In an SEC filing made on Thursday, May 4th, a statement by Activision Blizzard said that they don’t see a positive future for their two franchised esports leagues, the Call of Duty league and the Overwatch league. Both leagues seemingly struggle financially and fail to generate the widespread acclaim of other products, like ESL’s IEM, or RIOT’s League of Legends tournaments.
In a section titled “Management’s Overview of Bussiness Trends,” Activision Blizzard talked specifically about their two main leagues, the CDL and OWL
Teams are in debt
“Our cooperative agreements for our professional Esports leagues continue to face headwinds that negatively impact operations and potentially the longevity of the leagues under the current business model. We continue to work to address these challenges, which could result in significant costs, and these efforts may prove unsuccessful,” the filing states. According to the report, both leagues have teams that collectively owe about $400 million in late franchise payments.
Activision have admitted to concerns over the longevity of the current business model of the Call of Duty League and Overwatch League, and that efforts to address their challenges "may prove unsuccessful." pic.twitter.com/YU1ELD2yVK
— Jacob Hale (@JakeHaleee) May 5, 2023
Those massive debts have been delayed on and off for 3 years. The Justice Department also settled its lawsuit in early April over the alleged cap on player salaries in both leagues. Fixing all the issues involving the two leagues might be to costly and increasing their financial turnout too hard to make it profitable.
CDL and OWL financially struggling according to Activision, meanwhile EPIC has Fortnite in the Olympics. 🤔 https://t.co/PPgXkiODMo
— Matt (@MattAlphabet) May 5, 2023
“Overall, we expect that our most popular franchises will continue to account for a disproportionate share of our revenues and profits in the near term,” Which is mamo-jambo for: our biggest IPs will probably make the most money, intellectual properties like Diablo, Warcraft Call of Duty and Overwatch. “Accordingly, our ability to sustain these franchises and successfully compete with the broad range of competing titles in the industry could significantly impact our Performance.”
Activision Blizzard doubts longevity
The fact the company itself admits they doubt their own products does not send good signals to their investors and fans. Of course they also say that they want to change the situation but it’s a sign of weakness and generally doesn’t bode well for the future of the company. The strategy moving forward includes free-to-play games and more seasonal content (even more). Activision said it is “continuously looking for additional opportunities to grow our franchises and games,” including ongoing goals to “increase player engagement with the goal of releasing such content more frequently.”
They created a city-based franchise model, but some local fans have never seen their team play in their city. Some teams don't even live in their city!
There are *five* LAN events that will have fans this year, and one of those locations doesn't have a CDL team.
— Preston Byers (@PresByers) May 5, 2023
The company also acknowledged that it has “experienced challenges in retaining our existing talent and attracting new talent” in game development, but has seen “increasingly positive trends in these areas.” But their prestige-leagues aren’t part of the plan it seems. The Overwatch League, in particular, has had a particularly tough time. It has struggled as its Chinese franchises have faced NetEase drama and the closure of Blizzard titles in mainland China. Adding to the demise of Activision Blizzards leagues is the fact that many sponsors have pulled out because of their workplace and sexism scandals. So the Overwatchleague did not have a single sponsor this season. Things are a little better for the Call of Duty League. The game had two very successful releases and the “secondary”-game Warzone was very famous and well liked. Naturally more organisations want to join the CDL. For example Team Heretics, who want to get into the CDL by merging with Florida Mutineers, the goal is to make them “Miami Heretics”. We will see what the future holds for the CDL and OWL, as always, we will keep you updated.