The Overwatch League and your investment in esports has been a real focus for Activision-Blizzard in recent years – is 2019 the year it all comes together?
BLE this year is all about our international business, and our ambitions for growth. The core of our business has traditionally been in US, but there’s huge growth opportunity in western Europe and in China – those are the two regions in which we see the biggest potential. One of the big drivers of that international business is esports.
We professioanlised the Overwatch esports business, and what was exciting is this season we started to experiment with home and away matches, because this is a city-based league, as opposed to hosting them all in LA. Next season, all matches will take that format. Call of Duty’s esports leagues, launching next January with 12 city-based teams, will be local, ome and away matches from the start.
The reason I go into that detail on that is, from a consumer products perspective, it creates merchandising opportunities at the events themselves. Fans come out to have a great time, support their team and take away a memento.
It’s very much like the NFL business or the Premier League. So naturally we’re working with partners who are experts in those fields. Fanatics is our ecommerce partner, and they are also the partner of the NFL, the English Premier League and pretty much all the big sports leagues out there.
Call of Duty has been a licensed franchise for many years now, and Overwatch has grown in the past couple of years. How does adding this esports element change the way you license these properties?
The biggest difference: apparel. It’s by many magnitudes the biggest category in sports licensing, whereas where in character and traditional video games licensing, you’re looking at toys, collectables, plush, board games, gaming accessories and those other hardlines as your big revenue drivers.
The core of esports is apparel, hats, jackets. But football fans don’t want just a logo on a shirt, and esports fans are no different. What’s sort of cool is that a lot of what we’ve learnt in the past two years getting to grips with esports licensing has helped us develop better products in our core video game franchises.
On Call of Duty, we’re working with Scandinavian streetwear designer called DRKN, for example. Let me tell you, these are clothes you’d probably wear anyway whether or not you’re a fan of the franchise because they’re so cool. That’s something that is new in this space: elevating product through great product design. And that’s something we’ve learned from the best in sports licensing.
There are plenty of esports leagues out there, millions in investment, what makes your approach better – or at least, unique?
First it starts with the game experience, and Overwatch or CoD are perfect for esports, just in their core gameplay mechanics and design. But we’ve professionalized these leagues above and beyond through the level of investment in how we present content. The viewership experience is – and I’ll humbly submit this – probably the best in the world. We have great media partners in Twitch, Disney and ESPN. All that ties together into a very attractive package for returning viewers or just somebody flicking through and catching it for the first time.
But also I think this city-based competition is really unique in that it unlocks a level of local and dedicated support that other esports properties don’t have the notion that the London Spitfire is the local team that fans can get behind. Any given week they could be playing Dallas or Atlanta or Los Angles, and they can get behind their local team the same way they would with football, Chelsea or Arsenal.
If it’s so similar to sports, what sets esports apart?
The interesting thing about esports is that the fans and viewers can also play the game. Aspiration is way beyond what you see in traditional sports. Somebody might want to play for the England football team, but right now, odds are you’d be more likely to make it into the London Overwatch team.
Nascent is probably the right word for all of esports right now. We’re at the beginning of the journey, but we’ve already come a long way in the past two years. The biggest difference is in the partners we’re speaking to.
A good example is Upper Deck, and they make incredible trading cards for sports league tournaments, featuring the personalities and players themselves. And of course in esports, that’s the gamers, and that’s something we don’t see much of. That’s different to a trading card line for the franchise or the characters in the game itself. Probably we wouldn’t go to these guys for a Crash Bandicoot trading card line. But they bring expertise and product quality to esports trading cards from their background in other leagues and sports.
Has tackling esports changed the way you approach the business side of things? Is the pitch process different? Do you need more than a property, an audience and a style guide?
The process itself is not so different: curate licensees, create style guides and ensure partners have the assets to work with. At the end of the day this is the licensing business. But there are differences in how our partners can work with the propery.
Funko Pop! is huge for us on all of our core game franchises, and for the first time they’re bringing that to Overwatch League. That’s a great opportunity to expand with partners we already have strong relationships with.
Do you find you’re still in the process of educating partners – in a general sense?
The answers is yes. The big thing is that the understanding of the size of the audience and the demographic of the viewers and the players just isn’t there yet. That’s always the biggest eye-opener, and I can assure you the audience we reach with Overwatch League is very attractive to most of our partners. Compare that with the audience for traditional sports, and the way that is ageing up, the fact we’re delivering young adults and the next generation of sports fans is pretty cool.
One of my colleagues, who runs our licensing business in esports, likes to say, ‘the first sports jersey that many of our fans are going to buy will be an Overwatch jersey’. Not an NFL or an NBA team. And that’s one of the reason ESPN – you know, the biggest name in sports broadcast – is interested, because esports is going to be a major part of the future of sports and competitive entertainment.