Meg Whitman-Backed Firm to Weigh Sale of Overwatch Team
(Bloomberg) -- Immortals Gaming Club, one of the early investors in esports, is exploring options for its Overwatch League team, including the possible sale of all or part of the franchise, according to a person with knowledge of the matter.
Known as the Los Angeles Valiant, the team was one of the inaugural franchises in the league, which started play in 2018. The decision reflects a strategic shift by the owners, who agreed to sell another team last week. Initial investors in the league agreed to pay $20 million in franchise fees per team.
The moves are a blow to Activision Blizzard Inc., which has been marketing team franchises based on its Overwatch and Call of Duty games under a multiyear initiative. Immortals Gaming was an early backer of the concept, which involved acquiring exclusive rights to a local market, much like the NFL.
Immortals Gaming intends to focus less on city-specific teams and more on businesses related to online gaming, such as Gamers Club, a subscription service in Latin America which connects video-game players. The company said last week said it’s selling a team playing in Activision’s Call of Duty League to 100 Thieves, another Los Angeles-based esports business.
“We’ve enjoyed strong growth in our nonteam asset portfolio and are excited to leverage a strong balance sheet and focus our energy, time, capital, and other resources on these aspects of the business,” Ari Segal, chief executive officer of Immortals Gaming, said in a statement last week. He added that the company will continue to invest in some esports teams.
The company also announced last week a $26 million financing round from investors including Meg Whitman, an Immortals Gaming board member and former CEO of eBay Inc.
While overall interest in video games has surged with the pandemic keeping people at home, esports have suffered. Advertisers who were supporting the nascent business cut back on their marketing due to the economy. Many live events were canceled, and the teams took a hit on merchandise sales as a result. Immortals Gaming has also reached an agreement to sell its OpTic Gaming brand to its original owner, Hector Rodriguez, according to a statement. Terms weren’t given.
Activision began offering financial help to Overwatch League team owners earlier this year, extending terms on franchise fees and accelerating payments due from their shared revenue sources.
An Activision spokesman said the video-game giant recently signed International Business Machines Corp. as a three-year sponsor of the Overwatch League. Both leagues were able to continue playing during the pandemic and their seasons set viewing records for their competition on YouTube.com.
Last week, Walt Disney Co.’s ESPN laid off a number of its esports writers and commentators as part of a broader cost-cutting initiative. ESPN broadcast the first two years of the Overwatch League but chose not to renew this season.
“We recognize esports as an opportunity to expand our audience, and we’ll continue to do so through coverage from the broader team for major events, breaking news and coverage,” ESPN said in a statement.
Immortals, which is based in Los Angeles, was founded five years ago through the acquisition of a team playing Riot Games’ League of Legends. It attracted a number of high-profile investors, including billionaire Phil Anschutz’s AEG, the family of financier Michael Milken and Lions Gate Entertainment Corp. AEG and March Capital Partners, an investment firm where Milken’s son Gregory Milken is a partner, participated in the latest financing round.
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