Sources have informed Dexerto that, following the highly publicised lawsuit from the California Department of Fair Employment and Housing (DFEH), Activision Blizzard held a meeting with Overwatch League owners. We have been told that owners are becoming increasingly disaffected with leadership decisions, the costs around running a franchise, and the lack of a coherent plan for the future of the league that they hope will be bolstered by the release of Overwatch 2.
July 20 saw the DFEH file suit against the game’s developer after a two and a half year investigation into their workplace culture, with many credible allegations of sexual harassment and gender-based discrimination. The initial PR response from Activision was seen as a poor one, with Bobby Kotick later admitting it was “tone deaf,” and it prompted staff protests and walkouts.
Our sources inform us that even prior to the lawsuit and the loss of league sponsors, multiple team owners were dissatisfied with the direction the league was heading in and the delays to the release of Overwatch 2.
“We were already set to have talks with league operations because a few of us have been looking at our options,” one franchise owner told Dexerto. “The timing of the lawsuit couldn’t have been worse and it came out of nowhere.”
The lawsuit story was dominating the games press and the blanket coverage prompted more whistleblowers to come forward. So it was against this backdrop the owners’ meeting took place on July 23. Sources say the company’s representatives wanted to tell League owners that the lawsuit contained false allegations that they would be fighting against.
“It was a few days after the lawsuit when we all got together and it wasn’t the usual people that we talk to,” one source present during the call told us. “Instead of league ops, it was a legal representative from Activision and Brandon Snow (Head of Activision Blizzard Esports). They flat out denied multiple claims in the lawsuit and told us that they’d be challenging it.
“Obviously multiple representatives expressed their concerns about the nature of the lawsuit because no one wants to be associated with that type of thing. The way Brandon [Snow] handled the call also left a bad taste in many of our mouths – he referenced his being on vacation multiple times during the call, as if his inconvenience was somehow relevant in the context of the allegations and the pending suit”
A company spokesperson for Activision Blizzard told Dexerto: “We hold regularly scheduled calls with team owners to talk about league matters and developments.”
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We are told that discussions during the call included the problems facing the league now that the company was facing the likelihood of losing sponsors at a time when the league was already facing significant challenges.
“While the economics of the Overwatch League have improved significantly since the start, more and more owners are starting to be concerned over the lack of growth in viewership and revenue. While the League has monetized well historically, it really isn’t in a place where it can afford to lose sponsorship dollars for other reasons. Obviously, those whose business is most reliant on ABE properties were the most concerned.”
The source also confirmed that even prior to the lawsuit many owners had been weighing up the potential of selling their franchise slots. With Activision having approval over slot sales and prospective buyers, many who no longer believe in the viability of the Overwatch League are lingering not through choice. The price that they would be compelled to sell at due to outstanding franchise fees is higher than most people’s current valuation for a slot. However, the source thinks it’s best for the future if Activision tries to find owners who haven’t “checked out”.
“If interested buyers for OWL franchises exist, ABE should do anything they can to facilitate transactions to prove that liquidity exists and there are still owners who remain bullish. Forget about the $10 million of paid-in franchise fees and the outstanding obligations, just getting transactions done at any price would be good for the League and the owners who wish to remain committed to ABE”
The league has faced a series of challenges that have all contributed to the view that it has failed to deliver on its early promise. At the start of 2020, Activision’s deal for exclusive broadcasting rights with Amazon-owned streaming service Twitch ended, prompting a move to YouTube that was packaged with the Call of Duty League and Hearthstone esports products. The esports viewership measuring platform Esports Charts placed this move as being a key factor in them experiencing a 61 percent decline in viewership for their 2020 Grand Finals.
The global pandemic has also severely impacted plans for revenue generation around the league. The highly touted “Homestand” model, which would see teams travel and compete at local venues in home and away fixtures, was shelved after a few test events as lockdowns and travel restrictions set in. In March 2021, the Activision Blizzard President of Sports & Entertainment Tony Pettiti told the Sports Business Journal that they were going to become “less dependent on live events”, a decision that came with an estimated 50 layoffs from the company’s esports team.
Franchise owners were already hurting financially with multiple franchise owners taking government PPP loans during the pandemic. “The loss of live events due to COVID-19 was a major change to Envy’s 2020 business strategy, going from an expected seven events hosted in North Texas to only the single event,” a representative from Dallas Fuel told ESPN. In another report in the Washington Post, the Head of Events at the Atlanta Reign franchise explained that their business model relied on hosting live events and that they were “burning through everything right now with no help”.
The lawsuit was going to further impact on the league’s financial woes. On August 5, the Washington Post had confirmed that the fan-noticed absence of certain sponsor’s logos on the broadcast was indeed a sign of their intention to pull out of the league altogether. Absent logos included Coca-Cola, State Farm, and T-Mobile. On August 6, Kellogg’s confirmed they would no longer be sponsoring the league and explained their decision to the publication Polygon.
“We find these allegations troubling and inconsistent with our commitment to equity, diversity and inclusion” their spokesperson Kris Bahner said. “While Activision Blizzard has announced plans to address the challenging issues it faces, we will not be moving forward with any new programs this year, but will continue to review progress made against their plans.”
Two franchise sources have stated that following the news about sponsors, Activision Blizzard representatives had told them that several sponsors weren’t pulling out but were “waiting for the environment to improve before allowing their logos to be used again.” Both sources stated they hadn’t been able to confirm if that was accurate or simply a reassurance tactic from league operations.
For many franchisees, there were now two glimmers of hope. The first, obviously, was a return to normality once the pandemic restrictions could be lifted. The second was the release of Overwatch 2, which according to the sources we spoke with, had become synonymous with a hard reset of the league and a potential resurgence of enthusiasm among fans for the IP. When rumors started to circulate that the game was going to face delays, the team owners wanted to know how long realistically that would be the case. On August 7, the reputed Overwatch insider Metro spoke publicly about these rumors, stating that “from what I can gather a release in 2022 does not seem likely anymore.”
An internal Activision Blizzard source told Dexerto this was incorrect and added that getting the game out as soon as possible was now a high priority.
“We’re more than aware we need to get it out,” they said.“So the word is the dev team has been told to lock in the features the game has, get it fixed and get it shipped. We’re looking to get it out before the Summer of 2022.”
Another source, a member of franchise management, also corroborated this version of events.
“We’ve all been told that the aim is Q2 of next year,” they informed us. “The timing of the release will factor in the league schedule because obviously they don’t want to switch game versions in the middle of a season.”
On August 11, GGRecon reported that the league would go on a “year-long hiatus” before Season 5 began. They wrote: “According to multiple sources within the Overwatch League, the league office has told teams that the fifth season of the Overwatch League is going to be delayed past its usual starting point in the first half of the year. Sources are dating the suggested start of the League in late summer at the earliest, with its likely starting point being mid-fall.”
They also added that the reason for this was “a delayed launch of Overwatch’s sequel Overwatch 2, which the League wants to play next year’s season on.”
Shortly after the publication of the story, the Overwatch League Vice President Jon Spector tweeted: “It’s really not practical to respond to every rumor about our future plans, but in this case this story is inaccurate. We have not set nor communicated dates about our 2022 season yet but do not plan to take a ‘year-long hiatus’ in any scenario we are considering currently.”
It's really not practical to respond to every rumor about our future plans, but in this case this story is inaccurate. We have not set nor communicated dates about our 2022 season yet but do not plan to take a 'year-long hiatus' in any scenario we are considering currently. https://t.co/hDJwN2szb5
— Jon Spector (@Spex_J) August 11, 2021
However multiple sources that work within the league confirmed that this denial wasn’t telling the full story and that the denial was mostly made on the basis of semantics.
“That denial was a technicality,” one internal Activision Blizzard source told us. “There’s no plan set in stone yet as they are coming up with multiple models to discuss with the owners. What looks most likely at the moment is that we run a few Overwatch League branded events as the run-in to a delayed regular season while Overwatch 2 is tweaked. The hope is that we get Overwatch 2 to at least a playable beta in time for those events but if not we will run these competitions on the existing game. So, while there will still be competitive Overwatch being played and franchise teams will be competing in those competitions, the actual league component is more than likely to be delayed.”
This was followed up by another report published by Dot Esports on August 11 in response to GGRecon’s original story.
The report states: “The Overwatch League is assessing its options for 2022, including a potential extended offseason following the 2021 season and interim events that could include non-season-based tournaments amid the uncertainty of the release calendar for Overwatch 2”. Spector did not react to his report.
“What’s funny,” the source said, “is that there’s also a strong likelihood these events are run in partnership with all the third-party operators we’ve isolated ourselves from over the first game’s life cycle. We’re hoping the excitement around Overwatch 2 is significant enough that they are willing to let bygones be bygones.”
The next ownership meeting is slated to take place on Thursday, September 2, and it is hoped there the plans for the league will be decided upon. However, it won’t be as simple as making a decision about dates. There are multiple factors at play, ranging from existing contracts, potential delays in Overwatch 2’s developments and further pandemic protocols.
“We need to make a decision before October because that’s when we do player contracts,” a member of franchise management explained. “Typically, players are on one-year deals that run October to October. If players don’t have anything to compete in until the middle of next year then the thought is: why should we foot the salary bill for a stunted season? Renegotiations are going to have to take all this into account.”
Given these issues, not all franchises would be too upset at the prospect of the league actually being on hiatus for a year. One franchise manager summed it up by saying “Our suggestion would be for the league to pay us a stipend and just wait for a year. It’d give us more time to get things back to normal, for them to do what they need to for this lawsuit and for Overwatch 2 to get finished. Until that happens it just feels like we’re burning money for nothing.”