Robert Kraft One of First to Tackle Ownership of New eSports League

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Videogame maker Activision Blizzard Inc. announced on Wednesday, July 12, 2017, that seven international cities that will field teams for its upcoming Overwatch League, with buyers including New England Patriots owner, Robert Kraft, and chief operating officer for the New York Mets, Jeff Wilpon. Kraft will have ownership rights to a Boston-based team, and Wilpon will help field a team based in New York. Other cities will include Los Angeles, Miami-Orlando, San Francisco, Shanghai, and Seoul.

The buy-in price for Los Angeles-based Immortals and San Francisco-based NRG eSports is $20 million per slot to be paid over time. The prices for the teams in Boston and New York have not yet been disclosed. Reportedly, there will be no revenue sharing among the teams until 2021, when they each will receive equal shares of league-wide net revenue along with a set amount of local revenues.

In a recently released statement, Kraft stated “[w]e have been exploring the eSports market for a number of years and have been waiting for the opportunity to enter. The incredible global success of Overwatch since its launch, coupled with the League’s meticulous focus on a structure and strategy that clearly represents the future of eSports made this the obvious entry point for the Kraft Group.”

Blizzard has developed some of the most popular titles in the video game industry, as the Call of Duty franchise has sold more than 250 million units and World of Warcraft has more than 100 million registered users online. However, Overwatch’s following has grown more rapidly than any title they have developed before, as it was the company’s fastest game to reach 30 million players.

This year, the eSports industry is expected to generate approximately $700 million in revenue, and that total is expected to more than double by the year 2020. Earlier this year, a Morgan Stanley Report estimated that the Overwatch League could pull in more than $100 million annually. Blizzard hopes the League can eventually generate multi-billion annual revenues on par with traditional leagues, like the NFL. Nate Nanzer, Blizzard Entertainment’s former global eSports director, will serve as commissioner of the Overwatch League. He stated the business model is exactly the same as the NFL, where they plan to create content and “build an audience around the content, and then [] monetize the audience through media rights, sponsorship, merchandise, tickets, etc.”

Initially, the first Overwatch League regular-season matches will be played in an arena in the Los Angeles area. That is because team owners will need time to “develop their local venues for formal home and away play in the future seasons,” according to Blizzard. League games will be played each Thursday, Friday, and Saturday. In addition to regular-season matches, franchised teams “will have a license to operate and monetize up to five amateur events in their home territory each year.”

According to Blizzard, their goal is to sell 28 franchises worldwide. The Overwatch League is the first major eSports league to be built like a traditional sports league, with each team attached to a specific city or region in order to build local fan bases. The League will also give pro gamers an opportunity to earn salaries and benefits, instead of depending solely on prize-pool payouts and sponsorship deals for income. The goal is to create structure for the player community and to build careers similar to those in traditional sports.

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