Activision SEC filings show hazy future for Overwatch, Call of Duty esports

The future of Activision's esports division of Overwatch League and Call of Duty League are in a state of flux. According to Activision's quarterly SEC filings made on May 4, both leagues "continue to face headwinds which are negatively impacting the operations and, potentially, the longevity of the leagues under the current business model." This statement comes from an SEC filing that, overall, shows growth and strength in revenue from both game franchises in 2023.

But growth is nothing new for the games of Activision. The same hasn't been able to be said about its foray into esports, which has left investors, city planners, and players unhappy.

Activision's first foray into esports came with the advent of the Overwatch League. Announced in 2016, the esport division saw a number of big names associated with potential franchises. This includes the Kraft family of the NFL's New England Patriots, a COO from the New York Mets, Optic Gaming, Misfits gaming, and a NetEase-owned team. We all know how that's gone.

The price? A paltry $25 million dollar entry free per franchise. The number seemed almost unreal, given comparisons to other professional esports leagues. For comparison, an available League of Legends franchise costs $10 million. An additional $3 million is split among the teams being replaced.

From the start it all seemed too good to be true. These promises were akin to American sports leagues such as the NFL. The statements read like the thing you say about the blue sky' phase of creation, not a feasible reality. The vision pitched to franchisees was that of home games, arenas, fans buying merch, and cities supporting esports franchises like they do their physical sports teams.

This same pitch would appear again with the creation of the Call of Duty League. Raised from the ashes of the Call of Duty World League in 2019, a similar structure of teams with city representation appeared. The adoption price was the same as Overwatch League--a price that has been scrutinized over and again.

"That number is not feasible. Like, a $25 million dollar buy-in? That's not feasible for the size of our league," said Call of Duty esports legend Seth "Scump" Abner on a Feb. 24 lifestream. The comments came upon the news that the Heretics organization was looking to buy into the league, and the price required. As we now know, that deal went through with Heretics taking over the Mutineers franchise.

"There are plenty of teams that would love to be in the Call of Duty League, but for an appropriate price," said another former CDL star Anthony ‘Methodz’ Zinni. That price tag is why Activision investors were reportedly troubled by the inclusion of Contenders teams in the Overwatch League earlier this season. Investors expressed concern that teams who didn't pay the price skipped to the front of the line.

Likewise, the Chinese OWL teams have been in a state of flux. The Blizzard/NetEase breakup brought up myriad questions about the inclusion of teams from a location where the game was no longer sold. Those concerns appeared to be correct, as one of those expansion teams the Chengdu Hunters disbanded weeks before the start of the regular season.

The APAC-based OWL East Division, in general, appears unhealthy with only six teams. Two of which moved from the West Division. And one of those squads moved from Philadelphia to Seoul.

Since Philadelphia was the first city to jump on the arena craze, the change of the Fusion into the Infernal made even less sense in hindsight. Ground broke on Fusion Arena in 2019 next to the Wells Fargo Center in south Philly. The last update or news came in 2019, though the website for the arena still sits like an empty mall.

The key phrase in the Activision esports SEC filing is "current business model." It's apparent that what Activision is doing now simply is not working for anyone, from owners to potential teams and even the players and fans. Does this mean that both leagues are in danger? Potentially, as it is clear from Activision's perspective that how both leagues operate currently isn't working.

The phrase "such efforts may prove unsuccessful" feels like a clear warning to investors: This ship is sinking.

Whether that means a downsizing or full restructuring of the league remains a mystery while opening up many more questions. What of the owners who bought in at that $25 million dollar mark? Or Activision investors bought on the idea of esports becoming the next NFL? Would Activision start over from scratch with both leagues?

If you were to ask me today I'd say it's very likely that, a year from now, both leagues may only exist as a reduced part of the Activision marketing budget. Only time will tell, but it certainly seems as if Activision's confidence in esports is waning fast.

Stay tuned to esports.gg for more esports news.