This guest post was written for The Esports Observer by James Weiner, Ph.D., assistant professor – sport management at the University of Tampa.

What Does Franchising Mean in Esports?

If you have followed Call of Duty over the past six months, it is difficult to ignore the discussions in the competitive Call of Duty community surrounding the eventual integration of a franchise model into the Call of Duty World League (CWL). A franchise model allows esports organizations to “buy” a permanent spot on the largest league in the scene. In exchange for a franchise fee rumored at over $20M USD, organizations interested in a permanent spot could guarantee the year-long exposure in the CWL and placement in the main bracket of several LAN tournaments.

Additionally, franchised teams must often agree to a charter which dictates conditions such as minimum salaries for players, benefits, or guarantees to physical arenas and training facilities. Franchising has been successfully implemented among other esports titles such as the League of Legends League Championship Series (LCS), as well as the Overwatch League (OWL), but what would it mean for one of the world’s biggest console esports to jump on the bandwagon?

[perfectpullquote align=”left” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]A franchising model would be drastically different from the current “merit-based” system which has been implemented since the inception of the CWL.[/perfectpullquote]

A franchising model would be drastically different from the current “merit-based” system which has been implemented since the inception of the CWL. Currently, teams qualify for their CWL spots through a series of early LAN tournaments and online play. There is no way for a team to guarantee placement in the CWL, nor the exposure and prize money associated with it. The best 16 teams earn their way into the league. This makes it more difficult to obtain year-long, high-value sponsorships, since the inventory and viewership available one year may not be available the next.

Additionally, critics of the merit-based system point to viewership instability, since fanbases and organizations in the spotlight are constantly changing. While there is no definite answer on if franchising is “better,” there are some clear winners and losers for the upcoming change to the CWL, despite the trickle of information we have been given.

Winners: MLG, Activision Blizzard, Franchised Teams, and Franchised Players

The biggest winner in the franchise model, assuming all the spots are purchased would be MLG and its parent company, Activision Blizzard. With a guaranteed nine-figure payday and bids rumored north of the $20M estimate, the opportunity for major investment into the CWL production is impossible to ignore. Fans could expect a greatly improved viewership experience, and the CWL production team is likely to enjoy a significant influx of human and monetary capital at its disposal. Furthermore, as evidenced by success stories such as the OWL partnership with online retailer Fanatics and Coca-Cola franchised leagues can expect a larger commitment and asking price for CWL inventory due to added stability and increased perceived legitimacy.

The other big winners in the franchise model include the teams awarded with franchises and players who sign with these teams. Just like the CWL broadcast inventory, franchised organizations can expect increased value in their own sponsorship inventory since their teams will be locked in for hundreds of hours of expected high-exposure viewership and content. Franchised leagues often boast well-funded organizations, better working conditions and guaranteed minimum salaries for their players, marking a big win for Call of Duty pros who have seen their share of salary disputes in recent years. It is unlikely that organizations who can afford a franchise fee will fail to meet payroll for their team, as has been highlighted recently with multiple former CWL organizations.

Credit: Activision Blizzard

Losers: Amateur Players, Non-Franchised Teams, and Early Excitement

Franchising the most popular league in Call of Duty may seem to promise money raining from the sky, stability in a volatile fanbase, and fulfillment of many pro players’ dream scenarios, but it would be short-sighted to assume that a CWL franchise model will be perfect.

The biggest losers in this situation include the individuals who don’t make the cut for CWL franchised teams, as well as the organizations who will be shut out from much of the valuable exposure which they can shoot to “earn” in the current merit-based system. The CWL is the only real competitive league for Call of Duty with any significant following, and non-franchised teams will be shut out from CWL broadcasts and likely from major brackets at LAN tournaments (details involving open LAN tournaments are not yet disclosed). This saps much of the value from potential sponsors and thus organizations who would be paying the players.

Call of Duty has already suffered from a floundering amateur scene unlike their OWL and LCS counterparts, and it would be a tough ask for the CWL to require franchised teams to fund their “minor league” system for minimal exposure. This may leave future Call of Duty stars a difficult low-viewership, low-pay path to travel until they are noticed and selected by a CWL team.

[perfectpullquote align=”right” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]The new franchise model is rumored to follow OWL’s lead in possibly restricting players from streaming during OWL events…[/perfectpullquote]

The lowered potential ceiling for amateurs stings harder given the previous landscape of Cinderella opportunities organizations have had in a merit-based system. In 2018, Call of Duty organizations such as Enigma 6, Complexity , Lightning Pandas , and Ghost Gaming all fielded salaried teams with the hopes of breaking into CWL placement and the exposure opportunities that came with it. This year, the Pittsburgh Knights took the same risk.

A look at the electrifying 2019 Pro League Qualifier demonstrates the appeal of the “who’s in, who’s out” dialogue which resembles esport’s closest thing to a March Madness Selection Sunday. Teams such as Heretics, Enigma 6, Excelerate Gaming, UYU, and Midnight Esports shocked viewers, much to the delight of their sponsors and owners. Meanwhile, five pros without a team at the beginning of the year banded together on their own dime to qualify in a historic gamble, rewarding themselves with a Gen.G affiliation. There was drama, excitement, and adrenaline because it was all-or-nothing on the line. The wild 2019 CWL qualifier was heart-pounding and heart-breaking at the same time, and would be a missed adrenaline rush for many fans eagerly anticipating who may surprise or disappoint each year.

Rumored Losers: Established Brands, Streaming Content

In a series of leaked images from the infamous Redditor “CoDBurner,” there are rumors that franchised teams will be forced to re-brand themselves, giving up historic namesakes such as Optic Gaming , Team Envy , Faze Clan , eUnited , and 100 Thieves . While there has been no official word from Activision on the legitimacy of these leaks, it would mean a serious loss in intellectual property value of the teams involved. This would be difficult to swallow for established brands such as Faze Clan, Team Envy, eUnited and the wildly popular newcomer 100 Thieves.

Credit: Activision Blizzard

Optic Gaming, which has controlled a near-monopoly of the competitive fanbase and was recently acquired by Immortals Gaming Club (IGC) probably has the most to lose in the ban on their prominent OG logo and namesake. Many Optic fans have expressed sore feelings about seeing the preeminent organization in Call of Duty rebranded, and the effect (if any) it will have on the fans’ loyalty is still unknown. Regardless of any loss in intellectual property value, IGC also announced it plans to retain the Call of Duty team, and presumably pursue a CWL bid. This would mark the first organization representing a team in all three major franchised esports and a win for IGC and the franchise system.

More rumors regarding player streaming have begun to circulate due to a combination of the aforementioned “CoDBurner” leaks and conversations such as the one which occurred on Optic Gaming’s “Hecz”’s podcast Eavesdrop. The new franchise model is rumored to follow OWL’s lead in possibly restricting players from streaming during OWL events, or from streaming practice and pickup games (known as “10s” in the Call of Duty community).

Several players have thousands of subscribers and significantly supplement their own income streaming gameplay. For instance, pro player Seth “Scump” Abner tipped 15,000 subscribers after a wild night in November of 2018. If CWL franchising rules mirror the OWL system, a few of the most popular pro players will need to make difficult decisions regarding their own stream content. Likewise, Call of Duty fans who have grown uniquely connected to their favorite players through watching late-night streams, scrims and 10s, will sorely miss the connection to their favorite player personalities.

[perfectpullquote align=”left” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]There are still missing details involving how LAN tournaments will operate, or whether MLG will step in and try to subsidize a “minor league” system through requirements in the franchise charter. [/perfectpullquote]

So… Will Franchising Work?

The truth is that we don’t know yet, and it depends on how fans will judge success. There are still missing details involving how LAN tournaments will operate, or whether MLG will step in and try to subsidize a “minor league” system through requirements in the franchise charter. If you believe that the root problem that the CWL hasn’t grown at the same rate as other ESports leagues lies in the lack of monetary resources, the massive cash deposit from franchise fees will certainly alleviate much of the trouble. The stability of consistent teams and higher quality production are likely to exponentially increase sponsor valuations, benefitting the teams and players alike.

If you attribute the lack of growth to something else, such as the seasonal release of titles or the discrepancy between competitive and common gameplay, the franchising model may prove less successful than the OWL. Call of Duty fans have unique and strong attachments to their favorite brands and players built from years of content creation and streaming, so the effect on a potential streaming restriction or forced rebranding may have unforeseen consequences.

Furthermore, Call of Duty already has one of the weaker amateur scenes among franchise-worthy esports. Many amateurs (and amateur team sponsors) will lose the potential of breaking into the scene with a dark horse qualifying placement or open-bracket run, which has undoubtedly fueled interest and storylines over recent years. The franchise model has seemed to work very well in other leagues, but Call of Duty isn’t like many other Esports and there may be some unique complications. In 2020 we will see, for better or worse.