Activision Blizzard lays off esports staff as it faces potential dramatic changes for the Overwatch League

Amid the final days of the Activision Blizzard / Microsoft deal, Activision Blizzard is laying off workers in its esports department while also preparing for potentially huge changes coming to the Overwatch League.

Early today, Blizzard released its second quarter earnings report, within which lies the potential fate of the Overwatch League. From the report:

During the second quarter, we amended certain terms of our collaborative arrangements with team entities participating in the Overwatch League. According to the amended terms, following the conclusion of the current Overwatch League season, the teams will vote on an updated operating agreement. If the teams do not vote to continue under an updated operating agreement, a termination fee of $6 million will be payable to each participating team entity (total fee of approximately $114 million).

This means that the fate of the league after the current season is now in the hands of team owners to be voted on sometime later this year. Though we do not yet know what the franchise owners will decide, based on the shaky financial and team developments of the last few years, we can make an educated guess.

Last year, esports journalist Jacob Wolf reported that Activision Blizzard was owed around $400 million in franchise fees from both its Overwatch and Call of Duty leagues after it postponed payments due to the widespread financial stress related to the covid-19 pandemic. Then, last month, Sports Business Journal reported that the Overwatch League waived its franchise fees, canceling a portion of the $20–35 million in fees each team paid in order to participate in the league.

Additionally, back in January, several Blizzard games, including Overwatch and Hearthstone were taken offline in China because Blizzard and its longtime Chinese publishing partner NetEase failed to negotiate a new licensing agreement. Then, in April, at the start of the 2023 season, the league announced that one of its Chinese teams, the Chengdu Hunters, would not be participating for the first weeks of the season as they “continue to contemplate the future direction of their team.” There was a hope that the Hunters, a fan-favorite, would return later in the season before it was reported in June that the team was gone for good.

Given all of this and the general cooling on esports overall, it’s a safe assumption that the franchise owners will probably choose not to continue on with the league, take the $6 million payout, and summarily end the franchise era of Overwatch esports.

However, though it is likely that the OWL will cease to exist as we know it, that doesn’t necessarily mean it’ll simply cease to exist period. In an exclusive interview with The Verge, Overwatch League commissioner Sean Miller affirmed Blizzard’s commitment to Overwatch esports, no matter how the franchise vote shakes out.

“I want to be clear on one thing in particular, that Overwatch remains committed to a competitive ecosystem in 2024 and beyond,” Miller said. “And we’re building toward a revitalized global scene that prioritizes players and fans.”

Miller didn’t clarify exactly what OWL 2024 could look like but said that the Overwatch esports team is looking at other esports leagues for examples, including a league from Overwatch’s own past: the Apex tournament.

“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 as one of our examples,” he said. “The playoff format this year is almost an exact copy / paste of APEX season two.”

Miller, once again, couldn’t give details on whether a revival of the Apex tournament was in the cards should the team owners vote not to continue. But he acknowledged that the Apex tournament was much (much) beloved by fans and that, no matter what gets decided, Overwatch esports will prioritize that love, serving “the [fans] all across the globe and in the best way.”

Miller also emphasized the league’s commitment to its players but couldn’t share what that commitment looks like in a post-OWL future. “We’re in ongoing conversations with teams internally and [players] are our top priority to ensure that this transition, should it occur, happens in the best way possible,” he said. 

Because of the uncertainty concerning what the team owners will decide, there wasn’t much Miller could definitively say about the league beyond the 2023 season. He reiterated the ongoing commitment to Overwatch esports and committed to being as transparent with fans as possible. But despite the potentially massive changes on the horizon, Miller remained optimistic.

“I’m actually very optimistic about the future of Overwatch esports and the competitive ecosystem,” he said. “We are doing all we can to make the player experience and the fan experience one that people want to return to, want to be a part of, and get excited about to turn on.”

That optimism, however, doesn’t seem to line up with the reality of what’s going on with Blizzard’s esports department. Yesterday, the company’s esports department suffered layoffs impacting around 50 employees, which, according to one of those affected, “seems like a significant gutting of Activision Blizzard Esports.”

In a statement to The Verge, Brad Crawford, senior director of global communications of Activision Blizzard esports, wrote, “We remain committed to the future of esports, and we regularly assess how our staffing aligns with our business goals to ensure we can evolve with changing trends and best deliver for our teams, players, and fans. As always, supporting our employees through transition is our top priority.”

However, those let go don’t feel very supported. According to a laid-off employee who asked not to be identified for the sake of their future employment, the layoff came out of nowhere.

“There was no warning,” they told The Verge via email. “This was a complete shock to everyone, and none of us who were laid off were offered any opportunity to switch roles or teams.”

The former employee worked in esports operations and had the perception that everything within that department was going well. 

“The team had obviously shrunk over the last few years, and esports as a whole has been struggling lately, but we were seeing record viewership and lucrative sponsorship deals for our Call of Duty League tournaments,” they said. “Overwatch League didn’t seem quite as successful from a viewership perspective, but we saw more success than ever with our OWL skins [promotion] and our side leagues, like Calling All Heroes.”

The former employee shared that Blizzard was sunsetting some of the tools used to run its tournaments and that, before being let go, they were working on a new tool to replace those being shut down.

“As far as I know, that [tool] is still planned to be terminated in the coming weeks, and our replacement wasn’t finished, so I can only speculate that Activision Blizzard is closing its esports division,” they said. “They may be able to keep a skeleton crew on to close out the OWL and the World Series of Warzone seasons in the next few months, but in my eyes, they are completely unequipped to internally support anything esports after that.”

As Microsoft’s acquisition of Activision Blizzard looms, Miller’s optimism for the future of Overwatch esports contrasts heavily with the grim picture painted by the now-former employees who made Overwatch esports possible.

“I can’t really fathom what the benefit is to lay people off when your company is posting record profits and your stock price is quite literally capping out with a looming acquisition,” the employee said. “This move isn’t helping the shareholders, it’s not helping the business, and it’s not helping the remaining employees.”

Amid the final days of the Activision Blizzard / Microsoft deal, Activision Blizzard is laying off workers in its esports department while also preparing for potentially huge changes coming to the Overwatch League.

Early today, Blizzard released its second quarter earnings report, within which lies the potential fate of the Overwatch League. From the report:

During the second quarter, we amended certain terms of our collaborative arrangements with team entities participating in the Overwatch League. According to the amended terms, following the conclusion of the current Overwatch League season, the teams will vote on an updated operating agreement. If the teams do not vote to continue under an updated operating agreement, a termination fee of $6 million will be payable to each participating team entity (total fee of approximately $114 million).

This means that the fate of the league after the current season is now in the hands of team owners to be voted on sometime later this year. Though we do not yet know what the franchise owners will decide, based on the shaky financial and team developments of the last few years, we can make an educated guess.

Last year, esports journalist Jacob Wolf reported that Activision Blizzard was owed around $400 million in franchise fees from both its Overwatch and Call of Duty leagues after it postponed payments due to the widespread financial stress related to the covid-19 pandemic. Then, last month, Sports Business Journal reported that the Overwatch League waived its franchise fees, canceling a portion of the $20–35 million in fees each team paid in order to participate in the league.

Additionally, back in January, several Blizzard games, including Overwatch and Hearthstone were taken offline in China because Blizzard and its longtime Chinese publishing partner NetEase failed to negotiate a new licensing agreement. Then, in April, at the start of the 2023 season, the league announced that one of its Chinese teams, the Chengdu Hunters, would not be participating for the first weeks of the season as they “continue to contemplate the future direction of their team.” There was a hope that the Hunters, a fan-favorite, would return later in the season before it was reported in June that the team was gone for good.

Given all of this and the general cooling on esports overall, it’s a safe assumption that the franchise owners will probably choose not to continue on with the league, take the $6 million payout, and summarily end the franchise era of Overwatch esports.

However, though it is likely that the OWL will cease to exist as we know it, that doesn’t necessarily mean it’ll simply cease to exist period. In an exclusive interview with The Verge, Overwatch League commissioner Sean Miller affirmed Blizzard’s commitment to Overwatch esports, no matter how the franchise vote shakes out.

“I want to be clear on one thing in particular, that Overwatch remains committed to a competitive ecosystem in 2024 and beyond,” Miller said. “And we’re building toward a revitalized global scene that prioritizes players and fans.”

Miller didn’t clarify exactly what OWL 2024 could look like but said that the Overwatch esports team is looking at other esports leagues for examples, including a league from Overwatch’s own past: the Apex tournament.

“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 as one of our examples,” he said. “The playoff format this year is almost an exact copy / paste of APEX season two.”

Miller, once again, couldn’t give details on whether a revival of the Apex tournament was in the cards should the team owners vote not to continue. But he acknowledged that the Apex tournament was much (much) beloved by fans and that, no matter what gets decided, Overwatch esports will prioritize that love, serving “the [fans] all across the globe and in the best way.”

Miller also emphasized the league’s commitment to its players but couldn’t share what that commitment looks like in a post-OWL future. “We’re in ongoing conversations with teams internally and [players] are our top priority to ensure that this transition, should it occur, happens in the best way possible,” he said. 

Because of the uncertainty concerning what the team owners will decide, there wasn’t much Miller could definitively say about the league beyond the 2023 season. He reiterated the ongoing commitment to Overwatch esports and committed to being as transparent with fans as possible. But despite the potentially massive changes on the horizon, Miller remained optimistic.

“I’m actually very optimistic about the future of Overwatch esports and the competitive ecosystem,” he said. “We are doing all we can to make the player experience and the fan experience one that people want to return to, want to be a part of, and get excited about to turn on.”

That optimism, however, doesn’t seem to line up with the reality of what’s going on with Blizzard’s esports department. Yesterday, the company’s esports department suffered layoffs impacting around 50 employees, which, according to one of those affected, “seems like a significant gutting of Activision Blizzard Esports.”

In a statement to The Verge, Brad Crawford, senior director of global communications of Activision Blizzard esports, wrote, “We remain committed to the future of esports, and we regularly assess how our staffing aligns with our business goals to ensure we can evolve with changing trends and best deliver for our teams, players, and fans. As always, supporting our employees through transition is our top priority.”

However, those let go don’t feel very supported. According to a laid-off employee who asked not to be identified for the sake of their future employment, the layoff came out of nowhere.

“There was no warning,” they told The Verge via email. “This was a complete shock to everyone, and none of us who were laid off were offered any opportunity to switch roles or teams.”

The former employee worked in esports operations and had the perception that everything within that department was going well. 

“The team had obviously shrunk over the last few years, and esports as a whole has been struggling lately, but we were seeing record viewership and lucrative sponsorship deals for our Call of Duty League tournaments,” they said. “Overwatch League didn’t seem quite as successful from a viewership perspective, but we saw more success than ever with our OWL skins [promotion] and our side leagues, like Calling All Heroes.”

The former employee shared that Blizzard was sunsetting some of the tools used to run its tournaments and that, before being let go, they were working on a new tool to replace those being shut down.

“As far as I know, that [tool] is still planned to be terminated in the coming weeks, and our replacement wasn’t finished, so I can only speculate that Activision Blizzard is closing its esports division,” they said. “They may be able to keep a skeleton crew on to close out the OWL and the World Series of Warzone seasons in the next few months, but in my eyes, they are completely unequipped to internally support anything esports after that.”

As Microsoft’s acquisition of Activision Blizzard looms, Miller’s optimism for the future of Overwatch esports contrasts heavily with the grim picture painted by the now-former employees who made Overwatch esports possible.

“I can’t really fathom what the benefit is to lay people off when your company is posting record profits and your stock price is quite literally capping out with a looming acquisition,” the employee said. “This move isn’t helping the shareholders, it’s not helping the business, and it’s not helping the remaining employees.”