Activision's competitive video game watching hits new record

David M. Benett | Getty Images

Less than six months after launching its eSports subsidiary, Activision Blizzard seems to have a hit on its hands.

Viewership in the company's just-completed "Counter-Strike: Global Offensive Major Championship" set competitive video gaming records, said Activision, with viewers watching a total of 45 million hours of live broadcast over the five-day event.

All totaled, the event captured 71 million video views, with concurrent views hitting 1.6 million at one point.

If all of that sounds a bit confusing, try this: Two weekends ago, millions of video game fans spent hours watching on their PCs and mobile devices as other people played a game. And the number of people doing that regularly is on the rise.

"Last year, more than 225 million people watched competitive gaming, and the passion, engagement and size of this audience only continues to grow," said Mike Sepso, senior vice president of Activision Blizzard Media Networks and co-founder of Major League Gaming.

The big business of Esports
The big business of Esports

Players in the recent tournament competed for a $1 million prize pool.

While most of the media's attention is on virtual reality when it comes to new frontiers in video games, eSports is quickly becoming a force to be reckoned with. Electronic Arts has also launched its own competitive gaming unit, tapping one of its highest-profile executives, Peter Moore, EA's chief operating officer and former head of Microsoft's Xbox subsidiary, to oversee the division.

While EA's unit is still ramping up, Activision has expanded quickly, buying MLG last December for $46 million. That gave the company a mature platform to host tournaments and leverage relationships with television networks, including ESPN and USA.

The audience for eSports is certainly there. More than twice as many people viewed a competitive video game tournament last year than watched Super Bowl 50. And by 2018, the audience is expected to hit 323 million, according to analysis firm Newzoo.

E-sports betting to become a boon for gambling industry
eSports is coming to primetime

R.W. Baird analyst Colin Sebastian expects eSports revenue to reach $1 billion by 2018 — a big leap from an expected $200 million in 2015. There are significant opportunities with tournaments, advertising and sponsorships, broadcast contracts and wagering.

Perhaps more importantly, it's also a chance to deepen user engagement and increase monetization of game titles — as games played in tournaments are likely to see a longer tail at retail as fans try to emulate professional gamers.

For investors, though, it could be a little while before the success of Activision's (or EA's) eSports division trickles down to investors, say analysts.

"ESports is still mostly a marketing play for Activision — and the investment and impact in 2016 will likely remain minimal," said Ben Schachter of Macquarie Securities.