In a recent financial filing, Activision Blizzard revealed that Overwatch League franchise owners will have a crucial decision to make at the end of the current season. They will vote on an updated ‘operating agreement,‘ which could significantly impact the future of the league.
Should teams choose not to continue under the revised agreement, they will be required to pay a substantial termination fee of $6 million per franchise, amounting to a staggering total of $114 million.
The disclosure was part of Activision Blizzard’s Q2 financial results, where it was also disclosed that the total revenues from the Overwatch League constitute less than 1% of the company’s consolidated net revenue. This indicates the challenges faced by the league in terms of financial viability and profitability.
However, the specific details of the vote, such as the required threshold for it to pass and the exact date of the vote, were not provided in the financial filing. The current Overwatch League season is set to conclude on October 1st, adding a sense of urgency to the decision-making process.
Interestingly, the termination fee amount of $114 million implies that there are 19 franchises, despite the league being designed to accommodate 20 franchises. Reports had previously suggested that the Chengdu Hunters franchise had disbanded, but no official confirmation has been made on the fate of Chengdu Hunters’ slot.
History of Financial Woes
In the past, some franchises have renegotiated their financial obligations. For instance, OverActive Media, a franchise slot owner, struck a deal with Activision Blizzard to eliminate its outstanding Overwatch League franchise fee payments worth $6.5 million. This arrangement also included a sponsorship deal between the two parties. However, it remains unclear if other franchises have received similar arrangements.
Overwatch League commissioner Sean Miller expressed confidence that Overwatch esports would continue regardless of the voting outcome. Nevertheless, there have been reports of significant layoffs within Activision Blizzard’s esports staff, signaling the company’s acknowledgment of the challenges it faces in this domain.
Activision Blizzard, known for running both the Overwatch League and the Call of Duty League, has not disclosed whether the latter will undergo a similar voting process or if there will be structural changes.
This news follows the company’s public admission in a May 4th financial filing that its franchised esports leagues have been encountering difficulties that negatively impact their operations and potential longevity under the current business model.
Overwatch League: Poor Viewership and Revenue
The Overwatch League was initially established in 2018, with team owners investing $20 million per slot. However, poor viewership and revenue concerns have led to discontent among team owners. A significant number of Overwatch League teams reportedly initiated a collective bargaining process against Activision Blizzard due to high operating costs and unfulfilled revenue promises.
Adding to the league’s financial woes, reports indicated that as of May 2022, Activision Blizzard was owed a combined $400 million in franchise payments across both the Overwatch and Call of Duty leagues.
It’s important to note that the company faced severe backlash in 2021 when it was hit by multiple lawsuits alleging widespread sexual harassment and toxic workplace culture. As a result, several sponsors withdrew their support from the Overwatch League, compounding the financial challenges faced by the league.
For more up-to-date news and features about esports, please visit our eSports News and Features at, Crypto Club Site.
