Reports are breaking today, from excellent sources at ESPN, that the Overwatch League is planning to increase the buy-in for season two, from the $4m-$20m range in year one, to between $30m and $60m per new team.
Broken by Jacob Wolf of ESPN, the report today stated that Activision Blizzard will price expansion in the aforementioned range, with information coming from ‘sources familiar with discussions for those spots’.
This hike in price comes despite the league seeing a continual drop in viewing figures from the opening weekend peak figure of 437k viewers, which is in itself less than a third of what ELeague were able to achieve with their CSGO Major. Equally, the league itself has not been shy of a bad headline or two, with players banned for all manner of emoting and joking, creating headlines that paint a picture of a fairly volatile group of competitors.
With viewing figures that can’t scratch the surface of traditional esports and that number dropping it seems mad that Blizzard would increase their demands
Citing fear of missing out among the factors suggests that there is a degree of speculation as to whether the prices will be achieved, but the reporting of the story comes from the writer who first called the initial costing of the league. As is the case with the EU LCS spots, the prices are seemingly easier to achieve in North America than Europe, but the room for expansion seems to be mainly in EU, with the majority of existing teams currently funded by NA owners.
Still, if the valuation is true then it speaks of an ongoing disconnect between Blizzard and reality. The company has been criticised by those who understand esports for artificially pumping up competitive player numbers when speaking to investors, and the initial round of buy-ins saw a number of teams and potential owners drop out upon seeing the cost and projected return.
With viewing figures that can’t scratch the surface of traditional esports and that number dropping it seems mad that Blizzard would increase their demands. According to ESPN, the increase is due to the fact certain top North American esports organizations, such as Cloud9 and Immortals, have increased in their valuation, although there are obvious, non-OWL factors behind that even if you include franchise ownership as a factor.
With an average viewer count of 80,00-170,000 concurrent viewers on its English-language Twitch broadcast, ESPN reports that OWL has gained nearly $150 million in sponsorship and broadcasting rights deals, but the vast majority of that money comes from Twitch, who are very clearly invested in the success of the league beyond it just being another product, as you can see with the tie-ins and promotions they have offered. Once you remove the $90 million Twitch spent, the sponsorship draw is far less impressive.
It is impossible to categorically say if the sale is good value without knowing the future, but there is a huge element of risk involved for those who do invest, and Blizzard are probably relying on the figures being low enough to be considered speculation rather than a heavy risk by those they court. It does seem like the value of franchises is increasingly in doubt, especially in Europe, where they are less common in sport generally, but for now the bubble appears not to be bursting. For now.