Centered around weekly matches between teams competing in the sci-fi shooter game, the Overwatch League was the first esports league to attach franchises to cities. Whereas most esports leagues hold competitions either exclusively online or gather their teams in a neutral venue, the Overwatch League’s home-and-away format will require teams to travel around the globe for road games next season. For the first two seasons, the league has held its regular season matches at Blizzard Arena, a 450-seat facility in Burbank, Calif.
Following the framework of traditional sports leagues by attaching franchises to cities has been a defining characteristic of the OWL since its founding by game publisher Blizzard Entertainment in 2017. The rationale was to provide a more familiar dynamic that would foster support from casual fans who might be more likely to support a team representing their town. It was also envisioned as a way to bring esports to corporate partners on a local level, providing another revenue opportunity.
“It’s really taking a page out of traditional sports scheduling,” Commissioner Nate Nanzer said when making the announcement Friday at the South by Southwest Gaming Festival. “This isn’t just an important step for the Overwatch League; it’s an important step for esports. . . . You look at the esports club model where everyone is playing in a central studio or online, the business model is global sponsorships, there’s some competition there, and then monetizing content through YouTube and Twitch and other platforms. But if you look at the way teams drive revenue in traditional sports, it’s because they have a venue. They can sell tickets, VIP experiences and boxes and all of those things — concessions, parking, merchandise and local sponsorships — which to date have had no reason to invest in esports.”
Although the 20-team league ultimately would like to reach 28 teams — Nanzer identified several potential spots for new franchises, including Germany and Scandinavia — the OWL does not plan to add any teams between Season 2 and Season 3, focusing entirely on the new home-road format, he said.
“It’s safe to assume that in 2020 we will launch with the 20 teams we have right now,” he said. “It’s a huge lift at the team and league level to take this step, and adding additional complexity at this point, I’m not sure it makes a ton of sense.”
Enthusiasm for the regionalized revenue model, as well as solid viewership and growth in the league’s first season, were driving factors behind franchise prices rising from $20 million for the inaugural season to between $35 million and $60 million during the league’s most recent round of expansion. Interest has been strong again in Season 2, with the league reporting a viewership increase of 30 percent for its first week of matches in terms of total reach year over year. Week 2 saw a 40 percent increase.
The new format could provide a road map for other leagues. Activision is already bringing the franchise dynamic to its Call of Duty World League, with Overwatch League owners getting the first rights to purchase teams for a reported $25 million. Such sales would further buoy the growing esports industry, which is projected to surpass $1 billion this year, according to research firm Newzoo.
Michael Pachter, an esports and gaming market analyst who is the managing director of equity research at Wedbush Securities, said he believes the model also could be brought to the League of Legends Championship Series, a more established league operated by publisher Riot Games that features a more robust fan base than the OWL.
“If the OWL model works, I think other game developers will emulate it since Activision, the league owner, gets to sell franchises and gets to keep half of the advertising revenue,” Pachter said. “If it doesn’t work, other models will continue to be tested.”
The model does present significant logistical issues regarding travel. Of the OWL’s 20 teams, four are based in China, another in South Korea and two more in Europe. Even the North American franchises span the continent from Vancouver to Florida, making travel costs a significant challenge. So, too, could be the toll such travel takes on players, whom Nanzer said were involved in discussions about crafting the new schedule. No major professional sports league operates regular season events across three continents, as the OWL plans.
To mitigate that toll, Nanzer said teams probably will play multiple road matches in a row, for example playing all of the league’s Asia-based teams during the same road trip. Nanzer said the schedule wasn’t solid enough to know what the longest road trip could be, but he did say that teams on extended road trips could get a bye week following any lengthy time away from home.
Nanzer decline to provide a figure on what the travel will cost teams but said expenses would not range into the millions.
Given the large investments by team owners, Nanzer acknowledged that the league does feel some pressure to deliver results through the local model, but that the goal is for long-term growth rather than short-term success.
“Our teams recognize that we’re not trying to build something for five years,” he said. “We’re trying to build something that stands the test of time. . . . No one has any expectation that we’re selling out the Staples Center on 20 dates. That’s not the goal. The goal is to build this over time.”
The league held last year’s inaugural Grand Finals in Brooklyn’s Barclays Center, selling approximately 18,000 tickets over the two-day event.
With a start date in place, the teams must find suitable facilities to serve as their home venues. Several cities, including the District (home to the Washington Justice), Dallas and Orlando, have recently opened esports-specific arenas that could provide the desired combination of technological infrastructure and seating capacity. No team has announced a home venue.
The OWL will provide a small dose of its home-game dynamic during its 2019 season. The first of the so-called “homestand weekend” matches is slated for the Dallas area April 27-28 at Allen Event Center, which has a capacity of 7,000. Events also will be held this year in Atlanta and Los Angeles. Tickets for the Dallas event start at $35.
Pachter said he believes the challenge facing the OWL extends beyond resonating in its assigned markets, particularly regarding acquiring new fans.
“It’s far from clear that the OWL model works,” Pachter said. “The ‘payoff’ for the owners is to drive huge audiences, and the game is behind a paywall [retailing for around $40], so it will be hard to get a gigantic fan base.
“I think it’s a complicated endeavor for viewers even if they play, but it’s impossible to follow if the viewer hasn’t played the game. I think that OWL viewing is similar to golf: If you play, it makes sense to you. If you don’t, it’s a snooze to watch.”
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