|Said one executive,“It’s a great experiment.”
They expect audience growth and well-run competitions in season one, but otherwise say the league should be evaluated as a long-term growth play with sustainability — not an immediate splash — the top priority.
“We’re approaching the starting line, not the finish line,” said Pete Vlastelica, president and CEO of Major League Gaming, the division of Activision Blizzard that operates the Overwatch League.
Overwatch is the first attempt to craft esports into the traditional U.S. league sports structure, and will be viewed as an early indicator for the entire concept, said BTIG Research tech and media analyst Brandon Ross. A hit for Overwatch League could drive Blizzard to accelerate work toward an organized “Call of Duty” league, and also influence “League of Legends” developer Riot Games and other game publishers and tournament organizers.
“It’s a great experiment that’s had a lot of thought put behind it in developing what a sustainable esports ecosystem would look like,” Ross said. “If it’s successful, it will be copied internally and externally.”
Since the league secured 12 buyers of charter team franchises last year, further business deals have been slow to develop. The league has signed two league-level sponsors, Intel and HP, but just one of 12 teams, the Dallas Fuel, has announced a jersey logo sponsor.
Furthermore, no U.S. third-party media distribution deal had been signed as of Jan. 3, complicating sponsorship efforts. Vlastelica insisted in a Jan. 2 interview that a deal would be done by the Jan. 10 opening night. At a minimum, the games will be streamed on in-house MLG.tv.
Sacramento Kings co-owner and San Francisco Shock OWL team owner Andy Miller said the lack of a media deal has hindered sales efforts. “I’ll be honest, it would have been easier to get sponsors if we could have said ‘this is our distribution partner’ a month ago, but it is what it is,” he said.
But he, like Vlastelica, believes non-endemic sponsors will quickly respond once a product is in market. Despite the short list of deals announced so far, monetization efforts are actually ahead of schedule, according to a December research note Ross published.
“The company is a very methodical long-term planner, more along the lines of the big tech platforms you see, who have two-year plans, five-year plans and 10-year plans as opposed to just trying to survive, as we’ve seen in traditional media for some time,” Ross said in an interview.
Team owners, who paid Activision Blizzard approximately $20 million for their franchises, were sold on a model showing them breaking even in five years, according to sources, and the HP and Intel revenue (along with deals they believe to be close at hand) exceed the model’s pre-launch benchmarks. Sponsorship industry sources say their asking price has been higher than expected, but Miller said he’s confident Blizzard executives won’t sacrifice value or brand alignment for short-term revenue.
“That’s the reason why Bobby [Kotick, Activision Blizzard CEO] wanted to have the deep-pocketed traditional sports owners as well as the endemics that he felt fit this structure,” Miller said. “He felt this is a marathon. We’d love to have the revenue, and all of this is costly, but we’re building something for the future.”
Viewership is the most important metric out of the gate. Miller said he’d be very pleased if OWL can match ELeague’s early audience figures, which in its first season in 2016 ranged between 20,000 and 55,000 average concurrent viewers on Twitch and 247,000 viewers on TBS.
League officials won’t disclose a target number for viewers. Their focus, Vlastelica said, is converting a growing share of the game’s 35 million worldwide players into spectators, and being able to show a steady increase in awareness.
“We think that over the course of the season we’ll start to attract a broader audience than just the players of the game, and by the end of the season, by the finals, we’ll have a culturally quite relevant event,” Vlastelica said.
No matter what the numbers are, the 2018 season won’t live up to the full promise of the league because all competitions will be at the Blizzard Arena. League planners initially targeted 2019 as the season to launch a full home-and-away schedule, with local revenue opportunities, but now acknowledge it may not happen that quickly. In the meantime, teams have been making some revenue off merchandise sales and will share in in-game purchase revenue.
Miller acknowledged the risk of going first. This is the first time many corporate marketers and possible viewers will see esports in earnest, and early stumbles could be damaging.
“There’s a lot riding on this,” he said. “I don’t think esports is going to die if Overwatch League doesn’t work, but it would definitely put a dent in its universe.”
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