NBA and Take-Two team to launch eSports league

The National Basketball Association is moving beyond the hardwoods.

The NBA and Take-Two Interactive Software have teamed up to launch an eSports organization - marking the first time a virtual sports team has been owned by a pro sport league.

"It's based on the same bricks-and-mortar model of a league that we currently operate," NBA Commissioner Adam Silver told CNBC's "Squawk Alley." "But it opens up an entirely new world. So rather than being dependent on a limited pool, even though a global pool, of players with a certain prowess, this opens up a league to virtually everyone...everyone's on equal footing in this league, it's just a question of how good of a gamer you are."

Strauss Zelnick, Take-Two Interactive Software
Scott Mlyn | CNBC

NBA 2K eLeague, centered around Take-Two's "NBA 2K" franchise, will launch in 2018 and represents the gamemaker's first major push into the world of competitive gaming. Teams in the league will be operated by each of the NBA's 30 franchises and will follow a tournament format similar to the NBA — meaning a regular season, a bracketed playoff, then a championship match.

"We believe we have a unique opportunity to develop something truly special for our fans and the young and growing eSports community," said Silver.

Coverage of the eSports competitions is expected to take place both online and on television broadcasts.

Take-Two, which also makes the "Grand Theft Auto" series, and the NBA have been business partners since 1999, when the publisher launched its "NBA 2K" franchise. That annual series has become one of the most reliable in Take-Two's arsenal, with the most recent version selling more than 7 million units since it was released last September.

"It's our collective view that what consumers are looking for is a professional league with professional players with a sport that's beloved, a sport that won't come and go, but that will only grow in popularity," Take-Two CEO Strauss Zelnick told "Squawk Alley."

The publisher has dabbled in eSports before, launching an "NBA 2K"-themed tournament last year, but has largely stayed on the sidelines of competitive gaming. Zelnick last year referred to eSports as "a marketing umbrella". The rapid growth of the field, though, may have changed his thinking on the matter.

Even with its high-profile partner, Take-Two is a latecomer to the eSports field. In 2015, both Activision and Electronic Arts launched competitive gaming subsidiaries. EA tapped long-time gaming veteran Peter Moore (who previously served as COO of the company) to run the unit, while Activision brought in the former CEO of ESPN and the NFL Network to run its division.

That head start has given the other gaming companies a chance to make distribution inroads. Earlier this month, ESPN announced it would team with EA to broadcast FIFA eSports tournaments on the majority of its channels, including ESPN, ESPN2, ESPN Deportes and the ESPN3 online network.

eSports, as an industry, is still in its infancy, but analysts expect it to grow quickly. While the NBA is the first league to make an investment in the field, individual sports teams have been investing for some time. Since December 2016 alone, the Houston Rockets, Milwaukee Bucks and Miami Heat have all bought stakes in an eSports organization or made a high profile hire in the field. And the Dallas Cowboys are reportedly considering a purchase as well.

"It's an exciting trend and one with long-term prospects, as it's one of few themes that encompasses interactive entertainment, media, iGaming, virtual reality and mobile," says Ben Schachter of Macquarie Capital Markets. "Investments by professional sports teams into eSports [is] a way to maintain viewership and engagement and to connect with millennials. ... Overall, we expect this trend to accelerate."