Activision Blizzard has decided to lay off staff in its eSports department, resulting in Overwatch League franchise owners deciding to place a vote on whether they should continue the league with what was described as its "current format."
Activision Blizzard and Microsoft are Reaching Its Final Days with the Company Making Changes to Their eSports Divisions
According to the story by The Verge, this comes as the deal between Activision Blizzard and Microsoft reaches its final days. The company is reportedly laying off employees within its eSports department while also preparing for huge changes in its Overwatch League.
This comes amid Blizzard releasing its Q2 earnings report, which also highlights the potential future of the popular Overwatch League. During that quarter, it was noted that they were able to amend certain terms of their agreements with different Overwatch League participants.
The amended terms would see teams voting on an updated operating agreement. It was also noted that teams that won't vote will have to pay a $6 million termination fee to each participating team entity.
Total Termination Fee Could be Around $114 Million Should Teams Not Vote
This would result in a termination fee of around $114 million should teams not be able to vote to "continue under an updated operating agreement." This means that the future of the league now depends on the team owners, which are expected to vote sometime within the year.
It remains unknown what the franchise owners would decide, but according to The Verge, based on its team developments and shaky financials, an educated guess can be made. Jacob Wolf, an eSports journalist, reported in 2022 that Activision Blizzard reportedly owned franchise fees worth $400 million for Overwatch and Call of Duty leagues.
Franchise Fees were Waived Due to Financial Stress Related to the Covid-19 Pandemic
This was because of postponed payments due to financial stress related to the Covid-19 pandemic. During that time, Sports Business Journal said that franchise fees for the Overwatch League were waived, resulting in $20 to $35 million fees canceled.
It was also previously reported that NetEase, Blizzard's longtime Chinese publishing partner, was not able to reach negotiations regarding a new agreement on licensing. In April, it was reported that at the start of the 2023 season, the league announced that Chengdu Hunters, one of its Chinese teams, would no longer be participating for the season's first weeks.
Should Franchises Choose to Take the $6 Million Payout, This Could Signal the End of the Overwatch eSports Era
This came as the team was reportedly continuing to contemplate its future. So far, there was still hope that the Hunters would return. However, in June, it was officially announced that the team would no longer be participating, according to Dot eSports.
The Verge reported that given the news along with eSports cooling down overall, they noted that it was safe to assume that franchise owners might decide not to continue with the league and instead get the $6 million payout. This could ultimately signify the end of the Overwatch eSports era.
