Big money eSports deals on the way

The publication Biz Journal reports that the eSports market is about to see a burst of activity as major video game publishing houses Activision Blizzard and Riot Games embark on separate eight-figure franchising initiatives that some say has the potential to change the business economics of eSports.

California-based and Nasdaq-listed Activision Blizzard is expected to announce this week the first buyers of permanent, city-based franchises in its start-up Overwatch League, giving the early investors a stake in an untested but heavily promoted e-Sport for roughly $20 million each.

Later in the week, Los Angeles-based Riot Games is scheduled to close the window for accepting applications to buy a franchise in its North American League Championship Series in “League of Legends,” arguably the world’s most popular eSports game, with the final selections set to be announced later in the year.

Investors and bidders have had only six weeks to gather funds and prepare their bids, a short timespan seen by many as a move by Riot to exclude low-quality bidders.

Biz Journal reports that interest in the Riot Games offer is intense despite the price – $10 million with a $3 million fee for new entrants to the eSports market. Industry observers are predicting that between 30 and 50 bids for the 10 franchises on offer will be received. Riot has said that it may consider increasing the number of franchises to be offered.

Potential franchisees are a diverse group that includes existing eSports organisations in and outside of the current league, venture capitalists, traditional sports ownership groups and their affiliated arms.

Franchise holders in League of Legends will be entitled to 32.5 percent of league revenue which already includes at least $300 million from a technology and media development deal with BAMTech. The eSport track record of four years of steady viewership growth and sold out live event arenas also indicate the potential for rewards.

Biz Journal points out that there are other fast-growing competitors in the eSports market, notably Valve Corp. and its “Counter-Strike: Global Offensive” and “Dota 2” games. However, Kurt Melcher, executive director of eSports at Intersport says that in terms of certaincy and potential these pale in comparison with the permanent franchises being offered by Activision and Riot.

https://www.bizjournals.com/losangeles/news/2017/07/10/e-sports-leagues-nearing-8-figure-deals.html