After shutting down an existing esports league, Activision Blizzard Inc. is betting big on a new league that will begin its inaugural season Jan 24.

The Santa Monica-based game publisher is replacing its “Call of Duty” World League, which wrapped a three-year run in August, with a retooled version that features fewer teams and city-based franchises.

Instead of World League’s 32 teams, Activision’s new “Call of Duty” League has 12 teams located in major cities across the globe. Los Angeles will be the only city with two franchises. Teams will compete in a six-month season, with the winner of the league’s championship in July claiming a $6 million prize.

ESPN reported that buy-ins for franchise slots begin at $25 million, though Activision would not disclose price details.

“It’s our ambition to reimagine what esports can be and to celebrate some of the best competitors in the world in the process,” “Call of Duty” League Commissioner Johanna Faries said.

League leader

Activision’s “Call of Duty” first-person shooter games have been around since 2003, when the first game was developed by Woodland Hills-based studio Infinity Ward, which teamed with Activision to publish and distribute the game.

Since then, Activision has rolled out 16 “Call of Duty” titles. The company sees esports leagues as an opportunity to turn that vast catalog of intellectual property into a new revenue stream.

Activision’s first effort, “Call of Duty” World League, launched in 2016. The new “Call of Duty” League looks to expand on the success of the original competition.

“‘Call of Duty’ League includes many great aspects of its previous esports iteration as the ‘Call of Duty’ World League, and also introduces several unique elements to take the experience to new heights,” Faries explained.

Faries said the league will not only focus on a new game but will also provide additional opportunities for fans to engage with the sport, such as amateur online competitions.

All players in the “Call of Duty” League will be playing Activision’s recently released “Call of Duty: Modern Warfare” franchise title on Sony Corp.’s PlayStation 4 console.

Activision has not yet decided on a partner to stream its league matches, Faries said, but the company expects to name one soon.

“Competitive leagues have immediate as well as downstream benefits,” said Remer Rietkerk, head of esports at analytics firm Newzoo. “From an immediate perspective, it creates an opportunity to grow a new business line. From a revenue perspective, it also provides the opportunity to introduce new digital goods and activations connected to the esport.”

Rietkerk said esports leagues give publishers the opportunity to sell merchandise based on player equipment and jerseys, among other potential revenue streams. He noted that Activision can benefit from fans who may be incentivized to download the game.

The “Call of Duty” League will also help retain existing fans, Rietkerk predicted.

“Successful esports often see benefits in user retention and user revival for the core game, (and) it also provides fans an additional touchpoint and community connected to the (intellectual property),” he said.

‘Overwatch’ success

Activision found a successful tournament model with its “Overwatch” League, which boasts a large viewer base and lucrative ad opportunities.

Last year, an average of 137,954 fans watched each “Overwatch” League match, either online or in person, according to esports analytics company ESM One. In all, they viewed 18.6 million hours of content.

“From a publisher perspective, Activision-Blizzard is a leading firm in the esports space,” Rietkerk said. “‘Overwatch’ League remains a major esports property, and the ‘Call of Duty’ League looks to follow in its footsteps.”

Activision wants to continue the momentum of the “Overwatch” League, while finding new ways to engage and retain fans.

In addition to the new “Call of Duty” professional competition, amateur and semi-pro gamers can compete for their shot at $1 million, Faries said. “We also have an amateur-path-to-pro pipeline called the ‘Call of Duty’ League Challengers, which allows players from around the world to compete online and at our events,” Faries said.

Los Angeles esports fans will find themselves well-represented in the new league.

One team, the Los Angeles Guerrillas, will be owned by Denver-based Kroenke Sports and Entertainment, which also owns the Los Angeles Rams.

Culver City-based Immortals Gaming Club will back the other team, which will operate under the name OpTic Gaming Los Angeles.

Other “Call of Duty” League teams will be located in London; Paris; Toronto; Atlanta; Chicago; Dallas; Minneapolis; New York; Orlando, Fla.; and Washington, D.C.

Active Activision

Activision’s balance sheet could use an additional revenue driver. The company hopes a new league can replicate the success of the “Overwatch” League.

In the company’s most recent earnings report, Activision edged third-quarter expectations with revenue of $1.3 billion and net income of $204 million. Analysts had predicted the company would bring in $1.1 billion.

The company reported 36 million monthly active users in the quarter, a slight dip from 37 million in the second quarter.

Activision Chief Executive Bobby Kotick said on the November earnings call that introducing more mobile and free games based on Activision’s existing successful franchises might be a key to winning users back.

The company released a mobile version of “Call of Duty” in October. Activision reported more than 148 million downloads in the first month. It was Activision’s largest mobile launch to date and generated roughly $54 million in revenue.

“As we introduce mobile and free-to-play games … we believe we can increase audience size, engagement and monetization,” Kotick said.

Although diversifying an esports catalog can be beneficial, Newzoo’s Rietkerk explained it can be difficult for a publisher to effectively monetize each offshoot.

“While there may be challenges stemming from continued fragmentation of the esports audience around monetization, new properties are often a net positive in terms of overall esports audience growth,” Rietkerk said.