AGORACOM Small-cap Investor Relations Blog

This NFL giant just got into esports, and here’s what the tipping point was

• On Tuesday, Activision Blizzard revealed that the Wilf family’s WISE Ventures investment fund, founded by Vikings owners Mark and Zygi Wilf, will become part of its upcoming Call of Duty league by fielding a Minnesota-based team.

Annie Pei

It’s just the first step in getting in on the “next evolution of entertainment.”

That’s how Jonathan Wilf describes his family’s, and subsequently the Minnesota Vikings’, first esports play. On Tuesday, Activision Blizzard revealed that the Wilf family’s WISE Ventures investment fund, founded by Vikings owners Mark and Zygi Wilf, will become part of its upcoming Call of Duty league by fielding a Minnesota-based team.

And while the Vikings owners have had their eye on the esports industry for awhile, it was Activision Blizzard’s approach to building the space that led them to finally get in on the hype. Just like their Overwatch League, the gaming giant intends to run another city-based franchise with Call of Duty as inspired by traditional sports leagues.

“Having watched closely as the ecosystem evolved and matured with the first few years of franchised leagues, we are confident in the long-term potential of what Activision Blizzard is building and in the esports industry as a whole,” Wilf told CNBC.

This makes the Vikings the latest traditional sports entity to charge into the esports industry, which research firm Newzoo projects will generate over one billion dollars in revenue this year. That’s a year-on-year growth of 27% with the North American market accounting for over a third of that $1.1 billion revenue.

But the Vikings are also entering a field where a good number of traditional sports giants have already snapped up slots in various leagues or started their own esports branches. Take-Two’s NBA 2K League, for example, features 21 teams that are each owned by their respective city franchises. Activision Blizzard’s Overwatch League, which features city-based franchise teams, also boasts a few traditional sports entities including the owners of the New England Patriots and the Los Angeles Rams.

These same traditional sports entities have also been wheeling and dealing in the space. In 2017, the Houston Rockets paid $13 million for a slot in Riot Games’ League of Legends North American league. This past April, the Rockets sold their League of Legends team, known as Clutch Gaming, to Harris Blitzer Sports & Entertainment, the parent company of the Philadelphia 76ers, the New Jersey Devils and esports team Dignitas, for a reported $20 million.

But despite their later entry into esports, Wilf emphasizes that the Vikings owners were waiting for what they perceived as a strong investment that would give them a solid foothold in the space.

“For us, investing in esports was never about being first, it was about finding the right opportunity at the right time,” said Wilf. “The proven staying power of Call of Duty as a franchise certainly factored into our thinking.”

Wilf also revealed that WISE Ventures is looking to expand into other games, and that they are exploring the possibility of building an esports-dedicated arena in Eagan, Minnesota on the Vikings Lakes campus.

The Call of Duty league is set to launch in 2020, and its addition of the Wilf family brings the total number of announced teams to seven. Back in March, ESPN reported that franchise spots for the new esports league were being sold at $25 million per slot, though Activision Blizzard has never confirmed that number.

Source: https://www.cnbc.com/2019/07/05/this-nfl-giant-just-got-into-esports-and-heres-what-the-tipping-point-was.html

Facing off with Fortnite, Apex is turning to esports

• Fortnite soared to the top of the video game world when it launched in 2017.
• Electronic Arts’ “Apex Legends,” a similar free-to-play battle royale game, where players fight until the last squad standing, eclipsed “Fortnite” in online views in February.

By Shannon Liao, CNN Business

New York (CNN Business) Fortnite soared to the top of the video game world when it launched in 2017. Electronic Arts’ “Apex Legends,” a similar free-to-play battle royale game, where players fight until the last squad standing, eclipsed “Fortnite” in online views in February. Apex’s victory was short-lived, and Fortnite surpassed its viewership the following month. Now EA has plans to get Apex back on top once again. The company is betting competitions of professional and amateur gamers — known as esports — will broaden Apex’s audience.

Game enthusiasts play “Apex Legends” during the EA Play 2019 event at the Hollywood Palladium in June.

New features and esports deals

EA made a big play to bolster Apex’s esport credentials in June when it announced a deal with ESPN to allow college and professional esports players to compete in Apex games at two events over the summer. The game also added a new competitive mode Tuesday that ranks gamers based on how many wins and kills they can pull off. Fortnite implemented a similar competitive-ranking mode in March.   “Pro teams typically scout from the upper echelon,” said Chris Hopper, head of esports for North America at Riot Games, which develops “League of Legends,” one of the biggest esports titles. “But they also find up-and-coming talent in the ranks immediately below.” EA is leaning on its partnership with ESPN to stream Apex games live online and, later, on the air on the ESPN and ABC networks. ESPN’s director of business development, Kevin Lopes, told CNN Business the network was attracted to Apex Legends’ rising popularity and esports potential. The two companies already had an existing esports partnership over football game “Madden NFL.”   “Making Apex an esport will help drive the audience,” said Michael Pachter, an analyst at financial services firm Wedbush. “It gives players something to watch and learn from.”
World’s top gamers vie for $500,000 in prizes at a Fortnite International video game tournament.   The esports industry has attracted millions of viewers across multiple platforms, and it could reach about $3 billion in market size in 2022, Goldman Sachs forecasts. It’s not clear how exactly that translates into money for EA — esports revenue is hard to pinpoint, though sponsorships and event ticket sales can all generate revenue to some degree. Apex also makes money through in-game purchases such as cosmetic upgrades. But esports can encourage gamers to stick with particular titles and can keep the game feeling relevant for longer, “both of which lead to more chances for monetization,” said Nicole Pike, managing director at Nielsen Esports.   EA estimated during its last earnings call that Apex would bring in $300 to $400 million next year. For comparison, Fortnite made $2.4 billion in revenue in 2018, according to Nielsen’s SuperData.

Apex vs. Fortnite

“People play Fortnite partly because their friends are on Fortnite,” said Will Partin, a doctoral candidate at UNC Chapel Hill who studies esports. “The best-case scenario for the Apex Legends [ESPN] event is that it exposes the game to a lot of people who haven’t tried the battle royale genre yet.”

Esports is EA’s latest strategy to try and generate buzz for the title. When Apex debuted in February, EA paid well-known game streamers to play Apex for the first 24 hours. EA told CNN Business it stopped paying them after that.   The marketing bid paid off: Apex attracted 50 million players within the first month of launch. EA’s chief executive Andrew Wilson said it was the “fastest-growing new game we’ve ever had” during a May earnings call.   “It was our way of showing the world, when people go on

[game-streaming platform]

Twitch and it’s one of the top games, you’re like ‘Oh, that looks interesting. What’s that?'” said Vince Zampella, CEO of Respawn, which made Apex. EA acquired the developer in 2017. If people play Apex as a sport, the game could start winning back fan attention and viewership on live-streaming services.   Some observers think there’s potential for the game to actually succeed as an esports arena. Apex has unique characters and is not updated as frequently as Fortnite, so it’s easier to adapt to, said Will Hershey, co-founder and CEO at the investment advisory firm Roundhill Investments.   “Ultimately, I believe [Apex] has the potential to be more of an esport, in the traditional sense, than Fortnite does,” he said.  

Source: https://www.cnn.com/2019/07/04/tech/apex-fortnite-esports-ea-e3/index.html