Is Houston The Next Call Of Duty Franchise?

TNL Take: Last week on Activision-Blizzard’s Q2 earnings call, CEO Bobby Kotick revealed that the 8th slot for the upcoming Call Of Duty League has been sold. However, while the previous 7 slots have all been named, there was no mention of which investor or investment team purchased this slot and for what city.

The Next Level has been investigating this a bit, speaking with several industry insiders and researching additional information sources.  We want to qualify this take by noting that we do not have direct sourcing or confirmation, but based on these industry conversations and piecing together the clues, the Next Level believes that Houston will receive 1 slot in the upcoming Call of Duty League. Let’s see how the dots connect.


(Photo: Activision-Blizzard)

(Photo: Activision-Blizzard)

As reported by Jacob Wolf of ESPN last June (who seems to breaks almost all Activision-Blizzard related news), franchise owners in the Overwatch League have been given a first right of negotiation for the upcoming Call of Duty League slots.

That’s exactly what happened in May of this year when Activision-Blizzard announced the first 5 cities:

  • Atlanta (Overwatch League Team: Atlanta Reign)

  • Dallas (Overwatch League Team: Dallas Fuel)

  • New York (Overwatch League Team: New York Excelsior)

  • Paris (Overwatch League Team: Paris Eternal)

  • Toronto (Overwatch League Team: Toronto Defiant)


(Photo: Infinite Esports and Entertainment)

(Photo: Infinite Esports and Entertainment)

As reported by Jacob Wolf in May, LA based Immortals raised a $30M series B funding round, rebranded to Immortals Gaming Club and were one of a few bidders looking at buying Infinite Esports and Entertainment, the parent company of OpTic Gaming and Houston Outlaws.

In June, Infinite Esports and Entertainment were indeed acquired by Immortals Gaming Club. However, Immortals Gaming Club already have an Overwatch League team with LA Valiant and Activision-Blizzard prohibits franchise owners to field 2 teams in the same league.


(Photo: Riot Games)

(Photo: Riot Games)

Following a similar pattern as the first 5 cities, Immortals (Overwatch League Team: LA Valiant) acquired the 6th slot for Los Angeles for the Call of Duty League in July. Immortals Gaming Club and Splyce are currently the only esports teams to have teams in all 3 current franchised leagues: League of Legends, Overwatch League and Call of Duty League.

The 7th slot went to Minnesota via acquisition by Wise Ventures, an investment firm founded by Minnesota Vikings owners the Wilf Family and VaynerMedia CEO Gary Vaynerchuck. This is the sole slot without a companion Overwatch League franchise.

Also Minnesota is a state, why wasn’t it Minneapolis-St.Paul, unless location is still being determined?


(Photo: Activision-Blizzard)

(Photo: Activision-Blizzard)

2 weeks ago as reported by Jacob Wolf (seeing a pattern yet?), Houston real estate investor Lee Zieben agreed to buy the Houston Outlaws for $40M from Immortals Gaming Club. The deal has not been executed but is expected to close in late August.


(Photo: Complexity Gaming)

(Photo: Complexity Gaming)

While southern California was initially the leading geographical area for teams, developers and startups, north Texas has quickly established itself as the next dominant domain for esports. Envy Gaming is based in Dallas. Complexity Gaming opened a massive complex adjacent to the Dallas Cowboys stadium in Frisco, which was also home to OpTic Gaming prior to their sale.


(Photo: Heczquarters)

(Photo: Heczquarters)

This is the biggest wildcard of all.

I first met Hector “Hecz” Rodriguez 6 years ago during my time at Major League Gaming. Not only is he one of the nicest people in the esports industry, the growth of OpTic Gaming, his hustle and drive are inspirational and he deserves significant credit for where the space has gone.

How popular is Hector? Just read the thousands of Twitter comments made during the OpTic Gaming transition. His recently launched Heczquarters merchandise is already sold out.

Hector is still based in Frisco, Texas and why wouldn’t you want someone who has been around the Call of Duty scene for many years and created the most popular team for that title. There is no confirmation on this but would fit perfectly. Yet another dot?

Hector created the OpTic Gaming brand and in my opinion the “new” LA OpTic Gaming is not the same without him.

This narrative is our hypothesis that Houston will receive one of the Call of Duty League slots. To end with the same qualification, while hearing from industry sources and putting together this thread, it’s still not 100% confirmed. 

The Next Level reached out to The Zieben Group for comment but has not heard back as of this publication.

But again, the dots we are threading are:

  • Overwatch League franchises tied to Call of Duty League franchises

  • Recent purchase of Houston Outlaws by a wealthy investment firm

  • The growth of the esports industry in North Texas

  • The potential involvement of Hector “Hecz” Rodriguez


Doesn’t it make sense?

Melbourne Could Be Next For Overwatch League

TNL Take: As the first year for Overwatch League comes to its conclusion, it's never too early for the rumor mills to start churning for year two.

Sources have told the Australian Financial Review that Blizzard is targeting Melbourne for one if its expansion slots. Activision's CEO of Esports Leagues Pete Vlasetelica previously mentioned that the league would expand from 12 to 18 with "two from the Americas, two from Asia-Pacific, and two from Europe and the Middle East".  Overwatch League currently has 9 teams in the US, 2 in Asia and 1 in the UK.

The Australian esports scene has emerged over the past few years including sports clubs from the AFL like Adelaide Crows and Essendon Bombers both investing in teams. Gfinity recently launched their Elite Series city-based league including Melbourne, Sydney, Brisbane and Perth.

Further, the Victorian state government promises to make Melbourne the home of esports after announcing the country's biggest event, Melbourne Esports Open the first weekend of September. In partnership with TEG Live and ESL, the event is expected to draw 10,000 fans each day.


Whoever gets the one of the next 8 slots will need to pony up a pretty penny however. From the inaugural season buy in of $20M, expansion slot fees have now risen to $30-$60M sources tell ESPN

Nate Nanzer, Commissioner of Overwatch League, wouldn't confirm the rumor but added:

"We're open to having a conversation about any city.  If somebody wants to have a conversation with us about Melbourne, we would definitely have the conversation and be very interested. It's a global league, so we want big, globally recognisable cities. Our focus is really on expansion in Europe and throughout Asia Pacific, of which Australia and New Zealand is a part".

Here's The Next Level's previous 2-part series on Australia and esports.

How Much Money Could Twitch's New Feature Bring In

TNL Take: In June of 2016, Twitch introduced bits and cheering and provided another means of monetization for streamers outside of subscriptions. In the simplest terms, viewers purchase bits (the lowest price is $1.40 for 100 bits) and then give them to streamers in the form of cheering.

Twitch Bits (Photo: Twitch)

Twitch Bits (Photo: Twitch)

I thought the feature was amazing however it lacked 1 key element: Brands. My idea was this:

  • Custom Bits for Brands
  • Let Streamers/Brands give them away to their audience for Free
  • Audience donates the Brand Bits in the exact same manner and the streamer gets paid on the same revenue share of $0.01 cent per Bit — but charge a 0% Fee — as Twitch will already monetize on the Ad side

While that wasn't implemented, you can watch a Video Ad to earn bits instead of paying - more on that later.  

Last week, Twitch unveiled a new integration for viewers to use Bits and Cheers to support their favorite teams in Overwatch League.

Overwatch Hero Emotes (Photo: Twitch)

Overwatch Hero Emotes (Photo: Twitch)

Here's the interesting part: the revenue generated won't be shared with the teams but goes directly to Twitch and Overwatch League.

How did Week 1 fare?

Total Overwatch League Cheers (Photo: Twitch)

Total Overwatch League Cheers (Photo: Twitch)

Over 21M+ Cheers were contributed by the community which also has an overall goal total to unlock more goodies for Overwatch fans. With a few assumptions, here's how much was generated:

  • At the cheapest conversation rate of 100 bits for $1.40, the total haul would be ~$300,000
  • Lower the weekly run rate to $250,000 to be conservative
  • $1M potential revenue each month

While that maybe a drop in the bucket; all the drops will be necessary to recoup the estimated $90M that Twitch paid for media rights.

I still believe that Brands can be integrated into this ecosystem outside of Watch-to-Earn videos and hopefully will be coming soon.

Further, Twitch continues to evolve from merely lean-back, passive viewing to more engaging and community driven features. 

How Did Overwatch League Viewership Perform In Week 1?

TNL Take: It's only Week 1. It's only Week 1. It's only Week 1.

Repeat as necessary.

With so much money and hype riding on Overwatch League, how exactly did Week 1 perform from a viewership perspective?

Again, this doesn't take into account a slew of other Overwatch League monetization options like merchandise or in-game team skins but viewership only using the following methodology:

  • Twitch English stream for comparison
  • 2 Twitch viewership data sources (TwitchTracker and Waypoint Media)
  • Average Concurrent Viewership not Peak/Max
Overwatch League Week 1 Twitch Viewership (Chart: The Next Level)

Overwatch League Week 1 Twitch Viewership (Chart: The Next Level)

Again, it's only Week 1 so don't build a complex financial model on 4 data points but some potential insight:

  • Day 1: Saw some significant viewership with 300K+ concurrent viewers however will be difficult to maintain those numbers across the regular season
  • Day 4: With increased competition from other esports events and the NFL Playoffs, the average concurrent viewership had dropped to half of Day 1
  • With another few weeks of data, we'll be able to see if OWL can maintain their 150,000 concurrent viewership for the rest of the way - which would be good for the inaugural season

What gets really interesting is when you layer the next major esports event against Overwatch League.

  • Day 3: With the start of ELEAGUE's Boston event, there may have been some migration of viewers from Overwatch to Counter-Strike
  • ELEAGUE performed well head-to-head considering the numerous hours that they were live

This is very early and will good to gauge other esports events for comparison as OWL moves through its season.

Week 2 will have an even bigger test for Overwatch League however with the start of the other franchised league - North America League of Legends this weekend.