Activision Blizzard has structured the competitive circuit of Overwatch and Call of Duty by creating two franchised professional leagues. Within these leagues, esports teams must pay franchise fees to secure a stable position.
In this period of pandemic and with the cancellation of physical competitions, Activision Blizzard understands the difficulties of the teams and would be prepared to make a gesture in their favor.
Effects of COVID-19
You have to live on another planet not to be aware of the impact of the coronavirus today. Globally, with the various confinements, the drop in demand and the projects frozen, economic activity has fallen sharply and will take time to recover. Although esports has been able to benefit from online matches, it has been slowed down, with investors and sponsors in particular being more cautious during this delicate period.
More specifically, esports suffered from the cancellation of physical events. This isn't only due to the lack of refreshment stands, but also to unopened ticket offices and a lack of advertising revenue.
In this context, which is complicated for everyone, esports organizations can find themselves in difficulty. This is particularly the case for those who are involved in franchised sectors and who have paid a substantial entry fee for League of Legends, Overwatch or Call of Duty...
There are two main league systems in esports:
- Open Leagues: a relegation and promotion system which renew the participants on a regular basis.
- Closed Leagues: a system of franchises where teams guarantee themselves a place in the league over time by paying an entry fee to the league organiser.
Both systems have their advantages and disadvantages. With open leagues the competitive spirit is favored where franchised leagues offer more stability for the organiser, the organizations and the players. The idea of a multi-level partnership is often put forward.
In the current unforeseen context and with the cancellation, postponement or online holding of competitions, some players have complained about the cost of franchises to be paid while the loss of earnings would be consequent.
NRG Esports CEO, Andy Miller, was particularly moved by this during a podcast. According to him, he regretted having invested in an Overwatch team, which this year won't bring in nearly enough money to cover the $20 million cost of the franchise.
Activision Blizzard Ready to Make a Move
Activision Blizzard is responsible for the professional and franchised leagues of Overwatch and Call of Duty. To secure a place in the competition, teams must pay $20 million (OWL) and $25 million (CDL). A substantial sum which ensures long-term visibility, knowing that you can decide to resell your slot later and hope that the value has increased.
Several sources report that Activision Blizzard is currently in discussions with the owners of the various organizations involved. The group would be understanding of the situation and would agree to give some leeway to the participants, who are also its partners. If a price reduction is possible, the preferred alternative would be to offer a payment period to wait for economic activity to resume.
Original content by Tipsalewo.