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SBD Global/July 12, 2017/Leagues and Governing Bodies

Activision Blizzard sells seven teams for startup Overwatch League

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Activision Blizzard has sold seven charter franchises in its startup Overwatch League, including two to traditional sports owners and three to other buyers with backers from major pro sports.

The seven franchise locations and their owners are:
  • Boston: Patriots Chairman/CEO Robert Kraft
  • New York: Mets COO and Sterling.VC co-founder Jeff Wilpon
  • Los Angeles: Noah Whinston, CEO of Immortals, whose backers include AEG, Grizzlies owner Stephen Kaplan and Lionsgate
  • Miami-Orlando: Ben Spoont, CEO/co-founder of Misfits Gaming, backed by the Miami Heat
  • San Francisco: Andy Miller, chairman/founder of NRG ESports and a minority shareholder in the Sacramento Kings
  • Shanghai: NetEase Inc., the distributor of Overwatch in China
  • Seoul: Kevin Chou, co-founder and former CEO of mobile game developer Kabam
The owners will be officially announced today. The parties declined to disclose terms, but multiple industry sources said Activision Blizzard had hoped to get $20 million for the permanent, exclusive right to operate an Overwatch team in some markets. The announcement comes after Activision Blizzard said little publicly about the Overwatch League development, a time period in which several organized teams disbanded due to lack of playing opportunities and many insiders questioned the wisdom of launching such a major initiative so early in the life of the game. Blizzard Entertainment launched Overwatch in May 2016. Competitive structures around other games have mostly been developed after reaching a critical mass of players competing against each other. Activision Blizzard hopes to eventually sell 28 franchises across the globe. “It’s gone great,” said CEO Bobby Kotick. “The announcement we’re making is a validation of how much we have going here.” Allen & Co. has been advising on the sales process.

NEW MODEL FOR SPORT: Overwatch is one of eight games in which NRG fields a team, but the Overwatch League opportunity is fundamentally different, Miller said. He compared the Activision plan to moving from the PGA Tour to the NBA or NFL, because of the diverse revenue opportunities and permanent partnership. “We were waiting and hoping the league would come to fruition,” said Miller. “Then we got the specifics of it, and really liked the fact it was a big swing.” Wilpon said the sheer scale of the company’s vision appealed to him and his partners at Sterling VC, the venture arm of Sterling Equities, which owns the Mets and other properties. Team owners will each receive a share of league revenue from media rights, league sponsorships and merchandising, and owners will get half of the revenue from league-affiliated virtual items inside the game. The league will also collect and redistribute local team revenues above an undisclosed amount, and teams will be allowed to profit from up to 5 amateur events per year in their territory. “I thought that model was extremely exciting, and something we didn’t want to miss out on,” Wilpon said. Wilpon and Miller both said they’re confident the game will keep growing, particularly considering the marketing clout yet to be unleashed by the teams and the publisher. The seven teams start in very different positions when it comes to developing competitive teams. For instance, Immortals, Misfits and NRG all have active teams, while Kraft and Wilpon will have to build a team organically or acquire one. 

LAUNCH COUNTDOWN: The league’s first season will launch by the end of 2017, said Pete Vlastelica, president & CEO of Activision Blizzard subsidiary MLG, which runs Overwatch esports. The first season will be played entirely at a venue in the Los Angeles area. By 2019, Kotick said, he expects to have a slate of home, in-market matches to generate local ticketing and merchandise revenue. Both Wilpon and Miller said they are still scouting venues in their home regions. Wilpon said the plan is to find venues with between 3,000 to 6,000 seats for normal league games. The league and its early team owners have a tall order in front of them: Build a major spectator property out of a game that’s only 14 months old.  Overwatch claims 30 million registered players. The buzz in gaming circles is that it is fun to play but not necessarily fun to watch, and viewership is well short of other major esports such as Counter-strike: Global Offensive or League of Legends. Kotick said the company is committed to putting extraordinary money and manpower into improving the game itself, as well as into its marketing and production. “I would tell you this: What we do is make creative, compelling entertainment,” he said. “And our teams are really committed to continuous improvement, but also to making it an incredible spectator experience.”

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