Why Activision Plans to Focus on e-Sports in 1Q16 and 2016
Not All Bad after Activision Misses 4Q15 Estimates
Activision estimates revenues of $6.1 billion for 2016
In 2016, Activision (ATVI) expects revenues of $6.1 billion on a GAAP basis with EPS of $0.45. In 1Q16, it expects revenues of $1.3 billion with EPS of $0.21.
On a non-GAAP basis, revenues are projected to be $6.3 billion in 2016 and $800 million in 1Q16. EPS are estimated at $1.75 and $0.11 in 2016 and 1Q16, respectively. This financial outlook includes revenues from King Digital Entertainment (KING) as well on the assumption that the acquisition will close by the end of February 2016.
While Take-Two Interactive (TTWO) has raised its financial outlook for fiscal 2016, Electronic Arts (EA) expects revenues to fall by $21 million in the next quarter, which ends March 31, 2016.
Activision focuses on e-sports with the acquisition of Major League Gaming
On January 4, Activision Blizzard (ATVI) announced an acquisition of Major League Gaming of MLG for $46 million in cash. MLG is a leader in creating and streaming live gaming events and organizing professional competitions and competitive gaming leagues.
The acquisition should help Activision build what it calls a new ESPN of e-sports and enter the business of streaming online e-sports matches. According to MLG, MLG.TV attracts approximately 25 million viewers per month on mobile devices, computers, and video game consoles.
In October 2015, Activision created a new e-sports unit and hired MLG co-founder Mike Sepso and former Walt Disney (DIS) head Steve Bornstein. In December 2015, Electronic Arts (EA) also announced that it’s looking to create an e-sports unit. Live events attract players and spectators in vast numbers. At these worldwide events, professional gamers can win millions of dollars in prizes.
Disney accounts for 7% of the Consumer Discretionary Select Sector SPDR Fund (XLY).
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