Ben Bance started playing video games more than a decade ago because, like most little brothers, he was a copycat. But instead of a pest, Bance was a natural, and his five older brothers and their friends fought to have him on their team as they huddled around a boxy television or computer in his Plymouth, U.K., home.

As soon as Bance turned 18, he dropped out of college to join a professional e-sports team. Now 24 years old, he competes for the Toronto Ultra, playing Call of Duty in front of thousands of people screaming his name. Soon, Bance and his teammates will have a 7,000-seat stadium to call home on the grounds of Toronto’s Exhibition Place, part of OverActive Media’s bet that e-sports can attract the same kind of money as other professional sports.

Led by an executive who’s worked with teams in the NFL, NBA and NHL, and with big-name investors from traditional major league sports, OverActive is following the pro-sports playbook in pursuit of a young and growing audience—and what may be a billion-dollar opportunity.

“It’s just like any other sports,” Bance said in a phone interview from Toronto, where he lives during the Call of Duty season. “It’s just something that everyone needs to, probably, get used to because I think gaming is going to be forever—just like sports. E-sports is going to be around forever.”

In fact, gaming has already grown into a professional system mimicking that of traditional sports leagues. A company coordinates a league, offering a fixed number of franchises for wannabe team owners to bid on, with costs running in the tens of millions of dollars. Many of these leagues operate on a revenue-sharing model that sees all team owners benefit from income gleaned through sponsorship and other deals. Once the teams are set, the league schedules competition between them throughout the season. 

In 2018, Santa Monica, Calif.-based Activision Blizzard—a company known for games like Overwatch and Starcraft, which Microsoft has announced plans to acquire in a US$68.7-billion deal—presented the inaugural season of its Overwatch League. It was the first major global e-sports league, with teams across the U.S., Europe and Asia. The London Spitfire won US$1 million in the championship at New York’s Barclays Centre, usually the home of the NBA’s Brooklyn Nets.

E-sports have grown steadily since. The Overwatch League now has 20 teams. Investors in its franchises include the Aquilini Investment Group, which has a big stake in the Vancouver Canucks; Kraft Group, which owns the NFL’s New England Patriots; and Kroenke Sports and Entertainment, which owns a swathe of traditional sports teams including the NFL’s Los Angeles Rams, the NBA’s Denver Nuggets, the NHL’s Colorado Avalanche and Arsenal F.C., a storied member of European football’s English Premier League. 

On Bance’s Toronto Ultra, one of OverActive’s marquee properties, players make base salaries in the six figures. They train with two coaches at a 15,000-square-foot training centre six days a week. Practices begin late afternoon with warm-ups, including hand stretches, and they play into the evening. When they compete, their matches are broadcast worldwide. While some traditional broadcasters including ESPN and TSN have carried e-sports matches in the past, the Overwatch League, the Call of Duty League in which Bance and his teammates compete and other Activision Blizzard e-sports properties now stream on YouTube as part of three-year deal signed in 2020 for a reported US$160 million.

The e-sports sector’s global revenues were expected to reach nearly US$1.1 billion in 2021, up 14.5 per cent from the previous year, according to games market-research firm Newzoo. By 2024, the group projects them to reach roughly US$1.6 billion. The NBA, in contrast, projected US$10 billion in revenue this season. Meanwhile, the worldwide e-sports audience was an estimated 474 million people last year, up nearly nine per cent. That number’s expected to rise to 577 million by 2024, with nearly half “enthusiasts” rather than occasional viewers.

But according to an OverActive investor presentation, there’s a huge gap in the average revenue per viewer for e-sports versus the traditional major sports leagues. Major League Baseball brought in US$88 per “viewer” in 2020, the presentation reads. The NHL made US$69 per viewer, the NFL US$52 and the NBA US$35. E-sports brought in just US$5 per viewer, but the deck claims that number is “expected to grow.” That’s where OverActive Media CEO Chris Overholt sees “an arbitrage opportunity.”

OverActive formed from two groups, each unaware of the other, that were pursuing a team in Activision Blizzard’s Overwatch League for Toronto. One group included Sheldon Pollack, an entrepreneur who founded the IT services firm OnX and is now the chair of OverActive’s board, and venture capitalist Adam Adamou, who became OverActive’s chief strategy officer. Pollack brought Overholt aboard as an advisor. He had spent the previous eight and a half years as CEO of the Canadian Olympic Committee, and prior to that had been vice-president of Maple Leaf Sports & Entertainment before leading the marketing efforts of the Florida Panthers, then the Miami Dolphins. Beyond his pro-sports experience, Overholt said, he “had particular insight” into the e-sports world. In 2016, Activision Blizzard recruited him “to help them establish and set up their competitive model for Overwatch,” he said.

At the same time, the third generation of Toronto’s Kimel family, which built its wealth with investments in retail and real estate after founding Fabricland, started exploring e-sports. Brothers Michael and Jeffrey, who both now sit on OverActive’s board, had been urging their family to diversify with holdings in sports, entertainment and media. “They all laughed it off,” Michael said, until he and some of his siblings invested in the Pittsburgh Penguins in 2017. The investment performed “quite well,” and when Michael heard about an opportunity to bid for the Overwatch franchise, he “jumped on it as a hedge to traditional sports.” His family responded with an even bigger laugh. “They thought I was crazy from traditional sports. So, now they really thought I was crazy.” But he shared the same vision as Overholt. “It’s like buying an NBA team in the ‘80s…. Obviously, the value of those NBA teams are significantly higher today,” Michael said.

Activision Blizzard played matchmaker, suggesting if the two groups joined forces their bid would be a shoo-in. The next day Michael and Jeffrey met Pollack, Adamou and Jamie Firsten (a partner at the law firm Goodmans and also now a board member) at Kasa Moto, a Japanese restaurant in Toronto’s upscale Yorkville neighbourhood. Within an hour, they’d reached a verbal agreement. With tequila for Michael and vodka for Pollack, the group toasted. “In that moment, we ceased to be competitive bids and we came together as one bid,” said Overholt. In September 2018, Activision Blizzard announced six new teams in its Overwatch League, including OverActive’s Toronto Defiant. 

It was just the beginning of OverActive’s push into the sport. The company saw acquiring franchises in existing leagues that practice revenue-sharing as its “best opportunity to grow its business and to enjoy its slice of the industry,” said Overholt. “And so that’s what we did.”

It snapped up the rights to the Call of Duty team Toronto Ultra, for which Bance plays, and the Madrid-based Mad Lions league in 2019. In 2020, it joined other organizations to create Flashpoint, a league for Counter-Strike: Global Offensive. The moves gave it a franchise in the four leagues modelled after those in traditional sports, said Overholt. “It would be the equivalent of [MLSE] owning a basketball team, a hockey team, a major-league baseball team and an NFL franchise,” he said. (MLSE currently owns the NHL’s Maple Leafs and NBA’s Raptors, as well as Major League Soccer’s Toronto FC and the CFL’s Toronto Argonauts.) “We are the functional equivalent of that business model in the e-sports space and we are the only ones in the world that can make that statement.”

By owning all these properties, OverActive reaches a broad and lucrative audience, it tells investors. E-sports audiences skew to those in their early 20s—younger than those for traditional sports—meaning the company offers a conduit to Gen Z.

The pitch worked. Before OverActive started trading on the TSX Venture Exchange last July, it raised more than $100 million from investors. The Kimel family is the largest shareholder, Michael said. The executive team’s personal connections helped bring in cheques from the Canadian musician The Weeknd and several professional athletes, including Toronto Maple Leaf Mitch Marner and Arizona Coyote Phil Kessel. 

Though the company continues to grow, it is not yet profitable. It reported a comprehensive loss of nearly $6.5 million for its most recent quarter and roughly $16.2 million for the nine months ended Sept. 30, 2021. Overholt said the company is “laser-focused” on turning a profit, which he believes will help not only OverActive’s reputation but that of the broader e-sports industry. The company’s goal is to get there as fast as possible, for itself and its investors. 

Perhaps the most blue-chip of those investors is Bell. The telecom and media conglomerate is a longtime investor in traditional pro sports, and has a stake in MLSE, as well as the Montreal Canadiens. The company believes in sports, said Wade Oosterman, president of Bell Media, and “e-sport is a potential new arena” with a new demographic.

In June 2019, Bell signed a multi-year marketing partnership with OverActive, acquiring a minority interest. Overholt pegged the investment at $10 million. Bell can benefit from its OverActive partnership to get its 5G network in front of gamers who rely on speedy internet and, hopefully, gain new customers. Oosterman knows they can be a difficult audience to target. In the investor presentation, OverActive noted they tend to use ad blockers, reject legacy media and don’t love seeing traditional advertising clutter their social media feeds. At live e-sports events, Bell can set up demonstration areas or booths, Oosterman said.

Making those events happen is a big item on OverActive’s agenda. The company has earned the bulk of its mainstream attention to date for its plans to build a roughly 7,000-seat stadium at Toronto’s Exhibition Place to be the home of its two Toronto e-sports teams. The sleek venue, expected to be completed in 2025 with construction starting later this year, will host between 180 and 200 events each year, the company estimates, but only a fraction of those will be e-sports tournaments. While part of the vision is for the stadium to be “a home for today’s generation of fans,” Overholt said, it’s also intended to draw top music and entertainment acts. Toronto doesn’t currently offer a venue of its size, he said, and OverActive wants to give performers like John Legend or Lady Gaga a chance to offer a premium, more intimate experience in the city.

OverActive expects building the venue will require debt and equity financing, and has identified some ideal partners, including the U.S. entertainment giant Live Nation and Los Angeles-based Oak View Group. “We’ve had conversations with all of them about their interest in this project and about potential to partner with us on it,” he said. Kimel went one step further, saying he hopes the company will have a 50 per cent equity partner in the stadium. “We don’t have a deal signed yet,” he said, declining to say the name of the potential partner, but noting they are a publicly traded company that has a hand in events at the Scotiabank Arena.

“We’re not building this facility to be an e-sports facility first,” Overholt said. “We’re building a 21st-century sports, media and entertainment company, and this is our bold step into the entertainment space.”