Overwatch League’s future in peril amid esports layoffs at Activision Blizzard

The future of the Overwatch League is hanging in the balance, with Activision Blizzard painting, once again, a bleak picture of the league’s financial situation. At the same time, a round of layoffs has reportedly hit the company’s esports department.

In the company’s financial results for the second quarter of 2023, Activision Blizzard described its esports leagues as “continuing to face headwinds” and revealed that certain changes have been made to the collaborative agreements with the Overwatch League franchises.

Under the new terms, the OWL teams will vote on a new operating agreement at the end of the current season. If they decide against continuing in the League under a new agreement, they will be entitled to a termination fee of $6 million.

This comes just two months after the Sports Business Journal reported that the Overwatch League had agreed to waive its franchise fees. At the time, the OWL teams “still owed anywhere between $6 and $7.5 million,” according to the report.

Activision Blizzard’s financial statement adds that the total revenues from the Overwatch League “comprise less than 1%” of the company’s consolidated net revenues. With the industry currently going through what has been described as “the esports winter”, some teams might choose to withdraw from the league and take the termination fee to recoup some of their losses.

Last month, the Overwatch League confirmed the departure of the Chengdu Hunters due to “a shift in their overall strategic objectives.” And other Chinese teams could follow suit as many Blizzard games, including Overwatch, have been taken offline in the country following the company’s divorce from longtime Chinese publisher NetEase.

It remains to be seen what will happen to Overwatch esports if the teams pull the plug on the League. Overwatch League commissioner Sean Miller told The Verge that Activision Blizzard remains “committed to a competitive ecosystem in 2024 and beyond,” regardless of how the vote goes.

In May, Miller had already said in an interview with Dexerto that Overwatch esports was still part of the company’s plans. “They’re not going away anytime soon,” he said.

Activision Blizzard lays off esports workers

The Verge also reports that “around 50 employees” in Activision Blizzard’s esports department have been let go, a decision that seemed to catch those affected by surprise.

“There was no warning,” one employee who was laid off told The Verge. “This was a complete shock to everyone, and none of us who were laid off were offered any opportunity to switch roles or teams.”

It remains unclear how this round of layoffs will affect the operations of Activision Blizzard’s esports leagues. One worker, cited by The Verge, speculated that Activision Blizzard might be closing its esports division entirely.

“They may be able to keep a skeleton crew on to close out the OWL and the World Series of Warzone seasons in the next few months, but in my eyes, they are completely unequipped to internally support anything esports after that,” they said.

On Saturday, the Overwatch League announced that the 2023 Playoffs and Grand Finals will take place at the Mattamy Athletic Centre, in Toronto. It could turn out to be the final event in OWL history, with the fate of the league beyond the current season in the hands of the team owners.