Fast Money Halftime Report

Fast Money Halftime Report

Activision Blizzard's esports league is one step closer to becoming like traditional sports

Reign Homestand Weekend
Ben Pursell for Blizzard Entertainment

Activision Blizzard's Overwatch esports venture is one step closer to becoming a traditional sports league.

Last year the video game maker launched the Overwatch League – a competitive esports league based on their Overwatch game – and today the company announced that next year each team will host at least two weekends of competitive games in their respective markets. This mirrors the home/away game schedule of traditional sports teams, and is another step in Activision Blizzard's goal to bring a traditional sports league structure to the esports industry.

This push to start building a home/away game format was first revealed in March at South by Southwest by the league's then-commissioner Nate Nanzer, who said that teams would be hosting home games starting in 2020 but didn't provide additional details at the time.

All of last year's games and the vast majority this year have taken place at the Blizzard Arena in Los Angeles, but before announcing the new home game structure, the company did test out its audience appeal.

This year, Overwatch League introduced sold-out home games in Atlanta and Dallas as part of its Homestand Weekend series. These were one-time events, but next year's home games are expected to be modeled on these Homestand Weekends and implemented league-wide.

CEO of Activision Blizzard esports Pete Vlastelica emphasized that the city-based franchise model was a way to "unlock a lot of fans" that haven't made their way into the "esports ecosystem yet." Vlastelica told CNBC that the company wanted to provide brands and companies with a more familiar model for easier entry into the space.

"Our plan in the beginning was always to design a structure that's simple, easy to understand for fans and also partners in order to unlock value and new fans," he said. "What we're seeing is that so far it's working."

With the launch in additional markets, the company is hoping replicate the success of its Atlanta and Dallas tournaments.

"The two Homestand Weekends have really reinforced [the popularity of the league in local markets] and have really shown our fans and partners what it's going to look like next year when we roll out the home market events more broadly," Vlastelica added.

The Overwatch League's official partners include Intel, which has long sponsored esports events and even partnered with esports companies and leagues, as well as brands not traditionally associated with esports such as T-Mobile, Coca Cola and Toyota.

When Activision Blizzard launched the Overwatch League in 2018, they effectively created the first global esports league with a city-based franchise modeled on how traditional sports leagues operate. Many of the initial teams were bought by the owners of big sports franchises, such as the Kraft family which owns the New England Patriots, for a $20 million buy-in fee.

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Ben Pursell for Blizzard Entertainment

At the end of last year, eight new teams were added to the league, with expansion fees reportedly sitting between $35 million to $60 million for new team owners that opted in, with sources telling ESPN last August that the Toronto expansion team owners bought their slot for $35 million. Vlastelica reiterated that no new teams would be added for the next season.

But while esports leagues and companies look to expand their reach, some are warning that they may be getting ahead of themselves.

Wedbush's Joel Kulina does caution that interest in Overwatch has seemed to be fading, emphasizing that a "major content boost" may be needed to generate more buzz.

The last of the three Homestand Weekends will happen back in Los Angeles with the L.A-based team holding those home matches at The Novo by Microsoft at LA Live next month. Additionally, Activision Blizzard also revealed that teams will be grouped into four geographic divisions starting next season as well.

Activision Blizzard is also set to launch their city-based Call of Duty esports league next year.