Blizzard wants to create 'Overwatch' league with city-specific video game fans

November 9, 2016 by Paresh Dave, Los Angeles Times

Blizzard Entertainment pioneered e-sports with its "Starcraft" franchise more than a decade ago.

Now, with "Overwatch," the Los Angeles-area video game maker wants to bring to e-sports the wealth and recognition that sports such as soccer, football and basketball generate.

To do so, Blizzard Entertainment, a division of Activision Blizzard Inc., announced last week it will adopt hallmarks of traditional sports leagues to form an e-sports league more instantly relatable than others spawned in the last few years.

Blizzard envisions professional teams for the shooting game "Overwatch" based in a major cities worldwide. Players would be scouted and signed through free agency and receive guaranteed salaries and benefits. Feeder leagues would help train players up for the pros.

Potential team owners are expected to bid millions of dollars in the coming months to be one of the league's founding members. Their team's slot in the league would be permanent.

"The Overwatch League represents ... a genuine career opportunity for the most skilled Overwatch players," Blizzard Entertainment Chief Executive Mike Morhaime said in a statement. "We're building a league that's accessible to players and fans, sustainable, and exciting for everyone involved."

The announcement that "Overwatch" League would debut next year came as part of BlizzCon, the annual convention the 25-year-old company holds for users.

Media moguls, NBA owners, venture capitalists and former players are circling to invest in teams, and Blizzard invited several to hear more details last week at the convention, according to sources familiar with the private discussions. Over the last two years, such investors have put millions of dollars into teams for Riot Games' "League of Legends" League Championship Series, which has gained tens of millions of fans in its seven years.

One financier, Sacramento Kings co-owner Andy Miller, said he's "super interested" in the new league. NRG, the e-sports club he co-owns with former Lakers star Shaquille O'Neal and several others, signed a six-person "Overwatch" team in August. It features Brandon Larned, one of the nascent sport's most popular players.

"It's different," Miller said of Blizzard's plans. "But it's definitely worth a try."

Though only months old, "Overwatch" has attracted 20 million players. It has benefited from being within a familiar, long-established genre of games and being available to play on many devices. E-sports businesses say it's already one of the most popular games among competitive players.

On Plays.tv, an app for creating and sharing clips from video game matches, "Overwatch" is the third-most active community, closing in on "Counter-Strike: Global Offensive." On Battlefy, a tournament-organization service, "Overwatch" activity is growing faster than "Hearthstone," another Blizzard title.

"'Overwatch' has been quite an anomaly," said Jason Xu, chief executive of gaming tournament software developer Battlefy. "It's incredibly polished and simple from the very beginning, yet hard to master, which is perfect for e-sports. They've grown tremendously fast."

How that engagement translates to spectators, sponsors and broadcasting fees is what investors must evaluate as they weigh whether to back the proposed league. Details about how the league expects to generate income weren't publicly released. But some prospective bidders are pleased at least so far.

"It's a breath of fresh air to see a game publisher get very involved in creating a league that makes sense from a business perspective," said Mike Rufail, who owns Team EnVyUs.

Many conventions are in Blizzard's favor. Spectators tend to be players, and players are typically spectators, Xu said. That's unlike traditional sports, where many fans aren't active players themselves.

The relationship has been lucrative for game developers. Launching competitions with big cash prizes gets people to keep playing a game in hopes of climbing in the rankings. The competition gets players to spend more money on in-game purchases to personalize and improve their experience. And Blizzard is likely betting the additional revenue from fostering competition outweighs the expenses of operating a league, Xu said.

The league unveiling drew surprise and awe from the thousands of attendees at BlizzCon, who applauded when Morhaime said players and teams would share in league finances.

Potential owners expect Blizzard Entertainment to be selective in whom it approves as buyers for the limited number of initial franchises. Teams, at least at first, will compete in a single global division.

Online tournaments and leagues run by other companies would give players chances to distinguish themselves and gain the attention of pro teams. Blizzard Entertainment plans to hold a scouting combine for top players to show off their skills. Teams would vie for players during a signing period. There would be a regular season and playoffs.

The city-based teams open two untapped business opportunities in e-sports: local advertisers and fans. Most of the revenue generated in e-sports comes from national or global companies sponsoring events. And though Los Angeles and a few other cities house numerous e-sports teams, many metropolises are skipped. Fans rarely hold a geographic allegiance.

Rufail has been hoping to change the dynamics by planting EnVyUs in Charlotte, N.C., and seeking government and community support.

"You drive to a match and drive home afterward," Rufail said. "There's a market for that all around the world."

Blizzard Entertainment still faces some challenges for the league to work. Short-term, teams that have signed top "Overwatch" players to contracts running past this year want to know what happens if they aren't invited into the league. Over the longer term, the company must maintain players' interest by adding new characters and features to the game. The broad array of character and strategy choices in "League of Legends" is what has made it a long-lasting e-sport, experts said.

The company also hasn't "cracked the code" on how to broadcast the game in a way that lets viewers follow team strategies and individual ' skills, said Craig Barry, executive vice president and chief content officer at Turner Sports. The issues stem from the traditional view in shooter games, which is that of the barrel of the gun.

"Between the teams, the characters, the maps, all the pieces are in place," Barry said. "Now, it becomes refining everything."

ELeague, a joint venture between Turner and WME-IMG, partnered with Blizzard Entertainment and Faceit on a small "Overwatch" tournament earlier this year. Barry described the result as a "viable product," with the TBS broadcast attracting an estimated 280,000 viewers.

"It will continue to evolve and pick up momentum," Barry said of Blizzard's game. "I hope we get the opportunity to partner again in the future."

Blizzard Entertainment also announced last week that Allen Adham, one of three UCLA engineering graduates who co-founded the company 25 years ago, had rejoined. Adham, the former lead designer on "World of Warcraft," had retired in 2004. Co-founders Morhaime and Frank Pearce remain at the company.

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