What Happened to Esports Franchising?

Esports franchising emerged in the mid-2010s as a strategic move to professionalize the nascent competitive gaming industry, drawing parallels with established North American traditional sports leagues. The open tournament model, while merit-based, often led to financial instability for teams. Franchising aimed to provide stability, attract long-term investment, and ensure player welfare through guaranteed salaries and benefits.

Key turning points began around 2017-2018 when major publishers like Riot Games (League of Legends Championship Series - LCS) and Activision Blizzard (Overwatch League - OWL, Call of Duty League - CDL) introduced franchised systems. Initial buy-in fees were substantial, ranging from $10 million for the LCS to $20-25 million for OWL and CDL, attracting a wave of investment from traditional sports owners and venture capitalists. This influx of capital led to increased player salaries, better facilities, and higher production values for broadcasts, significantly elevating the profile of esports. However, the high costs of operating franchised teams, coupled with slower-than-expected returns on investment and challenges in monetizing viewership, soon became apparent.

The consequences of this model were mixed. While it brought legitimacy and structure, many teams struggled with profitability, often bleeding cash despite high valuations. The Overwatch League, a pioneer in city-based franchising, faced significant financial strain due to high costs and logistical challenges, eventually leading to its shutdown in late 2023 and replacement by a new open ecosystem, the Overwatch Champions Series (OWCS), which features a partner program but moved away from permanent franchise spots. The Call of Duty League also faced challenges, with reports in 2024 indicating that Activision reimbursed franchise fees to team owners to improve financial stability, though the league continues as a 12-team franchised competition in 2026.

As of 2026, the esports franchising landscape is characterized by adaptation and a renewed focus on sustainability. Riot Games, after experimenting with the merged League of Legends Championship of The Americas (LTA) in 2025, reinstated the LCS and CBLOL as independent leagues in 2026, emphasizing regional identity and a clearer path to international tournaments. These leagues continue to operate with a partnership and guest team system, indicating a refined approach to the franchised model. Mobile Legends: Bang Bang is also expanding its franchised leagues, introducing one in Malaysia in 2026. The broader industry is shifting from speculative growth to a more sober focus on diversified revenue streams, consolidation, and building resilient business frameworks, with economic sustainability being a primary challenge. Investment capital is moving towards later-stage, proof-backed companies, with a focus on monetization and mobile gaming.