Major League Baseball’s streaming-technology unit is looking to break into the hot arena of competitive videogaming by partnering with the creator of one of the world’s most popular computer games.
The agreement, expected to be announced Friday, calls for MLB’s BAMTech to pay a minimum $300 million through 2023 to Tencent Holdings Ltd.’s Riot Games for the exclusive rights to stream and monetize “League of Legends” competitions.
BAMTech, a spinoff of MLB Advanced Media that counts Walt Disney Co. and the National Hockey League as stakeholders, plans to launch a streaming app for “League” in 2017 that will run on smartphones, PCs and other devices. It also will handle distribution of “League” content it streams on other platforms, such as Amazon.com Inc.’s Twitch.
The companies plan to make money from advertising and sponsorship sales that BAMTech will oversee. Revenue generated beyond $300 million will be shared, though the companies declined to detail the percentages of the split.
The deal shows the rising prominence of competitive videogaming, or e-sports. It is projected to make up roughly 10% of U.S. sports viewing by 2020, consulting firm Activate Inc. said at the WSJDLive Conference in October.
In e-sports, players belong to teams, wear matching jerseys and boast massive fan bases on social media—much like traditional sports.
In October, more than 43 million viewers world-wide went online to watch a championship held at the Staples Center in Los Angeles before a crowd of about 15,000 people. Competitions have aired on Disney’s ESPN and Time Warner Inc.’s TBS television networks.
“No other sport has seen this kind of global online audience for live events,” said Bob Bowman, MLB’s president of business and media, and chief of MLB Advanced Media.
BAMTech’s deal with Riot is similar to its tie-ups with the NHL and the Professional Golfers’ Association, in which it pays to stream content. Unlike those deals, Riot doesn’t plan a subscription fee for viewing “League” competitions, though it may charge for premium content in the future.
In deals with entertainment companies such as Time Warner’s HBO, companies pay BAMTech a flat fee to create apps and handle the technology for streaming content.
“League,” which is free to play and makes money by selling virtual goods, has more than 100 million monthly users world-wide, according to Riot. It is on track to generate $1.89 billion in global revenue this year, according to SuperData Research Inc.
“Our goal has always been to build ‘League of Legends’ into a major global sport,” said Jarred Kennedy, director of e-sports at Riot. “We want our sport to be funded by itself and we think this deal is going to help us get there.”
Riot so far has relied on third-party streaming services such as Twitch and Alphabet Inc.’s YouTube to broadcast “League” tournaments. With its own app, Riot can build custom features such as player profiles and video on demand. It believes the coming app will offer fans “a better experience,” Mr. Kennedy said.
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