Overwatch League Teams Prepare for Cost-Cutting Amid Concern Over League's Future

Overwatch League teams are preparing for a belt-tightening on expenses after an Aug. 10 meeting between representatives of each team and Activision Blizzard CEO Bobby Kotick, league sources told The Jacob Wolf Report.

That meeting is the first time Kotick and his executive team have provided guidance to league team owners since Activision Blizzard accepted an acquisition offer from Microsoft in January, a merger that will take place in summer 2023 barring any government interference. The meeting was first mentioned on Twitter by collegiate “Overwatch” player Zachary "iced" Hughes. 

Activision Blizzard limited attendance for the meeting, allowing only team owners and a few of their executives to participate, sources said. Even certain executives from the Overwatch League itself were not in attendance. The feeling after the meeting by many teams across the league and their operational executives was not optimistic, though.

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On Monday, the Paris Eternal cut four players, opting instead to sign U.S. players from the Contenders secondary league, presumably as a money-saving move. One of the cut players, Daniël "Daan" Scheltema, hinted on Twitter that the four released members knew they’d be let go prior to their Aug. 14 match against the Vancouver Titans, which ended up being lopsided in the Titans’ favor.

The Washington Justice also made a series of moves, trading away South Korean tank player Kim “Mag” Tae-sung to the Boston Uprising on Monday. The team also cut Jung “Tydolla” Seung-min on Tuesday. Under public fire for the moves, its GM Aaron “PRE” Heckman deleted his Twitter account after sending out a bleak message.

“Thank you to everyone who understands that the situation we are in is awful and we're doing everything we can to give people a shot at success,” Heckman wrote. 

Since the announcement of the Microsoft acquisition in January, the Xbox developer has been silent on the future of Activision Blizzard’s esports portfolio—among the most expensive in the industry. 

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Teams in both the Overwatch and Call of Duty Leagues owe Activision Blizzard around $400 million in franchise fee installments, as reported by The Jacob Wolf Report in May. Those installments were suspended in late 2020 amid economic concerns related to the pandemic, but have continued due to pessimism around the league and its ability to generate revenue. In essence, Activision Blizzard has told its league owners: Until we figure out how to make money together, you owe us nothing.

Historically, Microsoft has invested the bare minimum to keep its esports operations afloat in other titles. Under the “Halo” banner, one of the original games in esports history, it operates the Halo Championship Series, which relaunched with the release of “Halo: Infinite” and an exclusive partner program. The developer has been criticized, though, for failing to market the game and league wider—resulting in middling viewership for many of its events.

Revenue for the Overwatch and Call of Duty leagues has been modest in 2022. While many of its teams have sponsors, often local to their regions, the Overwatch League has no advertisers listed on its website. The league lost most of its sponsors after allegations against Activision Blizzard levied by the California Department of Fair Employment and Housing in July 2020 in conjunction with a lawsuit accusing the developer of systemic sexual harassment and gender discrimination.

The Call of Duty League holds sponsorships from Zenni, Scuf, Mountain Dew, Aimlab and Amazon. It just concluded its season on Aug. 7.