It’s official. On Wednesday, Activision Blizzard formally announced the owners of the first seven teams from the video gaming giant’s much-anticipated new city-based professional eSports league.
The Overwatch League, which is set to launch at an unspecified date later this year, will feature teams based in major cities around the world comprised of professional gamers facing off at Activision Blizzard’s popular new game title, Overwatch. (For more on the game itself, which launched last year and now has more than 30 million players worldwide, read Fortune‘s profile of Activision Blizzard that appeared in the Fortune 500 issue of the magazine last month.)
New England Patriots owner Robert Kraft and New York Mets chief operating officer Jeff Wilpon are among those who have signed agreements to participate in the league, and they will own Overwatch League team in Boston and New York, respectively, Activision Blizzard said in a press release. (Wilpon, the son of Mets owner Fred Wilpon, bought into the league through the venture capital fund Sterling.VC, in which he is a partner.) Andy Miller, the co-owner of the NBA’s Sacramento Kings and the chairman of NRG eSports, will own the league’s San Francisco-based team. The other new team owners and cities include Noah Winston (Los Angeles), CEO of the AEG-backed eSports franchise Immortals, which also has funding from the owner of the NBA’s Memphis Grizzlies; Ben Spoont (Miami-Orlando), the CEO and co-founder of Misfits Gaming; Kevin Chou (Seoul), the co-founder of mobile gaming company Kabam; and, the Chinese internet company NetEase, which will run a team based in Shanghai.
“The Overwatch League will celebrate and reward our most accomplished players and give fans more opportunities to engage with each other,” Activision Blizzard CEO Bobby Kotick said in a statement. “We’re excited to be working with leaders from eSports and traditional sports to celebrate our players and to establish the Overwatch League.”
An ESPN report citing anonymous sources last week was the first to identify some of the Overwatch League’s initial team owners. Nate Nanzer, Blizzard Entertainment’s former global eSports director, who will serve as commissioner of the Overwatch League, tells Fortune in an interview that additional teams could be announced before the league officially kicks off later this year. Activision Blizzard said on Wednesday that the league’s first season will see teams competing at regular season matches in Los Angeles, with the teams eventually developing their own local venues to set up “home and away” match-ups for future seasons.
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The Overwatch League is the first major eSports league to be built like a traditional professional sports league, with each team attached to a specific city or region in order to build local fanbases. Activision Blizzard’s league also has the benefit of owning Major League Gaming, an organization that creates and distributes eSports events and coverage, which gives the company an obvious streaming outlet for self-distributing Overwatch League content on top of the money that Activision Blizzard expects to bring in through ticket sales, advertising, and merchandise. (Some Overwatch eSports events are included in a digital rights deal that Activision Blizzard signed with Amazon’s streaming video service Twitch last month, but Nanzer said that Overwatch League events are not part of that deal at the moment.)
The eSports industry is expected to pull in roughly $700 million this year and that total could be more than double by 2020. Activision Blizzard plans to take advantage of the industry’s expected growth, with a Morgan Stanley report earlier this year estimating that the league could pull in more than $100 million annually, mostly from content licensing and advertising initially. However, the company hopes the Overwatch League can eventually generate multi-billion-dollar annual revenues on par with traditional sports leagues, like the NFL. “The business model [of the NFL] is they create content, they build an audience around that content, and then they monetize the audience through media rights, sponsorship, merchandise, tickets, etc.” Nanzer tells Fortune. “The business model of the Overwatch League is exactly the same.”
Overwatch is actually not the most popular title developed by Activision Blizzard’s Blizzard Entertainment (the Call of Duty franchise has sold more than 250 million units, while World of Warcraft has more than 100 million registered users online), but the game’s following has grown rapidly since Activision Blizzard launched the title just last year, becoming the company’s fastest game to reach 30 million players. What’s more, other more established Activision Blizzard game titles are already widely played in existing eSports leagues, which is why the company believes it makes sense to make a fresh start by launching its own league with the newer title.
Last month, ESPN reported that some prospective team owners had expressed concerns over the Overwatch League’s proposed financials, which reportedly include $20 million buy-ins for the team owners. (Nanzer declined to comment on the size of the owners’ team purchases.) And while ESPN said at the time that prospective owners were balking at a lack of revenue-sharing, Activision Blizzard’s announcement on Tuesday notes that the league’s teams will receive equal shares of league-wide net revenue along with a set amount of local revenues.
Nanzer contends that the league’s financial structure is “designed to create value for stakeholders for decades to come,” especially with regard to the attractive demographics (the eSports industry is especially popular with male millennials) as well as the opportunity to grow local fanbases. “We think that by anchoring teams to cities, giving our teams exclusive territories, they’re going to be able to unlock significant revenues that are just not available in today’s eSports ecosystem,” Nanzer says.
