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The Battle Over Esports Streaming Rights Is Heating Up

Amazon.com's (NASDAQ: AMZN) Twitch.tv and Activision Blizzard (NASDAQ: ATVI) are joining forces to make Twitch the destination of choice for more than 20 Blizzard esports tournaments streamed live over the next two years. This collaboration will bring Twitch viewers select streamed events for titles, including Hearthstone, Heroes of the Storm, World of Warcraft, Starcraft 2, and Overwatch. In addition, Twitch Prime members will get free in-game content and deals for several of those titles.

As esports grow in popularity, Twitch, Facebook (NASDAQ: FB), and Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) YouTube are jockeying for position by signing exclusive deals with content providers to attract the millions of people who watch live-streamed games. For Activision Blizzard, more viewers watching its games could mean more sales of those titles over time.

According to SuperData, Twitch has 16% share of the game video content market. Image source: TWITCH.TV. 

The battle for viewers

The collaboration between Twitch and Activision Blizzard is not surprising given the latter's Starcraft 2 served as inspiration for the creation of Twitch. Besides history, Twitch is gaining the partnership of a company that makes some of the most popular content out there. According to Newzoo, four of the top 10 most watched games on Twitch in June 2017 were Blizzard titles: Hearthstone (No. 4), Overwatch (No. 5), World of Warcraft (No. 8), and Heroes of the Storm (No. 10).

Hearthstone and Overwatch have a huge following with player bases of 70 million and 30 million, respectively. Activision Blizzard is just about ready to commence Overwatch League, which could be a viable business segment for the company on its own in the long term. The Twitch deal basically serves as marketing with the potential that some of those viewers will buy games and content. If there are Blizzard fans who browse videos on a competing site like YouTube, the lure of free "loot boxes" is certainly tempting for them to come over to Twitch.

Recently, Facebook and YouTube have been signing partnerships for esports streaming rights as well. According to the Wall Street Journal, Facebook signed contracts with five professional esports teams to stream live, on-demand video of practice and competitions. And in May 2017, ESL -- the world's largest esports company -- signed an agreement to bring exclusive esports content to Facebook.

Meanwhile, earlier this year, YouTube signed a deal with FACEIT, creator of the Esports Championship Series (ECS), to make YouTube the exclusive home for ECS esports competitions. The big draw for YouTube with this deal includes competitions featuring Valve's popular first-person shooter Counter-Strike: Global Offensive.

What's the big deal with esports?

The most popular esports tournaments can attract millions of viewers and pack arenas and auditoriums. In 2016, League of Legends -- by far the most popular esports tournament -- attracted 43 million viewers. Industry researcher Newzoo estimates the global esports audience to reach 385 million in 2017. Clearly, that level of viewership spells a big opportunity for social gaming sites to capture potential advertising revenue from live streams.

These partnerships are also good for esports companies, such as FACEIT and ESL, as they don't have the know-how or capability to reach the massive built-in user base of tech giants like Facebook, Alphabet, or Amazon. Esports have been around for many years but are only now taking off, thanks to social media and the willingness of video game companies to invest in professional gaming leagues.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Ballard owns shares of Activision Blizzard. The Motley Fool owns shares of and recommends Activision Blizzard, Alphabet (A shares), Alphabet (C shares), Amazon, and Facebook. The Motley Fool has a disclosure policy.