^{Image: Blizzard Entertainment}

Teams will vote on whether they stay in an ‘updated’ Overwatch League or leave with a $6 million payout.

Activision Blizzard first made its concerns about the Overwatch League’s declining financial performance public earlier this year, and it looks like very little has changed for the better since. The Verge reports that Activision Blizzard is laying off staff in its esports department this week in preparation for dramatic changes coming to the Overwatch League.

The games giant recently published its Q2 2023 financial earnings report, highlighting the underperformance of the Overwatch League:

As previously disclosed, our collaborative arrangements for our professional esports leagues continue to face headwinds. 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).

The report all but confirms that the Overwatch League is on the verge of shutting down completely. The company mentions that it has provided an, “updated operating agreement,” to teams competing in the Overwatch League, likely to scale down costs, and now it’s up to them to decide if the League continues on. These teams will have to vote on whether they want to continue under the updated conditions of working under the Overwatch League, or leave altogether.

If the teams vote to leave, each ‘team entity’ will be paid a termination fee of $6 million by Activision Blizzard, amounting to a $114 million payout in total. Although the company doesn’t say so specifically, the Overwatch League would likely come to an end if its teams vote to leave the organisation - unless the company opts to keep it going on a much smaller and very different scale than before.

According to The Verge, 50 members of the esports department were laid off on Wednesday in what is described as a, “significant gutting of Activision Blizzard Esports.” This will likely impact the Call of Duty League as well, despite the rumoured launch of a new Modern Warfare game later this year. Overwatch League wasn’t a moneymaker for the company either, with Activision’s earnings report stating that it drew in less than 1% of its total net revenue.

The company likely hoped that the launch of Overwatch 2 would usher in a new era for the Overwatch League after a rough few years spent in the pandemic. The Overwatch World Cup 2023 was announced as a big comeback event with competition kicking off in Fall 2023, but Activision has neglected to provide consistent updates on the event in recent weeks. If these teams pull out, it’s hard to imagine that the tournament will continue without some significant changes.

The Overwatch League begins to collapse as Blizzard fires esports staff