, with multimillion-dollar investments into game development quickly earned back or lost within weeks after a title hits shelves. Experts said diversification offers Activision new ways to milk value out of its most cherished properties while capitalizing on trends in the industry.
When Activision acquired MLG, it quickly made its intentions plain.
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