• by Laurie Sullivan  @lauriesullivan, November 8, 2009

Major League Gaming (MLG) might have built a business model that would make Wall Street analysts proud. The four-year-old company will generate about $50 million in revenue this year from sponsorships, and face-to-face and online tournaments that broadcast live online in high definition (HD), according to Matthew Bromberg, the company's president and CEO.

Most of the revenue comes from online competitions -- about 500,000 monthly, many sponsor-supported. "Revenue has more than doubled from last year to this year, and it will more than double again next year," he says -- adding that 75% of revenue comes from sponsorship, with the remainder from licensing agreements.

The goal to "more than double" revenue in 2010 could take the MLG tour into Western Europe and Asia, says Bromberg, who greets me in Hall A at the bottom of the two-story main stage platform at this year's MLG Pro Circuit tour in Anaheim, Calif.

Already, the roadmap has the franchise expanding the event series next season in the United States. MLG will add a series of four events sponsored, in part, by Doritos to the existing five-circuit event. The new series, which requires players to qualify online first, aims to discover the next generation of video game pros who could one day join an MLG league and pro circuit tour.

The video game tournaments broadcast live online throughout the weekend from the Anaheim Convention Center. The tournaments provide "television quality broadcasts" online, which Wall Street analysts say lack. Most believe inserting a television ad mode into online streaming or downloadable content could help companies generate more revenue.

In the main stage area where two teams compete, there are eight Microsoft Xboxes, with four for each team. Each player's Xbox has a high-definition (HD) input feeding audio and video signals into onsite computers, the brains of the event. These computers feed the live broadcast stream online.

Bromberg says that four-year-old MLG built powerful computers and software to transmit graphics and play-by-play moves, similar to what someone might see in a live full-scale sports HD broadcast. "There are more live feeds going into the brains of this event than at the Super Bowl," he says.

More than 700,000 men between the ages of 12 and 30 watch the tournament from the company's Web site, estimates Bromberg. "That's probably three times higher than the average prime-time audience in that demo on cable," he says. "And it's not much different than a television broadcast. Ad pods, 15- and 30-second spots, run throughout the show, similar to a television network model."

Even as the economy tries to recover, MLG isn't hurting for sponsors. Last weekend at the Anaheim Convention center, within a stone's throw from Disneyland, Electronic Arts held a competition for Madden NFL. Best Buy, Geico, and Ball Park were sponsors.

Augmenting revenue gains, MLG has also moved into branded merchandise, such as headsets, eyewear, T-shirts and more. On Friday, the company will begin selling baseball caps with logos that promote the 165 video game pros under contract that make up the teams.

About 35% of video game players come to the event from a three-hour radius. Others travel from places around the country. Bromberg calls the live events "a destination experience." This season's tour ends January in Orlando, Fla.

When asked about an exit strategy, Bromberg says, "we don't think about exiting the business. The founders are still active. We think about building the business."