In the first major retail partnership for an esports league, Fanatics will manufacture and sell Overwatch products around the world, as well as run the online shops for the league and its teams.

(Bloomberg)—Fanatics Inc., the world’s largest seller of licensed sports apparel and No. 29 in the Internet Retailer 2018 Top 500, is branching out into competitive video gaming, a bet that esports is reaching a new level of mainstream appeal.

The company is teaming up with Overwatch League, the esports organization launched last year by publisher Activision Blizzard Inc. In the first major retail partnership for an esports league, Fanatics will manufacture and sell Overwatch products around the world. It also will run the online shops for the league and its teams.

For Overwatch followers, the deal will bring a significant expansion of fan gear like jerseys, T-shirts and hats. Through the Fanatics memorabilia arm, the league also will introduce collectibles, autographed products and game-used items for fans.

“If you look at the big sports organizations around the world—and their ability to quickly deliver unique and cool product to their fans—we had to ask ourselves, ‘How do we do that?’” said Brandon Snow, chief revenue officer for Activision’s esports leagues.

Turning point

The deal is a major moment for Overwatch League, which is built around the popular video game of the same name. In a break from most other esports organizations, Activision built Overwatch League in a mold similar to traditional sports leagues like the National Football League or National Basketball Association. That has included revenue sharing, broadcast contracts and minimum salaries.

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There’s also overlap in ownership. Among the groups that paid $20 million for the initial Overwatch franchise slots were the owners of the NFL’s New England Patriots and Los Angeles Rams, and MLB’s New York Mets. The league will expand from 12 to 20 franchises for its second season. Franchises have already committed to a dozen North American cities, plus London, Paris, Seoul and a handful of metropolitan areas in China.

That global footprint is part of the draw for Fanatics, which is looking to expand its business overseas. The company will eventually launch online Overwatch shops in more than a dozen languages, though the deal doesn’t include China or South Korea.

New model

Ross Tannenbaum, Fanatics’ head of special projects, said the company sees a difference between Overwatch and traditional sports leagues like the MLB, which is based entirely in North America but has fans elsewhere.

“Overwatch is a worldwide business, as opposed to being a domestic business with worldwide distribution,” he said.

Fanatics executive chairman Michael Rubin tasked Tannenbaum with exploring the burgeoning esports industry two years ago. Though team merchandise is very popular in competitive gaming, it has remained largely fractured—with individual franchises relying on themselves to find partners and sell gear to their fans. In its first year, Overwatch League used Activision’s internal consumer-products group to handle its merchandising.

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“What we told Activision Blizzard was that we’d bring our entire company to the table for this deal and try everything there is to try,” Tannenbaum said. “We think this has the potential to be as big as any of our sports long term.”

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