By Sarah E. Needleman | Photographs by David Williams for The Wall Street Journal
Tribalism has long been the backbone of sports, with fans
embracing teams that represent their communities. Now, owners and
investors behind teams in three nascent videogame leagues are
banking on people forming similar bonds by attending matches in
their home markets.
The rise of city-based esports leagues supports a growing bet
that publishers such as Activision Blizzard Inc. can entice people
to shell out cash to see star gamers compete locally -- and more
frequently than tournaments with large prize pools.
Before this year, the 20 teams in Activision's Overwatch League
spent their first two seasons competing mainly at a studio that
formerly housed NBC's "The Tonight Show" in Burbank, Calif., which
meant most fans could only watch the action online. This season,
teams are competing in concert halls, sports arenas and other
venues around the world.
Activision's Call of Duty League launched last month with 12
teams representing cities such as Toronto and Atlanta. Each team is
expected to host at least one homestand weekend this year. The NBA
2K League, a joint venture between Take-Two Interactive Software
Inc. and the National Basketball Association, held tournaments in
Las Vegas and Orlando, Fla., last year and plans to host more this
year. Its third season starts in the spring with 23 teams.
If any competition might be expected to transcend geography, it
would be esports. Amateur videogame teammates often play together
from multiple places, sometimes without ever meeting in person.
"Our fans are digital first, but gathering in real life to
celebrate and cheer on teams is as high a priority as it is for a
traditional sports fan," said Rohit Gupta, co-founder of esports
company Andbox, which owns Overwatch team New York Excelsior and
Call of Duty team New York Subliners.
Ian Livica of New York spent last weekend cheering on the
Excelsior at Manhattan's Hammerstein Ballroom, counting himself
among 1,600 fans who viewed matches each day. The 20-year-old
college student watched as the six-person squad battled the London
Spitfire and Boston Uprising teams. The New York team defeated both
opponents.
"The first match was close and we were on the edge of our
seats," said Mr. Livica, while wearing a varsity-style jacket with
the Excelsior's logo and the letters "NYXL." "Everybody was jumping
and screaming when we caught the first win. It was incredible."
Though esports revenue is a fraction of what is generated from
videogame sales each year, according to analysts, proponents expect
the market to grow in the years ahead.
Esports teams typically make money by striking deals with
advertisers, selling their own merchandise and winning prize money.
In some cases, leagues share with teams revenue gained from sales
of sponsorships and virtual items inside videogames.
Activision, Take-Two and the NBA are going a step further,
enabling teams to also make money through sales of tickets and
concessions. "Over time we see these as profitable local businesses
for sure," said Pete Vlastelica, head of esports at Activision.
"This is the first inning."
Activision launched "Overwatch," a team-based shooter game, in
2016. Chief Executive Bobby Kotick set out to build a competitive
league around it the following year, convincing sports executives
including New England Patriots owner Robert Kraft and New York Mets
operating chief Jeff Wilpon to buy in. The company formed an
esports league for its nearly two-decade-old Call of Duty franchise
last year, drawing in many team owners from the Overwatch
League.
Take-Two launched its NBA 2K franchise in 1999 and the company
partnered with the NBA to form a competitive league around it
nearly two decades later.
Backers of the three leagues have invested in marketing while
working to sell the rights to broadcast their competitions to
live-streaming services such as Google's YouTube and Amazon.com
Inc.'s Twitch. Activision signed a deal in January for YouTube to
become the exclusive broadcast home for its Overwatch and Call of
Duty Leagues. Terms of the deal weren't disclosed.
Still, it is unclear how long it will take, if ever, for teams
to prosper financially. Buyers of teams in the Overwatch and Call
of Duty leagues agreed to pay Activision between $20 million and
$30 million apiece, according to people familiar with the matter.
There are also startup and operating costs, from hiring talent and
coaches to providing housing and transportation for players and
staff.
"The revenue coming in from esports right now doesn't support
the cost associated with these teams," said Gene Munster, managing
partner at venture-capital firm Loup Ventures. "It will undoubtedly
take longer than people expect for esports to become mainstream,
with some teams folding along the way."
University of Northern Iowa senior Jacob Haag drove 3 1/2 hours
to the Call of Duty League's opening weekend in Minneapolis. The
league doesn't have an Iowa team so he settled for one of the
nearest options, the Minnesota RøKKR.
"You're supporting them and they're supporting you," said Mr.
Haag, 22, who paid about $100 for season tickets that cover two
weekend-long competitions.
Such fandom is why Drew McCourt, whose company c0ntact Gaming
owns both an Overwatch and a Call of Duty team, is betting the
city-based model will pay off. "I feel pretty good if ticket sales
are any indicator," said Mr. McCourt, whose Paris-based teams are
hosting games this year at The Zénith arena and La Seine Musicale
performing arts center.
To develop a fan base, team owner Andbox, whose investors
include actor Michael B. Jordan and venture-capital firm Sterling
VC, has spent the past two years hosting "watch parties" at
Manhattan restaurants and other events.
As a supporter of the Excelsior, Mr. Livica attended watch
parties, where he got to know other fans, including 30-year-old
Marc Padro of Verona, N.J., and 15-year-old Yunhee Chi of New York,
who came to the opening weekend competition with her mother, Reeran
Kim. All four hugged when they saw each other at one of the New
York matches earlier this month.
"Esports is all about community," said Mr. Padro. "It's very New
York in here."
Write to Sarah E. Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
February 15, 2020 10:14 ET (15:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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