In the midst of its impending acquisition by Microsoft, Activision Blizzard’s Overwatch League (OWL) faces uncertainty as the company laid off approximately 50 employees from its esports division. The move comes as the company prepares for significant potential changes to the OWL, which might signal the end of its current city-based franchise format.
The layoffs, reported by The Verge, took the esports community by surprise, and some speculate that a skeleton crew might conclude the current OWL and World Series of Warzone seasons. Former employees expressed concerns about the company’s capacity to support esports initiatives internally moving forward. This round of layoffs follows a similar action in March 2021 when around 50 employees from the esports teams were let go.
A recent earnings report from Activision Blizzard revealed that the company modified its agreements with OWL team owners last quarter. After the conclusion of the current OWL season, teams will vote on an updated operating agreement. Failure to agree to the new terms will result in a termination fee of $6 million for each participating team entity. The report also indicated that OWL’s total revenue accounts for less than one percent of the company’s consolidated net revenues.
Reports surfaced that the Overwatch League waived its remaining franchise fees, resulting in teams still owing between $6 million and $7.5 million after pandemic-related payment deferrals. Initially, a spot in the league cost $20 million, but expansion teams that joined in the second season paid over $30 million.
Over the years, the OWL faced numerous challenges, including shifts in its broadcasting platform from Twitch to YouTube, impacting viewership. Additionally, allegations of widespread sexual harassment and discrimination at Activision Blizzard led to sponsors like Coca-Cola, T-Mobile, and Kellogg’s distancing themselves from the league.
The esports ecosystem also grappled with regional challenges, with the absence of Blizzard games, including Overwatch 2, in China due to the end of the partnership with NetEase. Moreover, the league faced financial pressures, as team owners asserted they were not generating sufficient revenue despite high operating costs.
Despite the uncertainty, OWL Commissioner Sean Miller affirmed Blizzard’s commitment to a competitive ecosystem in 2024 and beyond. The company is exploring various options for the future of Overwatch esports, prioritizing player and fan experiences. Miller expressed optimism about creating a revitalized global scene that excites players and fans alike.
While the future of the Overwatch League remains uncertain, the upcoming Grand Finals in Toronto may mark a significant turning point for the esports ecosystem. The pending Microsoft takeover and Activision Blizzard’s continued efforts to support Overwatch esports could signal a transformative chapter in the league’s journey.
