Activision Blizzard crowned the San Francisco Shock as its second Overwatch League champion on Sunday in front of a sold-out crowd at Philadelphia's Wells Fargo Center arena.
Sunday's event capped off another season for the game publisher's competitive video game league that it officially launched last year with 14 teams. It was Activision Blizzard's biggest esports bet since the collapse of the publisher's "StarCraft II" game – whose predecessor "StarCraft" is often considered the first big esports sensation – and one that drove many a bullish call on the stock as Wall Street analysts picked up on the esports hype.
It was the first competitive gaming league structured as a global city-based franchise that imitated traditional sports leagues, with each of the 12 owners reportedly paying $20 million for a slot. Most of those slots were bought by the owners of traditional sports franchises, including the Kraft family.
For its second season, eight teams -- including the owners of the NHL's Vancouver Canucks -- joined the league with ESPN reporting that they paid between $30 million to $60 million in expansion fees. This was also the year Activision introduced what it called Homestand Weekends, a home-game format that it is expanding next season in another step to emulate traditional sports leagues.
While most of the recent bullish calls on Activision Blizzard have been based on its games releases – most notably its recent release of World of Warcraft Classic and the upcoming launches of Call of Duty: Mobile and Call of Duty: Modern Warfare – CEO Bobby Kotick told CNBC that esports remains a priority thanks to its broad audience appeal and, as a result, its potential to surpass the traditional sports market.
"When you look out over the next ten years, I don't see any reason why we shouldn't be able to rival major sports in terms of the economics of the opportunity," Kotick said. "But I think where we can actually surpass traditional sports is that most traditional sports are spectator sports, they're not participant sports. We're more like golf in that most of the people who are watching are also playing and have the ability to play and enjoy it."
"The engagement is different, the connection is greater and the enthusiasm is different in a lot of respects because you're spending an hour a day and an hour and a half a day as a player," he said. "So I think that's what makes it so different from traditional sports."
And that same enthusiasm for the growth of esports drives the publisher ahead of its Call of Duty esports league launch in 2020. Much like its Overwatch League, Activision's Call of Duty league will also be built on a city-based franchise that will feature a home-and-away system with 12 initial teams. ESPN reported that the buy-in for that league was $25 million per slot, though the publisher never confirmed the number.
Analysts are also looking towards Activision's annual BlizzCon event in November, with Nomura analyst Andrew Marok eyeing possible announcements for a second Overwatch game as well as a fourth installment for the publisher's Diablo franchise in a note released mid-September.
This comes amid a gaming ecosystem that's set to get more competitive. Apple launched its Apple Arcade gaming service on September 19 and Google Stadia is set to launch in November of this year, while Facebook has also continued to build its gaming and streaming platform. But Kotick believes that the same competition they're about to face could also elevate the gaming industry as a whole.
"Today we compete with Sony, Microsoft, Tencent and Nintendo," Kotick said. "[Now you're adding] Google, Facebook, Apple and Amazon. There is going to be a lot of competition for talent, there will be a lot more development efforts; We'll have a lot more well-keeled competition than we've ever had before, so that will certainly make us sharper."
"But I think in the aggregate, it should broaden the audience and broaden the appeal for great content out there and more choices for platforms," he added. According to research firm Newzoo, the global esports market could generate more than $1 billion for the first time this year.