EA Goes Big With Esports
DEC. 12, 2015 • Two months after Activision Blizzard, Inc. unveiled a separate division to oversee esports opportunities, Electronic Arts, Inc. announced its own Competitive Gaming Division (CGD). Chief operating officer Peter Moore is moving over to head the new division as executive vice president and chief competition officer. Joining him as senior vice president and general manager is Todd Sitrin, a SVP from the global marketing team. Sitrin will supervise strategy and operations while working closely with EA’s development studios to foster more competitive platforms in their projects. Moore will not shift full-time to his new duties until the completion of fiscal year 2016. The CGD will have three main goals: increase the number of competitive opportunities in EA games, grow the esports community involved with the publisher’s titles, and develop live events and broadcasting events around competition in EA games.
Impact: As a general rule we never recommend that companies come late to the latest trend. The cost is exponentially higher carving out significant market share and the revenue return is correspondingly less than most public companies can justify to their shareholders. In our view Activision Blizzard and EA are late to the party. True, they both possess major competitive franchises that can attract players, and yes, the buzz surrounding esports is deafening enough to mollify shareholders, but there are real questions as to how great a financial return these initiatives will produce. We still see esports as a marketing play and a loss leader to help drive excitement among players of specific games. The problem is making money at esports requires huge numbers of players to draw in the necessary advertising revenue. The reality is esports is primarily a core activity that requires a substantial amount of dedication by players to master competition is a single game. There are only so many ways to divide the available number of core competitive players. Neither is it realistic to believe legions of new core players can be recruited by community outreach in the necessary numbers to substantiate the potential esports opportunities EA and Activision Blizzard are suggesting. Just as the success of World of Warcraft resulted in a flood of me-too MMORPGs that never came close to attaining the user bases required to justify their production and service costs, many esport initiatives will never break even.