With the release of games targeted towards competitive gameplay, like StarCraft, Hearthstone, Heroes of the Storm, and Overwatch, Blizzard has set itself up as a leader in esports.
Many see esports as the future of gaming and it’s easy to see why. Esports viewership is expected to reach over 500m by 2021, with 250m of those viewers expected to be frequent fans, offering a huge pool of video game fans for publishers to target. A closely followed esports league fuels longevity, keeps player bases high, and guarantees recurring revenue long after release.
You only have to look to professional sports leagues for an idea of esport’s potential. And Blizzard hopes to mimic these leagues through competitions like the Overwatch League.
Speaking on Overwatch League, MLG CEO Pete Vlastelica said:
“The combination of production talent, the technical crew, and the on camera personalities are really gelling as a unit, and are really focused on a level of production quality and storytelling that’s new to the guys from the world of esports.”
But how much is Blizzard worth, and how much does it make from esports?
Blizzard net worth: Estimating the brand’s value
Calculating the exact value of Blizzard is difficult, given that the company is part of the Activision Blizzard company, which also incorporates titles under the Activision brand, such as Call of Duty, as well as mobile games under the King brand, such as Candy Crush.
At the time of writing, the Activision Blizzard market cap currently stands at $63.5bn.
According to Activision Blizzard’s latest investors report (2017), the company generated revenue of $7.2bn throughout the year. That was up 8% on 2016.
The breakdown between its three major publishing brands was as follows:
Activision – $2.63bn
Blizzard – $2.12bn
King – $2bn
The Blizzard brand accounts for approximately 29% of revenue in the Activision Blizzard group. This would value the Blizzard net worth at approximately $18.4bn.
Of course, this is just an estimate. There are various different ways of calculating the net worth of a private company (or in this case, a specific part of a public company), all of which will provide different results. However, this gives some indication of Blizzard’s value in the Activision Blizzard portfolio.
How much does Blizzard make from esports?
Again, it’s impossible to calculate exactly how much Blizzard currently makes from competitive gaming. While unconfirmed, it is highly likely that the profits are small. Esports is a future investment in an area that is currently showing great potential.
The company is pinning its hopes on competitions like the Overwatch League, which reportedly made $250m through the sale of franchising spots ahead of its first season, at a cost of $20m each. That buy-in price has reportedly risen to anywhere between $30m-$60m ahead of the second season.
Whether or not the inaugural Overwatch League season was profitable is unconfirmed. However, league commissioner Nate Nanzer has said that progress is being made. He told VentureBeat:
“Our goal was always to have a very narrow investment period and work to get teams to profitability as quickly as possible. We’re making great progress on that front.”
It’s worth noting that Activision Blizzard makes just 30% of its revenue from game sales. The remaining 70% mostly comes from recurring revenue channels, such as in-game items and currencies. In that regard, it’s easy to see why Activision Blizzard is investing in ensuring longevity, rather than churning out new game after new game.