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Abu Dhabi, UAEMonday 18 June 2018

Videogaming moves into the big leagues as players compete in global competition

Microsoft and Comcast latest to move to take advantage of developing market

Xbox head Phil Spencer has cut Xbox prices and introduced new models, stabilising sales which topped US$9 billion last year. FREDERIC J. BROWN/AFP
Xbox head Phil Spencer has cut Xbox prices and introduced new models, stabilising sales which topped US$9 billion last year. FREDERIC J. BROWN/AFP

In a nod to the renewed importance of gaming at the software juggernaut Microsoft, the firm’s head of Xbox, Phil Spencer, got a promotion and a spot on chief executive Satya Nadella’s senior leadership team.

Mr Spencer, now an executive vice president, previously reported to the Windows division head Terry Myerson, who has a seat on Mr Nadella’s council of chiefs. The group meets weekly and is comprised of the tier of executives directly below the chief executive.

It is a change in focus from earlier in Mr Nadella’s tenure. In 2014, in his first big company wide strategy memo, Mr Nadella defined gaming as outside Microsoft’s core businesses, but still a very important "other business in which we can have fundamental impact".

At the time, the business had just gone through a lacklustre release of the overpriced Xbox One and some investors were calling for Mr Nadella to get out of gaming entirely. Since then, Mr Spencer has cut prices and introduced new models, stabilising Xbox sales which topped US$9 billion last year. Microsoft’s purchase of the wildly popular Minecraft video game three years ago has also proven to be a success.

In another sign of the growing importance of gaming, Comcast is among the latest round of investors in the new Overwatch esports league founded by video-game maker Activision Blizzard. The largest US cable TV operator is acquiring the rights to the Philadelphia team, which will compete in tournaments centred around Overwatch, a cartoonish shooting game released last year by Activision that has attracted 30 million players worldwide.

Comcast’s participation in the nascent esports industry adds another deep-pocketed backer to a league that has attracted investors including the owner of the American football team New England Patriots' owner Robert Kraft and his NFL competitor Stanley Kroenke, owner of the Los Angeles Rams.

“We’re very focused on the theme that this is premium content,” said Pete Vlastelica, the chief executive of Activision’s Major League Gaming division. “I think Comcast coming in is validation of that.”

Esports, where professional contestants play video games before live and online audiences, is a growth business for video-game companies. The business has attracted investments from many traditional sports team owners looking to connect with younger audiences and buy in at a fraction of the cost of other pro teams. Activision is charging team owners a franchise fee of $20 million.

Riot Games, a unit of China's Tencent Holdings, is expected to announce shortly the team owners for its League of Legends series.

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Comcast, which owns the Philadelphia Flyers hockey franchise and the Wells Fargo Center where the team plays, also bought the rights to a professional lacrosse team and a minor league hockey team this year. The Philadelphia-based company also owns the NBC broadcast network and the Universal Studios film and theme-park business.

There are 300,000 Overwatch players in the Philadelphia area, said Dave Scott, the chief executive of Comcast’s sports and live events business. The company is in the process of hiring a coach and players as well as looking for an arena seating less than 5,000 people.

“We like the idea of hosting events, bringing in fans and growing this market,” Mr Scott said.

Activision, based in Santa Monica, California, announced two other Overwatch League owners last Wednesday. Team Envy, backed by Hersh Family Investments, will control the Dallas franchise, while OpTic Gaming, founded by the video-game player and Web personality Hector Rodriguez, got the Houston rights.

Team Envy was founded 10 years ago by Mike Rufail, a professional video gamer who said he got his start playing Activision’s Call of Duty. Mr Rufail said he has raised an “eight-figure sum” for a training facility, corporate headquarters and support staff in Dallas.

Activision now has 12 Overwatch League teams in place in Asia, Europe and North America. They will begin preseason play December 6, with regular competition running January 10 through to the finals in July. All games in the first season will played at Activision’s new 450-seat studio space in Burbank, California.