Activision Blizzard revealed in its second-quarter earnings report that it has started laying off esports employees ahead of changes to the Overwatch League. This has left teams with the chance to vote to continue with the "updated operating agreement", and if they choose not to, they will receive a termination fee of $6 million. Essentially, teams will vote on whether Overwatch League lives or dies.
As reported by The Verge, the Overwatch League has been in a problematic financial position for the past few years. According to ABK, it makes up less than one percent of its consolidated net revenues, and last year, Activision Blizzard reportedly owed $400 million in franchise fees for Overwatch and Call of Duty that were delayed due to the COVID-19 pandemic.
Venture Beat recently reported that esports itself is in a troubling position, as live stream views are down significantly from what they were in the pandemic, and ad budgets are decreasing in preparation for a recession. This means that esports companies, which typically rely on sponsorships, are being hit where it hurts. This could mean shutting down teams, diversifying beyond esports, or making big cuts. Given these developments, it seems likely that teams will take the buyout and the Overwatch League will die out.
However, as The Verge reports, the Overwatch League might continue in other forms. Commissioner Sean Miller said, "I want to be clear on one thing in particular, that Overwatch remains committed to a competitive ecosystem in 2024 and beyond. And we're building toward a revitalized global scene that prioritises players and fans [...] If you look at our playoffs format that we're doing this year, that should be a clear indication that, yes, we've been looking at [Apex Legends] as one of our examples. The playoff format this year is almost an exact copy/paste of Apex season two."
It's unclear what the OWL will look like in 2024 and beyond, or what the future for these teams will look like, but Miller stressed that they are the "top priority" and that they want to "ensure that this transition, should it occur, happens in the best way possible."
However, former employees who were laid off are less confident, saying that "there was no warning" prior to their firing, despite success with sponsorships, promotions, and in-game cosmetics. "I can't really fathom what the benefit is to lay people off when your company is posting record profits".