A depressing Activision-Blizzard financial report illustrates the Overwatch League’s eventual demise, which has long been forecasted for the shaky esport.
According to an Activision-Blizzard-King (ABK) financial earnings report released today, the Overwatch League is in terrible shape and may soon come to an end. The once-heralded esports league has undergone substantial pressure in recent months, with the esports sector appearing to be constantly in upheaval. The clubs will now vote at the end of the season on a proposed new operating agreement for the Overwatch League.
The financial statement is obvious, but the proportion of teams need to vote on a new deal is still unknown. One way or another, the Overwatch League will alter.
Overwatch League: Ending imminent?
The ABK statement from today paints a bleak picture of the Overwatch League’s demise and its financial effects. The press statement states that “Total revenues from the Overwatch League comprise less than 1% of our consolidated net revenues.” Anyone who has been paying attention for the past five years will not be surprised by this, but it demonstrates the league’s lack of identity.
In May, ABK revealed that it “continues to face headwinds which are negatively impacting the operations and, potentially, the longevity of the leagues under the current business model.” This was the canary in the mine. The financial statement for today is seen below, and it includes that headwinds line once more.
ABK’s financial statement
“As previously disclosed, our collaborative arrangements for our professional esports leagues continue to face headwinds. We changed a few conditions of our agreements with team entities taking part in the Overwatch League throughout the second quarter. The new provisions state that the teams will vote on an updated operating agreement when the current Overwatch League season is over.
A $6 million termination fee (a total of about $114 million) will be paid to each participating team entity if the teams decide against continuing under a revised operating agreement. A termination liability has not yet been accrued as of June 30, 2023. Less than 1% of our consolidated net revenues come from the Overwatch League overall.
Financial statement for Activision-Blizzard-King as of July 19, 2023
This translates to each OWL team having the option of accepting new terms or paying a $6 million “termination fee.” This figure is significant because several of the franchises had unpaid original franchise fees. This includes rumors that the Toronto Defiant and the OWL reached an agreement to get the latter’s outstanding costs waived.
Getting $6 million and washing their hands of the whole matter may appeal to franchise owners eager to recover their investment in what has been a big money pit. As a result, the Overwatch League clubs with Chinese bases are in a potentially terminal position. Given that Blizzard Games still does not have a contract in China as a result of its split from publisher Netase, this might be a simple and quick method to halt the Overwatch project.
The end or a new start?
Until the end of the season and the expected vote by clubs that might permanently turn off the Overwatch League’s respirator, we won’t know more about the league’s future. Sean Miller, the commissioner of the Overwatch League, is still committed to the development of Overwatch esports. Ash Parrish of The Verge quotes him as saying, “I want to be clear on one thing in particular, that Overwatch remains committed to a competitive ecosystem in 2024 and beyond.”
“And we’re building toward a revitalized global scene that prioritizes players and fans.”