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Major League Gaming, Twitch Compete to Become the ESPN of Videogames

After attracting millions of viewers to broadcasts of video game tournaments, companies are looking to build a business around a variety of eSports programming

When the “Call of Duty” Championship comes to L.A. Live on March 28-30, millions of fans will be watching via MLG.TV, as 32 teams compete to play the bestselling Activision videogame for the $1 million prize.

Videogames have clearly become a spectator sport. No wonder competition is fierce among online broadcasters in a booming category known as eSports. Tens of millions of viewers tune in to watch professional, sponsored gamers earn massive paydays.

In just two years, San Francisco-based firm Twitch has become the top player, though its live-streams of seven of the biggest tournaments is just a small part of what fuels its incredible growth. But on the other side of the country, Twitch is starting to feel the heat from rival Major League Gaming.

Based in New York, MLG has created what many consider to be the NFL of organized videogame tournaments, with a pro circuit of its own comprised of 700,000 matches per month that culminate in two arena-packed events. But in order to expand, MLG founders Mike Sepso and Sundance DiGiovanni realized they needed to be ESPN, too.

“We needed our own premium distribution platform to effectively differentiate our content, and it was clear that other professional eSports content producers needed it as well,” says Sepso, MLG’s president.

In July, the company tested the concept of MLG.TV, with shows developed around competitive play. The network quickly caught on among the advertiser-friendly demo of 18- to 34-year-old males. It officially bowed at the end of November across all digital platforms, including a newly launched app on Xbox Live.

From December to February, the channel’s viewership grew 760% — surpassing 5 million — without a tournament taking place. That leaps to three hours during tournament finals. Last year, MLG’s audience watched 54 million hours of video across multiple digital platforms, up 262% from 2012, with audiences wanting to learn gameplay strategy from the pros or check out new games and levels. When compared to 2011, it’s up a whopping 1,557%.

“We’re kind of just getting going and it’s staggering,” Sepso says. “We didn’t expect it to grow this fast. It’s way above our expectations.”

Yet Twitch is still the juggernaut in the space, more than doubling its size over the past year, with 45 million people watching 12 billion minutes on the company’s own multiplatform digital network. That’s largely because Twitch has given gamers a YouTube-like space in which they can record themselves playing, and upload video for others on the Web to watch.

The user-generated approach has certainly helped Twitch score with its core community,as it now counts over 1 million users uploading videos a month. Around 20% of its traffic now comes from Sony’s PlayStation 4 console.

“Video is becoming the connective tissue through which gamers can share their experiences,” says. Because of that, he admits that there’s room for multiple broadcasters to cover eSports.

“The growth we’ve experienced since then has surprised even the most bullish of us,” said Matthew DiPietro, Twitch’s marketing VP.

But MLG is focusing more on professionally produced (read: expensive) content, including “SportsCenter”-like news coverage of tournaments. The company’s founders believe the strategy will attract advertisers; most of MLG’s revenue comes from online ads and sponsorships.

MLG also is producing behind-the-scenes looks at movies that might appeal to its core fanbase. In February, that included a “Star Craft II” tournament sponsored by the homevideo release of Lionsgate’s “Ender’s Game” — followed by a stunt for Relativity’s “3 Days to Kill.” Twitch was also part of the “Ender’s Game” event, broadcasting the event’s final.

Relativity chief Ryan Kavanaugh is on MLG’s board and a minority investor in the company, guaranteeing that upcoming films from Relativity will also be promoted on the gaming channel.

MLG also has focused on attracting Hollywood to lead its first wave of promotions for a reason. “Movies are in our wheelhouse,” Sepso says. “Gamers are good consumers to advertise entertainment.”

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