Enthusiast Gaming Acquires Call of Duty Team

- September 16th, 2019

The Call of Duty franchise team was purchased from game developer Activision Blizzard for a rumoured US$25 million.

Enthusiast Gaming Holdings (TSXV:EGLX) and Canucks Sports & Entertainment jointly announced on Friday (September 13) that they have acquired the right to start a Seattle-based Call of Duty esports team for an undisclosed amount.

To do so, the companies had to reach an agreement with game developer Activision Blizzard (NASDAQ:ATVI). The inaugural Call of Duty esports event will take place in 2020.

In May, ESPN estimated that Call of Duty franchise teams could sell for as high as US$25 million. Players on the team will be paid a US$50,000 salary — in addition to benefits and housing, if necessary — SportsPro reports.

Enthusiast Gaming currently owns one other esports team, the Vancouver Titans, which are part of the Overwatch League. The team was purchased in September last year.

“Esports has shown extraordinary growth and we’re excited to continue to be at the forefront with a new Call of Duty esports franchise,” said Francesco Aquilini, managing director of Aquilini Group, in a press release. Aquilini added that the Vancouver Titans have experienced a strong season so far as it continues in the Overwatch League.

As part of the deal, Enthusiast Gaming will hold a minority interest in the newly minted team, while its subsidiary, Luminosity Gaming, will spearhead team management and procurement.

Along with the Seattle-based team, Activision Blizzard added new esports franchises in London, England, and Chicago, Illinois, bringing the total number of esports teams to 12 for the upcoming competition. ReKTGlobal acquired the London team and NRG Sports acquired the Chicago team.

“We aspire for Call of Duty to be one of the biggest and best leagues on the planet,” Johanna Faries, Call of Duty Esports commissioner at Activision Blizzard, said in a press release.

According to Esports Charts, the Call of Duty World League 2019 Championship in August attracted close to 200,000 viewers and a US$2 million prize pool.

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For context, Activision’s Overwatch franchise league has an average of 313,000 viewers worldwide, with viewership numbers rising 18 percent compared to last year, the Wall Street Journal reported. Toyota (NYSE:TM), Coca Cola (NYSE:KO) and Bud Light (NYSE:BUD) have all signed advertising contracts with the franchise league.

As the esports industry grows, its network of streaming platforms are following in line. For the 2019 Overwatch league, streaming has filtered across not only Amazon-owned (NASDAQ:AMZN) Twitch and Google’s (NASDAQ:GOOG) YouTube, but also the ESPN, TSN and ABC networks.

In a further sign of strength, teams, too, are attracting new revenue channels. According to Dexterto, Walmart (NYSE:WMT) has begun selling esports team jerseys and merchandise on its website. Teams from Overwatch, League of Legends and CS:GO are all featured, including the Vancouver Titans.

By and large, the esports industry shows few signs of running out of ammunition. According to Newzoo, the global games market is projected to reach US$196 billion by 2022, rising at a 9 percent compound annual rate of growth (CAGR). It projects that Latin America to be the fastest growing region, with a 10.4 percent CAGR over the next four years.

Shares of Enthusiast Gaming opened on Friday at C$2.47 and closed Monday’s (September 16) trading session at C$2.35, declining by nearly 5 percent.

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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.

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