Esports isn’t all fun and games. Behind the scenes it can be serious business. Teams need to pay for things like:
- Player contracts
- and much more
Given all these expenses, aspiring teams or investors often need to ask themselves “how do esports teams make money?”
The esports business model will vary from org to org but usually consists of some combination of what we’re about to cover. Some teams start at the bottom, in a small basement somewhere, and grind it out. Other teams start with funding, investors, and seasoned pros.
Esports Sponsorships and Ads
This is where many esports teams earn a significant portion of their revenue. Organizations that have built up audiences and fans are very valuable to advertisers.
Traditional advertisers in esports include companies that make keyboards, mice, controllers, chairs, hardware, and any of the other countless types of gaming accessories and components. Sponsoring a team is a great way to get their gear in front of a very targeted audience.
Nowadays, esports attracts some of the world’s largest companies as sponsors, even companies that don’t have anything to do with gaming. Some of these brands include Coca-Cola, Mobil 1, T-Mobile, Toyota, and many more.
Smaller streamers and teams may be able to find sponsorship deals from newer and smaller brands for free gear, some schwag, and the like. Larger organizations can get a lot more than some freebies, though.
Teams can also earn advertising revenue from streams, their YouTube channels, social media pages, and other platforms.
Selling Esports Merch
Selling merchandise is kind of like an org being their own sponsor. Instead of having another brand paying to advertise on their clothing, team members can wear their own merch to promote it. Jersey sales are another aspect of merch that parallels traditional sports leagues.
For larger orgs, merch sales can end up being quite significant. For smaller teams, it usually amounts to a bit of extra running around money here and there but every little bit helps when you’re trying to get a team off the ground. It’s also great for exposure since everyone wearing the team’s merch is promoting the team.
Investors in Esports
Whenever an industry breaks into the mainstream, there’s going to be an influx of investor money from people who want to participate in “the next big thing”. Here’s a look at some of the big names that have invested in esports (notice the crossover from traditional sports)…
Esports Owners from other leagues
- Stan Kroenke (Arsenal football club, the Los Angeles Rams NFL team, and the Los Angeles Gladiators in the Overwatch League),
- Robert Kraft (New England Patriots NFL team, and The Boston Uprising in the Overwatch League),
- Mark Cuban (Dallas Mavericks NBA team, and a website for betting on esports),
- Jerry Jones (Another NFL owner, he owns the Dallas Cowboys and teams that compete in Hearthstone, Dota 2, CS:GO, and more.)
Professional athletes that invest in Esports
- Michael Jordan (NBA champion, invested in the parent company of Team Liquid),
- Rick Fox (NBA champion, founded the team Echo Fox),
- Steph Curry (NBA champion, invested in Team SoloMid),
- Marshawn Lynch (Superbowl champion, invested in NRG), and many, many more.
In addition to the people above, there are also plenty of institutional investors that are drawn to esports. There’s also an endless list of other celebrities and notable figures who are racing to claim their piece of the pie.
Why are all of these people rushing to invest in esports teams? Because the global audience for esports is growing rapidly, with hundreds of millions of yearly viewers, and the cost of entry is still relatively low compared to other avenues of capturing that much attention.
A large portion of the esports audience also falls into the coveted 18-35 year old demographic, and the younger viewers will be in that group soon enough. It’s a long-term play to capture the attention of a target demographic in a rapidly-growing industry that’s centered around fun and entertainment, what’s not to like?
For athletes from traditional sports, and owners from traditional sports leagues, it gives them an opportunity to get into a much less saturated market where their skill-sets and experience are still related.
Also, teams and athletes who already have millions of fans have a huge head start when it comes to promoting their esports organizations. There are many layers as to why esports is such a popular thing to invest in, and it all comes back to how eSports teams make money.
How Much Money is in Esports – How Much Does it Make?
It’s difficult to say exactly how much money is earned each year in esports. Nonetheless, let’s go over some figures…
- Global esports revenues for 2019 will be around $1.1 billion dollars, which is an increase of 27% from the previous year and continues a trend of rapid growth from previous years. (source)
- Esports viewership around the world will hit just below a half-billion viewers in 2019. (source)
- All of the top 10 highest paid esports athletes come from Dota 2, and only a handful of the top 100 aren’t from Dota 2. (source)
How Does Esports Make Money as a Whole?
A lot of the money that’s earned isn’t only going to the teams or organizations. The owners of the venues make money from ticket sales, and the game publishers and leagues can make money in franchising fees and broadcasting deals. There are plenty of content creators and media outlets that make money by covering esports. It goes far beyond just the players, teams, and the leagues.
Final Thoughts – Making Money as an Esports Org
To sum it all up, esports orgs make money by trading in the commodity of attention. The most common way they do this is by “selling” that attention to advertisers, and convincing investors that the attention will continue to grow, ultimately making it even more valuable to advertisers.
Generally speaking, that’s how esports teams make money right now. How does esports make money moving forward, though? Is the advertiser/sponsorship model sustainable? Will smaller orgs still be able to grow, or are those days over? Time will tell, but for now, all we can do is make predictions and keep an eye on where things are going.
Traditional sports teams earn money from ticket sales, merch, food and beverage, sponsors, selling broadcast rights, and more. All of this applies to esports, it’s just a matter of who will end up getting that money once the dust settles and the industry matures.