Activision Sells Call of Duty Franchises in Latest Esports Push

Christopher Palmeri, Bloomberg News

Attendees play the Activision Blizzard Inc. Call Of Duty: Black Ops 4 video game at the company's booth during the E3 Electronic Entertainment Expo in Los Angeles, California, U.S., on Tuesday, June 12, 2018. For three days, leading-edge companies, groundbreaking new technologies and never-before-seen products is showcased at E3. , Bloomberg

(Bloomberg) -- Activision Blizzard Inc. sold the first five franchises of a new city-based Call of Duty league, stepping up its expansion into competitive esports.

All of the investors, which include Atlanta’s Cox Enterprises and New York’s Wilpon family, also own teams in Activision’s Overwatch League. Franchise terms weren’t disclosed, and no date was given for the start of the competitions.

The company is betting that esports -- the business of watching professional video-game players -- will help fuel its next wave of growth. It could use a boost. Activision delivered a tepid outlook for the second quarter, weighing on the stock in late trading Thursday.

The hope is to turn esports leagues into something akin to the major professional sports organizations, letting marketers reach a young, male demographic that may not watch football or baseball. Activision’s Overwatch League is now in its second season.

Call of Duty, a first-person shooting title based on military combat, is routinely one of the top-selling video games in the world.

The new cities with teams are:

Atlanta, owned by Atlanta Esports Ventures, a collaboration between Cox Enterprises and Province Inc.
Dallas, backed by Team Envy, owner of the Overwatch League’s Dallas Fuel.
New York, owned by Sterling.VC, which is backed New York Mets owners the Wilpon and Katz families.
Paris, owned by cOntact Gaming, which is behind the Overwatch League’s Paris Eternal.
Toronto, backed by OverActive Media, owner of Overwatch’s Toronto Defiant.

The Santa Monica, California-based company expects adjusted earnings of 23 cents a share this quarter, short of the 37 cents predicted by analysts. But it reported first-quarter sales and earnings that beat estimates. It cited increased time spent by consumers playing games such as Candy Crush and the latest Call of Duty release.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net