Update: Following yesterday’s reports of an MLG buyout by Activision, a bit more information has emerged. While there is still not enough to determine if a deal has been signed, it seems that one fear amongst eSports viewers might be assuaged.
MLG senior vice president of league operations and production Adam Apicella shared some thoughts via Twitter that point to continued operation of non-Activision games. While this would obviously be the case if a buyout isn’t happening, those concerned about what might occur if Activision were to assume control might be able to breathe easy.
HNY! Excited about the new year from our CSGO Minor, Offline Qualifiers, to of course the Major. See you soon!
— Adam Apicella (@MrAdamAp) January 1, 2016
Apicella also retweeted a note from Duncan “Thorin” Shields, a long-time eSports personality and Counter-Stroke: Global Offensive analyst.
Again, these tweets do not confirm or debunk the reported buyout. Rather, we’ve chosen to report them as fans of MLG-hosted games that aren’t published by Activision Blizzard have expressed concern about the fate of those titles. It is unlikely that, following reports of a buyout, a senior vice president would be as vocal about the continuation of activities were they about to be curtailed.
We continue to await more formal information. However, given that an acquisition of this nature would likely require SEC filings and proper investor notification, we won’t hear about it until at least Monday if a deal has, in fact, been finalized.
Original Story (January 1, 2016):
It appears that 2016 isn’t going to join us softly. Earlier today, reports surfaced that Activision is in talks to acquire nearly all of Major League Gaming’s assets. While a signed deal is far from confirmed at this point, it appears that the pieces are falling into place following major moves in the category from Activision in 2015.
The news first emerged via eSports Observer, which claims to have multiple sources and the documents to back up its report. A portion of those documents are available in the outlet’s story, reflecting an asset purchase agreement.
Given there is no statement from MLG or Activision, this may be a draft. Until there are signatures and confirmation, it’s not clear how far along the talks are.
According to the site though, Activision will be paying $46 million in cash and assumed liabilities (paying off MLG’s outstanding debt). If the document is executed as it appears, not all shareholders will see a payoff from the transaction.
Those holding series A (first round funding) preferred and common stock and those with series B (second round funding) common stock appear as if they will see some proceeds. Those with series B preferred stock may not see anything from the sale.
Additionally, should the deal become finalized, it appears that MLG CEO Sundance DiGiovanni will be replaced by Greg Chisholm, who previously was the chief financial officer for the company. The company has seen a shift in personnel, with the departure of founder and 13-year organization veteran Mike Sepso in August 2015.
Sepso was announced as senior vice president of Activision’s new eSports division. He is working with former ESPN and NFL Network CEO Steve Bernstein, who serves as chairman of the division.
Activision’s eSports initiative is effectively a third pillar of the company, joining Activision Publishing and Blizzard. It will work with both the game development and publishing businesses, as Activision has Call of Duty, with Blizzard bringing Starcraft II, Heroes of the Storm, and Hearthstone to the competitive arena.
Activision also dealt a blow to MLG in 2015 with the announcement of the Call of Duty World League. The publisher is teaming up with the ESL, an MLG rival organization, to run the competitions.
According to research firm SuperData, competitive gaming represents $748 million in revenue. According to SuperData CEO Joost van Dreunen, that segment of the market is on pace to reach $1.9B in revenues in 2018.
Right now, Activision Blizzard barely cracks the top five in terms of prize pools. Valve’s Dota 2 sits firmly atop the heap, having awarded nearly $26 million in prizes in 2015. The next highest prize amount belonged to Riot’s League of Legends, with approximately $4.6 million.
Call of Duty: Advanced Warfare distributed just 10 percent of that last year, at $2.5 million. The Call of Duty World League will offer a prize pool of $3 million.
Should Activision be moving to purchase MLG as the information suggests, fans will be eagerly looking for information about how other MLG-hosted games will fare. We’ve reached out to Activision for comment. We’ll update should we receive a response.
The information here seems compelling. As with any business deal though, until the ink is on the page, anything can change. Activision has been making big moves in the competitive gaming arena recently, and with EA in the mix too, it’s going to be harder for external leagues to compete. Given that part of the proposed buyout as detailed is Activision assuming liabilities, it seems like MLG has outstanding debts to cover.
I’m eager to see how this develops. Right now, we’re filing this under rumor, though it wouldn’t surprise me to see this progress once markets open and SEC filings can take place on Monday.