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Why Disney & ESPN's Esports Push With Activision Blizzard Matters


Shares of Activision Blizzard ATVI surged over 3.8% following an announcement that it landed a multi-year deal with Disney DIS that will see its esports Overwatch League broadcast live on both ESPN and ABC during the July postseason and beyond. Now let's dive into why this deal matters not only for Activision Blizzard but for Disney and the future of live TV as well.

The Deal

Activision Blizzard and Disney announced on Wednesday that this year's Overwatch League playoffs, which begin Wednesday night, will be broadcast across ESPN, ESPN2, Disney XD, ABC, and various Disney-owned streaming services through the end of July. The deal also includes Overwatch League Season 2 and will amount to hundreds of hours of live coverage and highlights, some of which will be broadcast in primetime on ESPN .

The deal marks the continuation of ESPN's push into esports, which currently includes podcasts and its own vertical on "The Overwatch League Grand Finals is by far our most comprehensive television distribution for an esports event over a single weekend: 10 total hours over four networks and three days," ESPN executive Justin Connolly said in a statement.

"This overall collaboration with Disney/ABC, ESPN and Blizzard represents our continued commitment to esports, and we look forward to providing marquee Overwatch League coverage across our television platforms for fans."

Disney secured the deal for an undisclosed amount, and it is worth noting that its TV and streaming contract will not impact existing rights agreements the Overwatch League has with partners such as Amazon's AMZN widely popular Twitch streaming platform.

Why It Matters

The Overwatch League is set to conclude its inaugural season this summer. The league is a huge step in the right direction for esports, which have been on the rise for years, since it features city-based teams competing in a regular season followed by a postseason. This could prove key to converting non-gamers and sports fans into esports watchers.

Activision Blizzard's league already features 12 teams , spread across the U.S., Europe, and Asia-including Los Angeles, London, and Shanghai. The league also boasts some big name owners, from New England Patriots owner Robert Kraft to Los Angeles Rams and Denver Nuggets owner Stan Kroenke, with all the groups having paid $20 million per team to reserve franchise spots this season. And there are already rumors that the new teams expected to join next season could pay even more.

That might seem rather crazy to people who don't know much about esports, but the Overwatch League said it would hand out $3.5 million in performance bonuses during the first season, including $1 million during the postseason. On top of that, all the players started on a league minimum salary of $50,000, plus health insurance and retirement plans-which already puts them up with some WNBA and MLS players.

Meanwhile, the overall esports economy is expected to total $906 million in 2018, up from $696 million in 2017,according to market research firm Newzoo-with the potential to hit $1.5 billion by 2020.The firm also noted that 77% of this revenue will be generated directly from marketing, sponsorships, and media rights.

Intel INTC , T-Mobile TMUS , and HP HPQ all sponsored Activision Blizzard's Overwatch League during the first season, which is set to run from last December's preseason through the All-Star weekend in August.

Disney's push into esports demonstrates just how important live sports are, because even if some don't see esports as a "real" sport, they are games that have that all-important live aspect. This is why Amazon spent millions to broadcast the NFL again over the next two seasons, and why both Facebook FB and Twitter TWTR have continued their push into live sports in the age of Netflix NFLX , where advertisers are willing to spend big on anything and everything live.

Bottom Line

Disney hopes to continue to gobble up more and more content as it aims to launch its own over-the-top streaming service in late 2019, while also bolstering its ESPN streaming offerings. And Disney is not alone, with Amazon's Twitch currently streaming Take-Two Interactive TTWO and the NBA's inaugural NBA 2K League season.

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