Activision acquires MLG in bid to create the ESPN of e-sports

Video game publisher Activision Blizzard has acquired leading e-sports provider Major League Gaming (MLG) as part of its plan to create the "ESPN of e-sports."

Activision, the publisher of the popular "Call of Duty" game franchise, paid $46 million in cash for MLG's assets, as reported by E-sports Observer late Monday. MLG specialises in creating and streaming events live online, organizing competitions and running competitive gaming leagues.

"Our acquisition of Major League Gaming's business furthers our plans to create the ESPN of esports," said Bobby Kotick, CEO of Activision Blizzard, in a press release.

"MLG's ability to create premium content, its proven broadcast technology platform – including its live streaming capabilities – strengthens our strategic position in competitive gaming."

Attendees play the "Call of Duty: Black Ops III" game by Activision Blizzard Inc. during the E3 Electronic Entertainment Expo in Los Angeles.
Patrick T. Fallon | Bloomberg | Getty Images
Attendees play the "Call of Duty: Black Ops III" game by Activision Blizzard Inc. during the E3 Electronic Entertainment Expo in Los Angeles.

The e-sports sector is becoming increasingly lucrative. According to games market research firm Newzoo, global esports revenue was worth $252 million in 2015, and is predicted be worth $765 million by 2018.

The acquisition makes strategic sense, according to Piers Harding-Rolls, director and head of games for IHS technology.

"It gives them access to a growing online video platform for esports and gaming content, albeit weighted heavily towards a North American audience," he told CNBC via email.

"Video streaming platforms are fundamental to the future success of esports due to their ability to scale, reach a global audience and monetise that audience through advertising. While the advertising opportunity is interesting for the longer term, the importance of video content for games marketing makes this as much a strategic marketing play for Activision as a direct revenue opportunity."

Activision has invested heavily in the e-sports sector. Last year, it set up a worldwide e-sports league for "Call of Duty" and created Activision Blizzard Media Networks, a division of the company focused on developing e-sports content, which is chaired by the former CEO of ESPN and the NFL Network Steve Bornstein.

It also established Activision Blizzard Studios, which will develop films and television shows based on Activision's games library.

Harding-Rolls explained why Activision has been diversifying away from being a purely gamemaking company.

"Activision is following a pattern already established by big media companies such as Disney and Warner, by leveraging their portfolio of content properties and investing into adjacent licensing and entertainment markets," he said.

"It just happens that in contrast to traditional big media companies, Activision is extending towards more traditional media - film and video - and licensing opportunities - films, toys, merchandise - from a business centred on games. This 'umbrella' strategy is a pillar of Activision's longer term growth strategy and underlines the growing importance of games to the wider entertainment industry."