(Bloomberg) -- Microsoft Corp.’s Activision division is negotiating changes that could give team owners in its Call of Duty League a greater share of revenue, according to people familiar with the discussions.

The owners want a bigger cut of their teams’ virtual merchandise sales and fewer restrictions on sponsorships, said the people, who asked to not be identified because the discussions aren’t public. 

Esports, where fans watch professional contestants play popular video games, was once considered a major growth area for entertainment. But the industry has faced headwinds, with audience turnout lower than expected and sponsorship revenue drying up.

Microsoft bought Activision Blizzard, the owner of the Call of Duty video game and league, last October in the industry’s largest-ever merger. The company has since been making changes at its gaming business, including reducing headcount and making more titles available on rival consoles.

Under the previous management, Activision created leagues modeled after the NFL, selling franchises to Call of Duty and Overwatch for millions of dollars to investors including LA Rams’ owner Stan Kroenke and the New England Patriots’ Robert Kraft.

As part of those agreements, Activision kept sponsorships for certain drinks and console platforms for itself, the people said. A spokesperson for the company declined to comment. 

The talks began last year and drafts with new contract terms began circulating in January, the people said.

In mid-February, a former Call of Duty team owner and professional player sued Activision, alleging the video-game publisher held an unlawful monopoly. Optic team owner Hector “H3CZ” Rodriguez and player Seth “Scump” Abner claimed the terms of the partnership with the league were “financially devastating.”

The plaintiffs, who seek $680 million in damages, say Activision limited sponsorship opportunities. An Activision spokesperson said Rodriguez “demanded that Activision pay them tens of millions of dollars to avoid this meritless litigation.” 

Activision has already reorganized one troubled league. It announced last month it will outsource a new version of the Overwatch League — called the Overwatch Champions Series — to Saudi-owned ESL FACEIT Group, which is cutting 15% of staff.

Call of Duty team owners have faced fewer frustrations than Overwatch owners, according to the people. 

Call of Duty participants, for example, were asked to pay a smaller share of their $27.5 million franchise fee up front, the people said, and the game is more popular with consumers. Franchise fees for Overwatch amounted to $20 million per team, with a higher percentage due sooner.

(Adds timing in seventh paragraph. Rodriguez’s owner status was corrected in an earlier version of this story.)

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