According to one report, the teams in the Overwatch and Call of Duty leagues owe Activision Blizzard a total of up to $420 million. Since investor interest is dwindling, sponsors are dropping out and viewer interest is also falling, the financing of the two leagues is considered uncertain.
E-sport projects with classic professional sports as a model
The Overwatch League has been an important project for Activision Blizzard since its inaugural season in 2018, and an equally important part of Overwatch. Unlike other esports organizations, the league was built along the lines of mainstream professional sports, with teams that are privately owned and affiliated with specific cities. These are primarily distributed in the USA, but there are also teams from China, Canada, South Korea, France and Great Britain. The American team Boston Uprising, which is based in the city of the same name and was formerly owned by Robert Kraft, who also owns the American football team New England Patriots, is used as an example in the now published report by a sports journalist. Activision Blizzard attempted to copy the system with a call-of-duty league after the launch of the Overwatch League.
High fees equals high debt
However, it is precisely this private property that is now becoming a problem. The eight teams that joined the Overwatch League, which originally consisted of twelve competitions, only in its second season, had to buy into the league for 27 to 35 million US dollars – in addition to the annual fees. The founding members each paid $20 million in 2017, making the Overwatch League the most expensive esports league at the time.
However, some of these payments were suspended by Blizzard with the onset of the COVID pandemic and were once postponed to fall 2022. The pandemic came at a particularly bad time: Blizzard had just transitioned the Overwatch League to a round-trip model, with teams visiting their opponents on-site. However, with the lockdowns beginning in early 2020 and emerging travel restrictions, nothing came of it; the league made an unscheduled switch to online-only competition after just a month. The result was a lack of income.
Otherwise it's not good
Activision Blizzard, however, has not been in a favorable position to collect the outstanding claims for a long time. The high cost of entry has traditionally made it difficult to attract investors to the two leagues. In addition, there seem to be difficulties in keeping current investors on the ball. Robert Kraft, the owner of the New England Patriots, had to be persuaded by controversial Activision Blizzard CEO Robert Kotick to help found the league, according to the report. However, Kraft has since sold the majority of its shares. The history of many other teams reads similarly.
At the latest since the harassment scandals and other controversies became known, Blizzard has also had problems keeping advertising sponsors. For example, Coca-Cola, Kellogg's and other sponsors terminated all collaborations at the end of last year. Before the start of the fifth season in spring 2022, Blizzard was desperately looking for sponsors. And since Overwatch has been missing new content for years and Overwatch 2 is still not imminent, the number of viewers is also comparatively low. Activision Blizzard could therefore have to suspend or even waive the outstanding payments if the publisher wants to keep the two leagues together.
Improbable that the status quo will change in the near future
At the beginning of the pandemic, Activision Blizzard already waived part of the debt, but the company could not bring itself to a complete haircut. The then Head of eSports Brandon Snow propagated such a step, but is said not to have been able to assert himself internally. In February 2022 he left Blizzard. With the pending takeover by Microsoft, an early decision seems unlikely – the future financing of the two leagues is correspondingly uncertain.