Late last year Blizzard announced its plans to expand its esports offering for Overwatch – still not even a year old – with the introduction of Overwatch League. An unnecessary announcement so early into the game’s lifespan as an esport, perhaps, but equally necessary, too.
One of the more interesting points that stood out about the news – and if you want a recap, we covered the Overwatch League announcement when it happened – was that Blizzard would be seeking to bring franchised sports teams into the fold, tempting the likes of Manchester United and Miami Heat to join Overwatch.
It was a noble idea, one that Blizzard hoped would eventually bring localised support for cities across the world, a dream that could – ultimately – end up with Overwatch matches taking place in sports arenas worldwide, rather than convention centres in a select number of locations.
But you’ve probably seen the news that Blizzard has been seeking the likes of $2 million for a franchise spot within the Overwatch League and, well, it’s certainly got people talking.
That $2 million, in fact, is thought to be a minimum, with numbers like $3 and $5 million for more valuable teams in what has been described as “non-major” markets. It was suggested that up to $15 million could be required for teams based in more significant areas like Los Angeles.
The immediate instinct is to kick and scream, to insist that this is just far too much of an ask from Blizzard. Esports still maintains, at best, a skeptical view from the wider world of media and sports, demanding such high prices will only put off potential prospects.
There’s no denying that either, to be honest, esports is in such a volatile state right now that there’s no guarantee of a return on that investment, and will this elusive 18-25 demogrative market that is so valuable really mean increased income for any team?
With the way the internet has reacted, you’d be forgiven for thinking it is an insult to esports fans, that Blizzard is single-handedly undoing all the hard work that years of chipping away at that stigma of competitive gaming.
Not so. If anything it’s highlighting just how much value is in esports. This is an industry said to be worth over $1 billion by the end of 2017. Blizzard is playing its cards close to its chest, but this is a move to bolster the value of not only Overwatch and the developer itself, but the wider esports industry.
The problem is not everyone agrees on just how Overwatch is worth at this time, and that’s fair. Milwaukee Bucks last year bought a spot in League’s Challenger Series for $1.8 million, a large sum to be sure but by now the numbers speak volumes for Riot – it doesn’t need to talk the big game.
Blizzard’s Overwatch is a growing esport, of course, and already it has seen an uptake few other esports can achieve in a similar space of time, but it’s not anywhere near the same ballpark that League Of Legends can offer.
The issue comes in what this means for the existing esports organisations. What will be required of the teams already playing competitive Overwatch, whose players are competing for significantly less amounts of money. As an example, so far the highest prize pool for an Overwatch event has been $300,000.
Will these teams have to offer up similarly high prices for a spot in this Overwatch League? Or will these high prices of these franchise slots be enough to cover the cost of having esports orgs involved, who admittedly reach nowhere near the financial figures of comparative sports orgs?
There was talk of a combine where players will compete so scouts of these sports teams can bid on the players they want, but why would they not just buy a team outright and move them to their respective cities?
That’s the thing about investment: it is about throwing money at something with the //belief// that it’ll earn a return at some point down the line. Esports is a growing market, that’s a safer bet than so many other investments, and sports teams no that.
If they throw $5 million at a spot, then in a matter of years they’ll have their money back from sponsorship deals alone, let alone from the potential income from merchandising and broadcasting rights, or following Riot’s lead with purchasable in-game items that these orgs can profit from.
And these spots are permanent for as long as the Overwatch League exists. There’s no potential that the position will be lost or its value degenerate, and that’s an important thing for Blizzard to offer when it does finally come to settling on a price.
So what’s the play here? If this is true, is this too high a price for Overwatch? Well, yes, it is. But it’s not too much that sports organisations won’t be considering the fee.
Instead, look at it this way. Blizzard has been incredibly tight-lipped on the details of the Overwatch League, and reading between the lines of this latest news it seems that similar secrecy is being held for those looking to invest, too.
The real benefit, then, is that all this chatter gives Blizzard, Overwatch and the question of value a spotlight from which it can sing. It creates a hype that everyone in the esports industry – ourselves included with this very article – is falling susceptible to.
And hype = money.
People are talking and investors are frustrated by the lack of information, but what that doesn’t mean is that they’re no longer interested. They’re eager, rabid even, and that can only translate to a higher price to ask for from Blizzard’s Overwatch League. As they begin to head on the road to speak to franchises, these feverish takes on the news will only help solidify value for the very things Blizzard wants to sell.