Activision's New E-Sports Revenue Play

League of Legends and the DOTA games have long dominated the Multiplayer Online Battle Arena (MOBA) genre of E-sports. These games combined for just over one billion dollars from January to September in 2014 according to SuperData Research via Venture Beat. While these games have been key players in the history of E-sports to date, there have been issues with learning curves and toxic communities preventing widespread popularity among casual gamers. Enter Activision Blizzard Inc

, who came up with their self proclaimed "Brawler" to separate itself from other MOBAs. While criticized for some of its dynamic changes compared to traditional MOBAs, Blizzard looks to simplify the game for the more casual gamers. In exclusive Benzinga phone interviews, Sterne Agee analyst Arvind Bhatia says he believes Heroes of the Storm success will fall somewhere between League of Legends and the failed Electronic Arts

MOBA Dawnsgate. Bhatia followed this statement saying the title, "will gain slow, small market to start through 6 months and attracting a bigger audience over a year from launch." With recent social media attention from Heroes of the Dorm championship on ESPN2, Bhatia believes this could be an "interesting partnership [and] trend for ESPN." Although Cowen Securities analyst Doug Creutz agreed that ESPN coverage could occasionally cover major E-sports events, he says the main benefactor from Heroes of the Storm E-sports coverage would be Amazon's

recently acquired Twitch.tv. Michael Pachter of Wedbush Securities culminated the modestly optimistic view of the upcoming Heroes release stating, "it stands to reason that the game will achieve some level of success." All of the analysts mentioned agreed that this title from Blizzard could be an important E-sports revenue generator. Creutz said he, "would be very surprised if Heroes of the Storm isn't a multi-hundred million dollar revenue a year game." Michael Pachter echoed Creutz stance and added," I estimate that League is generating around $1 billion annually, so it isn't a stretch to expect Heroes to get to a $200 million annual run rate by year end. That means Heroes will do around $60 - 100 million this year." Bhatia also had positive sentiment for the Blizzard title stating Heroes is a "long-term play, and will be quite successful." As we come up to the June 2nd launch, we will see if Blizzard's investment into Heroes of the Storm will truly innovate the MOBA genre and E-sports sector as a whole. As of Thursday afternoon, Activision Blizzard is trading at $25.18/share. Arvind Bhatia of Sterne Agee CRT has a $27 price target and a Buy rating. Douglas Creutz of Cowen Securities also has a $27 price target and an Outperform rating. Michael Pachter gives an Outperform rating and $31 price target for Activision Blizzard.