Overwatch League $20 Million Franchise Fee Has Potential Teams Balking

Blizzard Entertainment has big ambitions for its professional Overwatch League, but perhaps their goals are too big. ESPN reported Wednesday that potential teams are balking at the developer’s steep conditions to join the official eSports league for the hero shooter, starting with a $20 million franchise asking price.

Sources with ESPN report Blizzard has a $20 million starting price for an Overwatch League franchise. Prices escalate from there for larger markets such as New York and Los Angeles. Additionally, these franchises are not guaranteed any money from revenue sharing until after 2021 and only if certain unknown criteria established by Blizzard are met. The sources also claim the developer will take a 25 percent cut if a team sells its franchise to another party.

For comparison, Riot Games’ League of Legends asks $1.8 million for teams to buy into the official Championship Series eSports league. It is also the most popular with 43 million reported unique viewers total for the 2016 championship, with 14.7 million peak concurrent viewers. Established in 2013, League of Legends is the oldest official eSports league.

Genji from Overwatch.
[Image by Blizzard Entertainment]

Blizzard’s franchise asking price is perhaps bolstered by a Morgan Stanley report that puts Overwatch League revenue as high as $720 million per year. This is on the very high-end of the estimates with Overwatch hitting mainstream versus a niche following and with the league expanding from 16 teams to 32.

However, a team owner told eSports reporter Richard Lewis he doesn’t take the Morgan Stanley claim seriously.

“The report is a joke that we’re all laughing about” the owner told Lewis. “Having been involved in esports for as long as we have we don’t understand that projection, especially when you consider how little you make on something as big as having a team in [Riot Games League of Legends Championship Series] LCS.”

Meanwhile, the stats for Overwatch are certainly impressive. Activision-Blizzard recently boasted of more than 30 million players enjoying the game globally with more than $1 billion in total revenue since the game launch one year ago. However, it has yet to take off as a competitive eSport despite Blizzard-Activision CEO Bobby Kotick’s claim of 75,000 Overwatch players that are professional level.

Kotick has been busy trying to find some big money buyers into the Overwatch League that are outside of the existing eSports structure. New England Patriots owner Robert Kraft and Miami Dolphins owner Stephen Ross have reportedly been courted to buy into the league and form their own teams.

The future is still in doubt though as several teams have pulled out from joining the league. As ESPN reports, startup Reunited backed out in January with Team SoloMid joining soon after. Additionally, a team backed by the Boston Bruins and TD Garden is said to be backing out as well.

Orisa in Overwatch.
[Image by Blizzard Entertainment]

Blizzard announced the Overwatch League at BlizzCon in November 2016. It was scheduled to launch in 2017 with players having the chance to try out for teams and receive a guaranteed contract if picked up, but that is currently in doubt with the year almost half done and the formation of the teams still forthcoming. Currently, national teams fill out the league as currently formed with competition to start this summer.

In a departure from norms, the Overwatch League is meant to be regionally based with teams representing different cities and areas of the countries. Hence, the interest from NFL franchise owners given the possible marketing crossover and other opportunities that come from running a regional franchise.

“The Overwatch League represents not only the pinnacle of Overwatch competition, but also a genuine career opportunity for the most skilled Overwatch players,” Mike Morhaime, CEO and co-founder of Blizzard Entertainment, said in the league’s official announcement at the time. “We’re building a league that’s accessible to players and fans, sustainable, and exciting for everyone involved.”

[Featured Image by Blizzard Entertainment]