by Justin J. Andreozzi, Esq.
In the early 1970’s Atari, Inc. pioneered the video game industry and carried the torch for over a decade. Since then companies like Sega, Electronic Arts, and Blizzard have made significant strides in almost every aspect of gaming entertainment. Today, it seems like more kids grow up playing video games than conventional sports like soccer and basketball. The parental inclination to force children away from video games and into physical sports has been a less popular practice due to the cutting edge results of intensive studies regarding the long term effects of concussions, especially those inflicted on children. Likewise, more and more studies have publicized the cognitive benefits that certain video games have, especially those that require strategy, problem solving, and quick decision making. For millennials, video games have undoubtedly become a global pastime, and the industry leaders have finally begun to realize the potential that comes with creating a game capable of endless, repetitive entertainment. That potential rivals that of professional major sports. Competitive esports could soon be on the list of marketing goliaths, creating enticing financial opportunities for investors, team owners, and the best players in the world.
On May 24, 2016, Blizzard Entertainment released the highly anticipated online multiplayer game Overwatch. In almost no time the game amassed over 20 million players and eclipsed many of the other competitive multiplayer games. On November 4, 2016, Blizzard Entertainment used BlizzCon 2016 as a platform to unveil the next generation of competitive gaming. In just a three-and-a-half-minute video Blizzard presented the world with a well thought out structure for an Overwatch esport League, drawing inspiration from professional sports leagues that have been successful for over a century. Blizzard’s proposed league structure by no means re-invents the wheel, but the plan is excitingly novel and spectacular in the world of esports.
The Current Climate of E-Sports
The esports world to date has been an unstable landscape intriguing to only the most quixotic investors. For the most notable example of the volatility of the esports climate, look no further than the most popular video game in the world: Riot Games’ League of Legends. The competitive and entertaining nature of the game his taken the world by storm, amassing over 100 million players and viewers. To put the games vast popularity into perspective, consider that in 2014 the MLB World Series averaged 15.8 million viewers; the NBA Finals averaged 15.5 million viewers; the Daytona 500 averaged 9.3 million viewers; and the World Cup final averaged 26.5 million viewers. The League of Legends Worlds Championship series at Staples Center in Los Angeles, CA was viewed by 27 million people. Over the 15-day World Championship tournament, viewers watched for a combined 179 million hours. This number was 100 million viewer hours higher than the 2013 World Championship Tournament. In total, 228 million total viewers tuned in to watch the 2014 League of Legends World Championships, and the massive numbers are no fluke. In 2015, a record 334 million viewers tuned in over the four-week League of Legends World Championship period.
These staggering viewership numbers beg some serious questions regarding, among other things, the astonishingly low professional player salaries and team profits, and the underutilization of marketing potential. Over the past couple years, the various competitive esports franchises have been working towards creating a system that provides adequate and stable compensation to professionals and franchises, but their efforts have been met by significant resistance from companies like Riot Games, who appear to be holding most – if not all – of the cards.
Riot Games earned $1.6 billion in revenue last year from League of Legends alone. Professional League of Legends players, however, receive a base salary of merely $12,500. While the team owners and Riot Games battle out their issues, it is the professionals who have been taking the biggest hit. The top professionals dedicate roughly fifteen hours a day to their craft, which means that the best of the best receive an hourly rate of $2.28 per hour from Riot Games. This is an embarrassing level of compensation for the top professionals of a game with a fan base rivaling that of baseball. Especially considering the league minimum salary in baseball is over $500,000, and in 2015 Giancarlo Stanton signed a $325 million contract with the Florida Marlins. The top League of Legends player in the world, Faker, reportedly has a net worth of only $1.5 million. These low numbers completely undermine the global popularity of esports.
Riot Games co-founder Marc Merrill has argued on record that it is not Riot Games, but the team owners who determine the market pricing for players. While this may be true in other professional sports and entertainment industries, Riot Games has effectively prevented team owners from investing serious money into players by maintaining a league structure with no stability. Blizzard Entertainment’s proposed global league plan details a structure that could be the first ever esports endeavor geared towards adequately compensating the top tier professionals, building a long-lasting fan base, and providing a stable landscape for investors and franchise owners.
Proposed Overwatch League Structure
The Overwatch League’s foundational first step, purported already in the works, is to create a global league in which each franchise is based in a major city. This gives fans around the world a local or regional team to root for, and each franchise owner will provide a venue for fans to watch the top professionals perform. Franchise owners will also be charged with player development and internal structures. In turn, players will receive a competitive base salary and benefits, and the franchise owners and the players will share in league economics. Additionally, and most significant to franchise owners, once a franchise has been approved by the league and assigned to a city, it has a guaranteed place in the league going forward. This means that team owners can confidently invest capital into their franchises knowing that their team cannot be removed from the league. This is an important feature of the Overwatch League that is new to esport leagues, but a fixture in most other competitive professional sports leagues.
As is true with almost everything, the devil lies in the details. From a distance this structure looks to be exactly what esports has been waiting for, and could be the first step towards the next generation of sports and entertainment. However, there will be a lot of specifics to look for in the next few months that will show the true colors of the plan.
The BlizzCon 2016 announcement of a professional esports league with a stable, fertile structure is just what E-Sports investors have been waiting for. In less than a week the owners of the top League of Legends teams collaborated by drafting correspondence with their collective demands and delivered it to Riot Games’ Marc Merrill and his team. The new Overwatch League is on the cusp of becoming the world’s premier esports league, with a structure that provides the stability that players, teams, and fans desire. If Riot Games chooses to ignore the requests of the top team owners, and fails to provide a league with a structure that meets the new industry standard provided by Blizzard Entertainment, we will likely see a shift in popularity away from League of Legends and towards the Overwatch League. Regardless of whether or not Riot Games answers to the call of its owners and players, Blizzard Entertainment has taken a monumental stride that will likely take the esports world to the next level.
 All numbers provided by USA Today Sports.