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Activision Blizzard Confirms MLG Buyout As Building Block For 'ESPN Of Esports'

by Mike Futter on Jan 04, 2016 at 10:00 AM

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Following a weekend of rumor and speculation, Activision Blizzard has confirmed reports that it has acquired the entirety of Major League Gaming (MLG). Contrary to the original information that surfaced, MLG CEO and co-founder Sundance DiGiovanni is staying with the company he’s helmed for more than a dozen years.

In a statement today, Activision Blizzard CEO Bobby Kotick explained how MLG fits into the broader vision for the company's new eSports division, Activision Blizzard Media Networks. "Our acquisition of Major League Gaming’s business furthers our plans to create the ESPN of esports,” Kotick says. “MLG’s ability to create premium content, its proven broadcast technology platform – including its live streaming capabilities – strengthens our strategic position in competitive gaming. MLG has an incredibly strong and seasoned team and a thriving community.”

We spoke with DiGiovanni and Mike Sepso, senior vice president for Activision Blizzard Media Networks, about the deal. The primary message the two delivered is that MLG will continue to operate as it has.

MLG Will Remain Intact

“Major League Gaming is an iconic brand in the eSports world,” Sepso says. “We’re going to absolutely continue operating the products and businesses, but continue to expand the brand. A key part of this thing is that under no circumstances is MLG going anywhere except to bigger and better places.”

The duo also reinforced that MLG will continue to work with outside partners on games that aren’t owned by Activision Blizzard. “I would point to the upcoming Counter-Strike minor and major that we’re operating in the first quarter of 2016,” DiGiovanni says. “We’re going to continue to build and develop. Some programs come to an end naturally. There are some things that are coming up and we’re finished with, but that shouldn’t be perceived as being tied to this transaction.”

MLG has relationships with Valve for Counter-Strike: Global Offensive, Microsoft for Halo, Hi-Rez for Smite, Psyonix for Rocket League, and Nintendo for Super Smash Bros. for Wii. There also won't be changes, at least not immediately, in the relationships that exist between individual internal game franchises and their respective competitive scenes. This includes the Call of Duty World League, which is partnered up with ESL, an MLG rival.

“The individual groups inside of Activision Publishing and Blizzard Entertainment who operate the franchise and their eSports activities are going to continue to do that,” Sepso explains. “Our job is to build eSports globally into an enormous, mainstream sport, and to be the lead media network in that industry.” 

What Is Activision Blizzard Media Networks?

Sepso describes the Media Networks business as a partner to those existing eSports efforts, rather than a replacement.

“This is not a zero-sum game in this industry at this point,” he says. “We’re going to need all of the resources focused on building everything. I think if anything, from Activision and Blizzard’s point of view, this is just more resources, more closely held to propel what they’re doing on a franchise by franchise basis. Our job is to really help them do that when they need it and build out the media side of the business.”

MLG will be a significant piece of that, and Activision Blizzard has interest in the whole operation. The League brings its entire staff and its technology platforms to the publisher, and the business will not be moving to cut existing initiatives.

“It allows us to continue to operate MLG as we have in the past, servicing our partners,” DiGiovanni says. “We’ll have more resources behind us, more of an opportunity to build and create the best experiences, whether it be a live event, broadcast, or online tournament.”

The business will continue to operate similarly to how it did independently, though DiGiovanni will have an expanded role beyond MLG. It’s not been announced exactly what shape that will take, he’ll be working with Sepso’s team in the Media Networks business.

The League's ongoing operations give us our first look at how Activision Blizzard will be shaping its newest corporate pillar. The company hasn’t talked about specific operations yet for the Media Networks division that will house MLG competitions and broadcasts, but Sepso says the purchase gives the publisher a leg-up on reaching its goals.

“[Our mission is] to build the biggest and best eSports media platform in the world,” Sepso says. “This acquisition instantly makes us a significant player in the space.”

Competitive Gaming Is Growing, And Major Publishers Are Finally Ready To Invest

Despite the fact that competitive gaming is currently a $748 million segment (on track for $1.9 billion in 2018 according to research firm SuperData), Sepso points out that the field is still relatively young. The interest that Activision Blizzard and EA have demonstrated recently is a big step for eSports’ continued growth.

“This is so early in the timeline of the development of this sport if you compare it to traditional sports, with 75 to 125 years of developing infrastructure," Sepso says. "Esports is realistically only 15 years old, and we’re super early. Our position as Activision Blizzard Media Networks and MLG is now to try to engage as directly as possible our internal partners and other publishers to develop the entire space into something bigger and better. People are realizing that this is a big opportunity, even as recently as a year or two ago. Publishers are starting to realize that eSports is a real thing and it’s not going away. It’s an important part of fan engagement and, for us, an important way to grow a new business.”

The competitive gaming scene’s growth is beginning to accelerate, and Activision Blizzard is moving to speed up its own participation. This buyout falls in line with other recent decisions to branch into segments in which the publisher previously didn’t have a presence. The company made waves in November, purchasing Candy Crush maker King for $5.9 billion. Both of these acquisitions leverage Activision Blizzard’s still sizable cash reserves, allowing the company to instantly compete in the respective sectors. They also complement powerful homegrown franchises, including Call of Duty, Starcraft, and Hearthstone, all of which are eSports favorites.

The publisher isn’t opening up yet about how much the MLG buyout is worth. Reports suggest that the acquisition represented $46 million. We were told that details weren’t being disclosed. Additionally, it was reported that some investors were not made aware of the deal until after it was complete, indicating there was no shareholder vote. “I’m in constant contact with the MLG investors and the board,” DiGiovanni says. “They share my excitement and they are supportive of the company’s future direction. This is a situation where I’ve not fielded a single call from one of our investors that had complaints.”

He suggests that every investor has the means to reach him, including by phone and email. “The fact is that I’m accessible and available to all of our investors, and I’ve only fielded congratulatory calls,” DiGiovanni told me.

Easing Fans' Concerns

Fans are likely less interested in the finances of the deal than they are about the future of MLG programming and competition. For them, DiGiovanni offers some words of reassurance.

“This is the greatest possible outcome for us in the scenario of wanting to build eSports and continue to serve the communities, the players, and the games we work with,” he says. “I’m going to be front and center just as I always have. I’ll be there taking the hits as they come, and I’ll be there celebrating with the communities when the wins come, as well. Over time it will make a lot of sense to everyone. I don’t think anything I say will make some people calm, but I can guarantee this: I’m more dedicated than ever, as is the entire MLG team. Now we just have more resources to work with. Ask me how everyone feels in a year time, and I think we’ll have a fantastic update to give about what we’ve accomplished.”