Esports has long been an area where companies and organisations have both achieved significant financial results and withdrawn from the market for good. With the right strategic approach, it is possible to make money in esportss and the ways of making money are no secret.
The esports is an extremely popular direction in the IT market. Analysts of various profiles predict the growth of the market in 2023 to $2,000,000,000.
In the news feeds of profile publications regularly announce esports tournaments with prizes of hundreds of thousands of dollars, announcements of new collaborations, as well as large investments in clubs or esports infrastructure. Every year thousands of new websites appear, offering users a variety of esports information: tournament and match schedules, detailed match statistics and commands. A special interest of users is shown to the sites that provide Dota 2, LoL, CS GO live score and match schedule. In this article we’d like to discuss benefits of the cooperation for all the parties involved.
Esports players and teams
The main activity of eSports players and eSports teams is participation in tournaments of different formats. They may also be involved in marketing activities. Professional teams rarely exist without an organisational structure; in order to keep players from being bogged down with managerial and logistical issues, eSports organisations have a pool of specialists ranging from agents to managers. All the players have to do is to play their best in the championships.
From the outside, it might seem that the vast majority of the eSports market is fabulously rich and that players can compete with Forbes list members, but the reality is somewhat different from what is expected. There are very few organisations that can boast of operating at a profit.
The presence of a large support staff of psychologists, managers, analysts, the need to provide players with proper conditions for a comfortable and effective preparation for the competition makes the cost of the organization quite high. For example, a League of Legends team requires expenses of $500,000-$700,000 per year. The field is actively growing, which is reflected in the small amount of money and sponsors, but also leaves room for profit growth for esportss organizations.
Prize money at tournaments
At the top eSports tournaments, prize money can reach millions of dollars. But this is one of the most insignificant ways for esportss organisations to make money. That’s because most of the prize pool goes directly to the players, and the size of that portion is written into the contracts.
Pro esports clubs
A eSports club has all the hallmarks of a traditional sports organisation. Esports players do not have an acute need to be in peak sporting form, but the club infrastructure, approaches to working with fans, as well as methods of monetisation are much the same. The audience for esportss already exceeds many classic sports. Some analysts predict that the sport will overtake the iconic basketball and football in the next 15 years.
Famous sports clubs have decided to take advantage of the emerging trend and have entered the market, predominantly signing FIFA line-ups. But the audience for this football simulator is significantly inferior to the top disciplines. The most popular CS:GO, Dota 2, Valorant and League of Legends tournaments draw millions of viewers. Chinese audience increases this value by an order of magnitude.
Merchandising
This solution is suitable for organizations and teams. The profitability of this method is directly related to the popularity of the team and the size of the fan base. Often players are contracted to participate in a minimum amount of media activities in order to increase the recognition and popularity of esports players.
Not only does eSports allow for the branding of traditional t-shirts, socks, hats and other apparel and merchandise, but also of computer hardware and peripherals such as mice, keyboards and headphones.
Franchise system competitions
For a long time teams and tournament operators operated in the market for their own interests. But the evolution of the industry has led to increased costs for esports wages and infrastructure, forcing many popular teams to operate at a loss in order to maintain a place among the best.
This problem has been solved with the help of the franchise system. Its essence is that in order to participate in a tournament, teams pay an entry fee to gain a place, and then the tournament organisers share the revenues with the participants. Slots in such tournaments are bought out over a long period of time. Examples include the Overwatch League, ESL Pro League tournaments and others.
Benefit Sponsors
The esports audience is predominantly made up of young fans, although the proportion of adults is also significant. The younger demographic, while not boasting a high purchasing power, will start to buy into it in the near future. Many investors realise that while the eSports market is booming, it is easier to enter.
Among the sponsors of big organisations are gaming hardware and peripheral manufacturers such as Razer, Steelseries, Zowie, BenQ, Lenovo, HP, Roccat and Thermaltake. One of the sponsors of Natus Vincere was the electronic trading platform G2A, which specialises in game keys. Esportss are also attractive to bookmakers and online casinos. Notable examples include the aforementioned NAVI’s work with GG.bet.
Of the traditional classic sports sponsors, VISA and their partnership with SK Gaming can be noted, while their MasterCard competitors work with G2 Esports. The energy sector is represented by Red Bull, Adrenaline Rush, TORNADO and Monster. Brands such as Gilette, Borjomi and car manufacturers such as Audi and Mercedes are also found, clearly targeting the affluent segment of the audience.
South Korea as an example of an established eSports market
South Korea is a prime example of collaboration. For example, the SouL StarCraft team has had among its sponsors such giants as STX, which operates in the field of shipbuilding. Also the state-owned Korean Air carrier Jin Air has its own esports team.
This level is justified by the enormous popularity of esportss in Korea. The vast majority of citizens play video games. Esportss are broadcast on television. Sponsorship allows one’s company to make huge publicity.
At the end of 2017, one of South Korea’s most famous corporations, Samsung, sold a League of Legends team for $100,000,000. Overall, the most successful results have been with Korean telecommunications companies, namely the SK Telecom T1 and KT Rolster teams.
Conclusions
Esports has long been a large and fast-growing business. The specificity of the market is the need for large investments in order to reach a level where the venture can generate decent returns. If you invest a small amount of money, there is little chance that you will be able to recoup the investment because the team will not achieve the desired results.