Orgs requested a 50-50 uncapped revenue sharing for ALGS. But EA reportedly disagrees.
One of the most popular battle royales today, Apex Legends reached its all-time player count peak in February this year. The fast-paced game has seen its popularity increase manifold during the pandemic years. And so did its esports.
Despite the famous exits by several organizations such as Invictus Gaming and Team Liquid from the Apex Legends esports, the game still has a healthy representation of Tier 1 orgs. But the friction between orgs and the publisher has reportedly brought revenue-sharing talks to a grinding halt. A recent Billy Studholme report for Digidayy talks about the back-and-forth between the various parties involved in Apex Legends esports.
Respawn Entertainment reportedly offered teams $60,000 each as a flat licensing fee - a number that was far below team expectations. The teams wrote a letter with a counter-proposal. The letter was signed by executives from 100 Thieves, Alliance, Cloud9, Complexity, DarkZero, Faze Clan, Fnatic, G2 Esports, NAVI, NRG, Sentinels, Spacestation Gaming, Team Liquid, and TSM.
We are not comfortable with the proposed licensing offer, nor do we believe that the decisions made around it have been done so in good faith.
Apart from minimum guarantees, the teams also proposed a 50/50 revenue split without an upper limit for revenue from skin sales.
According to Digiday, EA came back with a new model that would reward the most popular teams with more compensation.
EA came back with a revised offer based on sales performance instead of a flat licensing fee: the three orgs whose skins sold the most would get $160,000; the next three would get $120,000; the next six would get $80,000; and the bottom eight would get $60,000. There was still no revenue-sharing included.
When the teams pushed for a revenue-sharing model as close to 50%-50% as possible, EA shut down talks says the article. Citing tight deadlines, EA sought time to “internally discuss how we can best work together with teams to build meaningful, mutually beneficial partnerships around Apex Legends and the ALGS.”
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Is there a revenue-sharing deal in place for Apex Legends esports?
There is no revenue-sharing deal in place for Apex Legends as of April 2023. There were rumors of team-based skins being introduced in Apex Legends last year. Several teams had already started working on their skins that were initially scheduled for an October 2022 launch as per reports.
EA released Team Banners later in the year, but with no creative input from the teams themselves, the Banner sales were disappointing. The poor Banner sales further discouraged EA from approaching revenue-sharing agreements with teams.
Other games have revenue-sharing deals in place. Riot Games has favorable revenue-sharing models in place for VCT and also pays teams a stipend. Even CS:GO, despite its open-ended system allows for specific revenue sharing amongst partner teams. Halo Infinite also launched Esports bundles to support HCS teams. Right now, esports teams need help from publishers and tournament organizers.
The Apex Legends esports season Split 2 is currently underway. Teams are competing for an opportunity to qualify for the Split 2 Playoffs that will take place in London in July 2023. The ALGS Champs will take place shortly after marking an end to the ALGS season.
The broader monetization and rights issue in esports
In traditional sports, teams make money from merchandise sales, broadcast deals, and tickets. With Twitch’s monopoly and an audience used to free broadcasts, esports has historically failed to find substantial broadcast revenue. The Overwatch League had signed an exclusive broadcast deal with Twitch for its first two years, but there was no extension.
Another issue with esports monetization has been the publisher issue. While there is no IP owner in traditional sports, publishers hold all the cards when it comes to video games and esports. As such, they are quite often the sole decision-makers when it comes to the format and monetization of their games.
The past decade of esports’ growth has mostly relied on VC money and it only in the past few years has teams renewed their focus on content creation and merchandise sales. 100 Thieves is well known for its clothing line and recently released an energy drink called Juvee.
With the current season coming to an end in a few months, hopefully, teams and the publisher come to terms soon. The synergy between the two sides of the deal will only further boost Apex Legends' popularity and increase player numbers.
Stay tuned to esports.gg for the latest Apex Legends news and updates.
