Video game publishers will undoubtedly benefit from the development of pro esports leagues, but the overall potential of the esports phenomenon is still difficult to discern, an influential equity research shop wrote yesterday. BTIG, best known in sports for tracking media companies, began rating stocks for three key videogame makers yesterday. It rated as “buys” both Overwatch League creator Activsion Blizzard and NBA2K maker Take-Two Interactive, while it rated EA Sports as a “neutral.” BTIG researcher Brandon Ross wrote he is “most positive” about the opportunity for Activision Blizzard, noting “OWL has already signed two significant sponsorship deals, with Intel and H&P, and we believe is ahead of schedule in its monetization efforts.” He also wrote “We expect (Take-Two) to benefit from NBA2K League as well.” However, in general, he notes that so far esports have generated minimal revenue in the grand scheme of these large publishers, who still fundamentally are selling a consumer product, not a sports league. “Even League of Legends (LoL), the most successful esport, has not driven game-changing direct revenue to Riot (Games,)” Ross wrote. “The benefits of esports have mostly been in helping to create the further engagement around games that leads to game sales and in-game revenue.” Ross notes that revenue-generating esports viewership is not as large as many enthusiasts believe, once it is compared directly to linear TV ratings and account for so much of the audience living outside of the U.S. Also, he says that fluctuations in game popularity and the complexity of the games pose serious questions about esports’ potential to grow its audience. However, every dollar earned via esports is “basically incremental,” he said. “Overall, we do not mean to appear bearish on esports,” Ross wrote. “We believe it is a massive opportunity. However, how big it becomes and *who* capitalizes on that massive opportunity is less clear. There are a lot of questions and a lot of work to be done.”
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