Amidst the COVID-19 pandemic, the United States government implemented a Paycheck Protection Program to assist companies during this hard time. The release of the PPP applicant and recipient list raises concerns over the stability of Activision Blizzard and their franchised esports leagues.
Breaking down the PPP Loan
The PPP loan is a way to ensure that companies can cover operational costs during the pandemic. At a glance, this program is a viable way for small businesses and restaurants to stay alive in a time where isolation is necessary. The PPP loan is a topic of debate online currently, with questionable companies taking out large sums of money.
The PPP loan is broken into brackets, judged by operating costs and the salaries of staff for the year doubled. Entertainment companies suffered, forced to make cutbacks, and cancel events. Among the organizations to apply for a PPP loan were Envy, FaZe Clan, and the Kraft Group. All of these organizations either own a Call of Duty League or Overwatch League team, or both. Not many esports organizations outside of Activision Blizzard’s franchised leagues applied for the PPP loan, other than eSports Go LLC who owns the Florida Mayhem and the Florida Mutineers.
This has raised questions about the integrity of Activision Blizzard, and their level of dedication to the esports leagues they founded. Blizzard arguably has a bad habit of trying to force their titles to be successful in competitive atmospheres. World of Warcraft found a successful niche, but Heroes of the Storm and Starcraft didn’t stand the test of time.
Activision Blizzard’s esports issues
The bad habits of Activision Blizzard when it comes to esports has cost organizations, hence the numerous PPP loan applicants. The fee for an OWL team was $20 million in 2018, and in 2019, the cost for a CDL team was $25 million. Kraft Group, the same organization which owns the New England Patriots and the Boston Uprising, could afford to make this leap into a new venture. Others broke the bank to make this significant investment, but their payout has yet to come.
In 2020, Activision Blizzard planned for Homestands to set a new standard for live esports events. The initiative was over before it began, and all events were canceled due to health concerns. The organizations had no choice but to find ways to recuperate the costs dumped into curating a live experience.
It is fair to question if the Overwatch League was ready for the Homestand format change in the first place. The three tournament format implemented halfway through the Overwatch League’s 2020 season works well. It is an addition that many fans enjoy, and raises the stakes midseason. There isn’t much diversity between the regions, but most esports are separated by region, only meeting for world championships. Many teams would be hesitant to admit if financial troubles began before the pandemic. The feeling of reserving a venue, confirming vendors, securing sponsorships, and then having to eat those costs when the event is canceled has to be devastating.
The Call of Duty League is having major issues as well, not truly succeeding yet either. Call of Duty esports has always been and always will be a fragfest, with competitive integrity varying from year to year. While most CDL esports organizations will use this money to stay afloat and continue to support their staff, it is hard not to question if they forced themselves to expand too soon. Speculation around the finances and decisions of Activision Blizzard holds little weight, but regardless, teams had to file for the PPP loan for a reason.
The future of franchised leagues
Franchising has been an unsuccessful structural experiment in esports so far. A focus on organic growth, refining the competitive experience, and fostering community events has worked for Valve and Riot with their titles. Dumping money into an esports scene doesn’t work, but given time, Activision Blizzard can improve and grow.
The Homestand format was a leap at pushing esports into the same format as traditional sports. For the Call of Duty League, they had no other choice given the poor state of Modern Warfare servers. For the Overwatch League, it was a chance to bring the Homestand experience to fans of every team.
The coronavirus is still running rampant, with cases increasing daily in the United States. For the health and safety of staff, players, and fans, hosting esports competitions online, as they have been done for the past decade, is the smartest move. There is no guarantee that events will continue in 2021, but as restrictions lift, LAN competitions will resume. It is my personal belief that Activision Blizzard should use this time to shift gears, and rethink their priorities when it comes to growing their esports.