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Overwatch League Shutdown Vote Underway as Activision Blizzard Prepares for Esports' Future

After six years of operating the most expensive esports league ever, Activision Blizzard is preparing to shut down the Overwatch League for good. Its new operator? An unsurprising face.

The most expensive esports league ever produced will soon be officially dead.

Staff at Activision Blizzard are preparing to contract with the Saudi Arabian state-owned ESL FACEIT Group to run the 2024 Overwatch season, effectively dissolving the existing Overwatch League, sources familiar with those discussions told The Jacob Wolf Report.

The plans come in anticipation of a vote among Overwatch League team owners to discontinue the city-based franchise format the league has operated under for the past six years, sources at the publisher and the participating esports organizations said.

In early October, Activision Blizzard Esports leadership presented a path-forward plan to the 20 Overwatch League franchises, followed by paperwork to cast their vote for or against the continuation of the league. Activision Blizzard is still awaiting final word from each organization, but it is expecting that vote will return with the majority of teams voting to discontinue the league.

If the vote comes back as expected, the game developer will pay the teams back a collective $120 million in compensation—$6 million each—after the teams spent more than $7.5 million apiece in franchise fees and millions more in operating costs since 2017. Many of the franchises owned by traditional sports owners are expected to leave esports entirely, while some will remain active participants in the undecided future of the Overwatch esports ecosystem.

Plans for the new-look Overwatch League are still up in the air, but it’s likely that it will be an open-circuit system similar to what existed prior to the formation of the franchise league in 2018. Activision Blizzard’s sought proposals for who will run that new system over the past few months and the ESL FACEIT Group, backed with an unmatched level of resources in the current grim state of the esports industry, will likely emerge the victor based on current discussions, sources said.

Esports Engine, an American-based event and broadcast production services company that ESL FACEIT Group acquired in March, already handles some operation and all broadcast responsibilities for the Overwatch League’s sister league, the Call of Duty League.

Negotiations between the ESL FACEIT Group and Activision Blizzard began prior to the call for the vote between existing Overwatch League franchise owners, highlighting internal doubt that the teams would vote to continue on.

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Now back to the story…

The 20 franchise owners and Activision Blizzard have stood at odds for more than a year, with teams frustrated at losses of millions of dollars on a league that made big, yet ultimately unachievable promises.

In January, the teams hired the British sports law firm Sheridans to collectively negotiate on their behalf, as reported by The Jacob Wolf Report. Ultimately the teams reached a deal that should they elect to exit the league this fall, each would receive $6 million in compensation.

It’s likely that some of the Overwatch League teams will remain, given relatively low costs versus other esports titles such as League of Legends and Counter-Strike, according to team sources. When Activision Blizzard paused franchise payments in 2020, many teams ran at break-even or just a minor loss due to the Overwatch ecosystem’s lower player salaries—though the animosity toward the developer’s handling of the esport and the promises made by Activision Blizzard CEO Bobby Kotick during pitches to teams in 2017 and 2018 remained.

At the end of this most recent season of the Overwatch League in October, the entire cast of on-camera talent appeared to thank fans for their support and their colleagues for six years of the league. Many of those talents then took to social media to say goodbye, despite the teams’ votes not yet being fully cast.

When reached for comment on this story, Overwatch League representative John Nomis declined, and directed The Jacob Wolf Report to the statement the league issued on Oct. 2.

“With the completion of the 2023 Overwatch League season, we will be focusing on our vision of a revitalized esports program,” the league posted on X, formerly known as Twitter. “We’re eager to share more with you as details are finalized.”

Over the past two years, Activision Blizzard scaled back its esports operations significantly, laying off around 50 people in July and not backfilling roles for those who’ve left and others who’ve been affected by other downsizing.

While some in esports were hopeful that Activision Blizzard’s new owner, Microsoft, might reinvest in the industry, that seems unlikely. Historically, Microsoft remained fairly hands-off with the esports scene for Halo and instead delegated organizing responsibilities to companies like Esports Engine and its spiritual predecessor, MLG.

The Overwatch League started in late 2017 with 12 teams backed by a never-before-seen lineup of both endemic esports organizations and some of the wealthiest and most famous sports team owners in the world.

Among its non-endemics were the likes of New England Patriots owner Robert Kraft; Los Angeles Rams, Denver Nuggets and Arsenal owner Stan Kroenke; former Mets ownership family the Wilpons; and Philadelphia Flyers owners Comcast Spectacor. Around them were some of the best-known esports organizations, such as Cloud9, Team Envy and OpTic Gaming. Twelve franchises signed on and agreed to pay $20 million over the next few years for their right to participate in the league.

Many of the sports luminaries came from personal relationships with Kotick, who spent much of 2017 traveling the world with Activision Blizzard staff, meeting with potential investors for the league. Kotick promised to change esports forever, activating the localized profits—such as ticket sales, advertising and regional broadcast rights—that traditional sports teams enjoy. And for a few seasons, it seemed possible, but due to a shift in consumer habits away from esports and the 2020 onset of the COVID-19 pandemic, the Overwatch League lost much of its hype.

Prior to the March 2020 widespread COVID outbreak in the U.S., the Overwatch League teams hosted several events across the country, including in New York City, Washington, D.C., and Dallas. Many of those events packed facilities that seated anywhere from 1,000 to 3,500 people. But with COVID-19’s rapid spread across the world, Activision Blizzard ultimately canceled dozens of live events planned in the U.S., Canada, England, Franchise, China and South Korea.

Over the past three years, many of the Overwatch League teams have significantly downsized, or in some cases, completely eliminated the majority of their operating staff.

Most notably, the Kroenke-owned team The Guard, who ran its Overwatch franchise Los Angeles Gladiators, laid off almost all of its staff in February, leaving behind a skeleton crew to operate its holdings in Overwatch, Call of Duty and VALORANT. It later let go of its entire VALORANT squad in August after that team made it to the VALORANT Champions Tour via promotion.

And in December 2021, the Overwatch League’s first owner, the Kraft family, merged its team, the Boston Uprising, with another esports organization, Oxygen Esports, which raised an additional $20 million. By doing so, the Krafts limited their risk should the league go south, signaling a lack of faith in the future of the league.

The outlook of the esports ecosystem now is dire. While the industry has shown some signs of growth in certain games, such as VALORANT and Counter-Strike, the issue lies with the significant amount of investments—billions in team-focused organizations alone—over the eight years. Few esports teams have reached profitability, all while staffing up to unsustainable levels with high operating costs.

Thanks for reading the The Jacob Wolf Report. If you didn’t know, I host a podcast, ‘Visionaries,’ and create other content with former Washington Post games journalist Mikhail Klimentov.

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