Activision Blizzard (ATVI) is declaring its faith in electronic sports via its purchase of Major League Gaming, but the price tag for the host of major video game tournaments may have fallen well short of expectations.

Although financial terms of the transaction weren't disclosed in the announcement late on Monday, Jan. 4, The Deal has confirmed a press report that the price was approximately $46 million.

Following Amazon's $970 million deal in August 2014 for MLG peer Twitch Interactive, rumors in the market were that MLG was after a valuation of up to $500 million or so based on the Twitch deal, said Joost Van Dreunen, CEO of New York digital gaming and playable media-focused firm SuperData Research

Industry news Web site eSports Observer first reported the $46 million price tag on Friday.

"It's a good deal for Activision and a bit of a sobering moment for MLG," Van Dreunen noted. "The dream was bigger for them."

MLG CEO and co-founder Sundance DiGiovanni told The Deal in May 2014, amid reports that Google was after video-game streamer Twitch, that his company was garnering inbound interest. DiGiovanni said at the time that he was fielding calls from bankers and strategics inquiring about speculation of a Twitch deal and wondering if MLG was also looking to sell or seek an investment. Sources previously suggested a range of strategics could look at MLG, including gaming publishers, new media players and traditional media companies.

"They had a good thing, but were too early, to some degree," Van Dreunen said of MLG, acknowledging that it represented the first professional e-sports organization in the Western market.

As e-sports became increasingly mainstream as a spectator sport, other companies entered the mix including rival Electronic Sports League, which last year stole one of MLG's biggest contracts. ESL in October 2015 took over MLG's major licensing agreement with Activision for the Call of Duty World League for 2016 to support the World League's Pro Division.

The lost contract and increased competition, paired with MLG expenditures including the construction of its first gaming arena in China, a venue that had been expected to open in 2017, weighed on the company, Van Dreunen explained.

Likely setting the stage for a sale of MLG, Swedish media company Modern Times Group in September 2015 completed its majority acquisition of Turtle Entertainment GmbH, the holding company for ESL, for $87 million.

Headquartered in New York, MLG showcases video games as a competitive sport through its broadcast network MLG.tv, which streams live and on-demand daily content including its most popular show, "eSports Report," and MLG's Pro Circuit, North America's longest running eSports league, which includes large-scale, in-person competitions across the U.S. Through MLG Play, the company runs global online gaming tournaments and competitions. MLG's GameBattles platform is the largest online gaming tournament across consoles, PC and mobile devices.

The company has raised about $67 million in financing from investors including Oak Investment Partners LP since its 2002 founding by DiGiovanni and Mike Sepso.

MLG will continue to operate its MLG.tv, MLG Pro Circuit and GameBattles platforms as part of Activision, joining its e-sports division Activision Blizzard Media Networks.

Perhaps an indication of uncertainty surrounding the future of MLG was the departure of Sepso from the company in October 2015. Sepso left to join Activision as the senior vice president of Activision Blizzard Media Networks, which former ESPN CEO Steve Bornstein helps head up.


For Activision, the acquisition is small in terms of size, especially when compared with its recent $5.9 billion purchase of King Digital Entertainment, the producer of the Call of Duty and World of Warcraft gaming franchises. But from a strategic standpoint, buying MLG gives the company a foundation for its e-sports broadcast technology platform and is further indication of traditional publishers' movement into the space.

"In a broader sense, it's continued validation of e-sports," said Deep Fork Capital co-founder and managing director Tim Komada, whose Menlo Park, Calif.-based venture capital firm's investments include tabletop gaming developer Playdek. "It's a demonstration of a more traditional line of players recognizing its importance."

"They have a whole bunch of efforts on their way that amount to becoming more of a media company, like a Disney, than just games," Van Dreunen added. "People like to interact with companies across different platforms. Having key assets from MLG to host their own tournaments is a smart move."

Added Bobby Kotick, CEO of Activision Blizzard, in Monday's prepared statement, "Our acquisition of Major League Gaming's business furthers our plans to create the ESPN of e-sports.

Officials with Activision and MLG did not return emails or calls on Tuesday.