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Overwatch League set for shakeup as teams offered US$6m termination fee

Teams to vote on updated operating agreement at end of esports competition’s current season.

20 July 2023 Ed Dixon

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  • Total payouts will be approximately US$114m
  • Move set to end Overwatch esports franchise era

Esports’ Overwatch League (OWL) looks set for a major overhaul after its organiser and game developer Activision Blizzard announced plans to amend its agreement with the competition’s 19 teams.

Following the conclusion of the current OWL season, Activision Blizzard has said teams will vote on an updated operating agreement. If the teams do not continue under an updated agreement, they will be offered a US$6 million termination fee. The total amount in payouts will be approximately US$114 million.

It means that the future of the league after the current campaign rests in the hands of team owners. Should they take the US$6 million payout it would surely end the franchise format of Overwatch esports.

However, it would not necessarily spell the complete end of OWL, with the league’s boss Sean Miller stressing that Activision Blizzard planned to continue Overwatch esports.

“I want to be clear on one thing in particular, that Overwatch remains committed to a competitive ecosystem in 2024 and beyond,” Miller told The Verge.

“And we’re building toward a revitalised global scene that prioritises players and fans.”

Miller did not confirm what OWL could look like in 2024 but said other esports leagues were being looked at for inspiration, including the Overwatch Apex tournament which ran in South Kora for four seasons before being shut down in 2017.

“If you look at our playoffs format that we’re doing this year, that should be a clear indication that, yes, we’ve been looking at Apex as one of our examples,” said Miller.

“The playoff format this year is almost an exact copy / paste of Apex season two.”

Miller added that OWL remained committed to its players but did not clarify specific details should the league change course.

“We’re in ongoing conversations with teams internally and [players] are our top priority to ensure that this transition, should it occur, happens in the best way possible,” he said. 

Miller continued: “I’m actually very optimistic about the future of Overwatch esports and the competitive ecosystem.

“We are doing all we can to make the player experience and the fan experience one that people want to return to, want to be a part of, and get excited about to turn on.”

Activision Blizzard remains the subject of a US$68.7 billion takeover by Microsoft. The deal for the video game publisher moved a step closer earlier this month when US courts rejected an attempt by the Federal Trade Commission (FTC) to block the transaction.

SportsPro says…

Miller may sound upbeat about Overwatch competitive gaming, but recent developments in Activision Blizzard’s esports division suggest otherwise.

The company has laid off around 50 employees this week, which appears a surprising move when factoring in strong viewership and high-profile sponsorship deals for Call of Duty League (CDL) tournaments.

Activision Blizzard also saw operating income grow 70 per cent year-over-year and net bookings (the net amount of products and services sold digitally or sold-in physically) rise 50 per cent to US$2.46 billion in the second quarter of 2023. OWL revenue comprises less than one per cent of the company’s consolidated net revenues – it is not a key income driver.

Still, Activision Blizzard is a business and OWL is failing to deliver. The league has missed revenue targets and been hit by falling viewership. It was also reported last year that OWL’s franchises owed Activision Blizzard roughly US$6 million to US$7.5 million each. According to Sports Business Journal (SBJ) last month, outstanding team entry fees to the league had been waived entirely.

OWL is set to continue next year, though likely in a much different guise. Activision Blizzard can take the hit financially but scaling down operations would be a further setback to the wider esports industry. The sector has seen the attention accrued during the Covid-19 pandemic give way to a stormy economic climate and other testing business realities.

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