Fortune

A GIANT ENTERS A NEW ARENA

Activision Blizzard built a videogame empire around bestselling titles like Call of Duty and Warcraft. Now it wants to become the ESPN of competitive gaming. Will audiences play along?
COMBAT ZONE Competitors do battle in the game Overwatch in front of a live audience in Anaheim in 2016. Activision Blizzard will launch an e-sports Overwatch League this year.

RANK 406

2016 COMPANY PROFILE

ACTIVISION BLIZZARD

REVENUES

$6.6 BILLION

PROFITS

$966 MILLION

EMPLOYEES

9,500

TOTAL RETURN TO SHAREHOLDERS (2006–2016 ANNUAL RATE)

16.3%

A DIAPERED DRAGON hatches from a polka-dotted egg. Casting off the speckled shards of its shell, it toddles out of its nest and crawls around curiously, flapping a pair of adorably tiny purple wings. Seconds later, a trio of extraterrestrial troublemakers appear, taunting the mythological infant. “I looove baby dragons,” their three-fingered ringleader says menacingly as he and his cohorts encircle their prey. “Especially medium-rare ones.”

The diminutive dragon abruptly lashes out, disabling his opponents with a surprisingly forceful flame. “Oh yeah, Spyro wins!” he gloats, trampolining on one of the fallen aliens with his chubby, clawed legs. Out of nowhere, a tall wizard with a Viking helmet appears and offers him a half-eaten corn dog. “It’s barely touched,” he says.

At this point, I’m completely lost (a sensation that will recur several times while I’m reporting this story). But were I quite a few years younger—and a gamer—I would have recognized the creatures on my screen as characters from Skylanders, a $3.5 billion “toys-to-life” franchise created by videogame powerhouse Activision Blizzard. The Southern California company publishes several of the most popular titles in gaming history, from multiplayer combat series like World of Warcraft to smartphone time-suckers like Candy Crush Saga. The Skylanders franchise, which launched in 2011, has sold 300 million action figures and other toys in six years.

The only part of this scene that might have struck my hypothetical gamer self as remotely odd is that, well, none of it took place during a game. Rather, I’ve just watched the opening two minutes of the first season of Skylanders Academy, a TV spinoff that made its debut on Netflix in October. That program signals a new chapter for Activision Blizzard, a gaming Goliath that is attempting to hack-and-slash its way into becoming a more diversified—and even more gargantuan—entertainment juggernaut.

The company’s growth to date, on games alone, already belongs on some sort of high scorer honor roll. In its last fiscal year, Activision Blizzard reported record revenue of $6.6 billion, up 42% from the year before. Over the past five years, its stock price has

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