It cost millions to join the Overwatch League. Teams are pushing for a break.
Esports teams in the Overwatch League have retained British law firm Sheridans to negotiate on their behalf with the game's developer, publisher and league owner Activision Blizzard, according to esports journalist Jacob Wolf of the "The Jacob Wolf Report." The teams are said to be seeking financial assistance amid flagging revenue and viewership.
The effort is reportedly being led by OverActive Media, the Canadian esports company that owns the "Overwatch" team Toronto Defiant. Teams have spent between $7.5 million to $10 million dollars since the league was founded in 2017, according to Wolf; on top of that, maintaining an "Overwatch" team costs approximately $1 million per year.
When the Overwatch League launched its inaugural season in 2018, eager investors were sold on the promise of a booming future for esports, with participation in the league predicated on a $20 million franchise fee. Among those investors were Sacramento Kings co-owner Andy Miller, New England Patriots owner Robert Kraft and Los Angeles Rams owner Stan Kroenke. In an approach that was unique in esports, the Overwatch League tied its teams to cities rather than esports organizations. This was intended to help teams capture and control certain markets, which they could then work with advertisers to target.
Since then, viewership has steadily trended downward, with the coronavirus pandemic upending ambitious plans for in-person events to fuel regional rivalries and fandom. By 2022, the league had lost all its previous sponsors due to a sexual harassment suit brought by California regulators against Activision Blizzard. Coca-Cola, Kellogg, State Farm and T-Mobile all pulled their partnerships with the Overwatch League shortly after state labor regulators sued Activision Blizzard for systematic discrimination against women and a "pervasive 'frat boy' workplace culture."
The company is also poised to lose its presence in China, which comprises a massive portion of "Overwatch's" viewership. An estimated 87 percent of the league's viewers are based in China, according to data revealed by esports caster Josh "Sideshow" Wilkinson. Activision Blizzard's partnership with NetEase, the publisher that distributed and oversaw some of Activision Blizzard's biggest titles in China for over a decade, will end on Jan. 23. The company has not yet announced a new partner in China.
The esports industry is bracing for what has been dubbed an "esports winter," as live stream popularity declines and advertisers tighten their wallets in fear of a looming recession. In the past few months, multiple esports organizations have undergone layoffs while others have ceased operation entirely.
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