How Do Esports Teams Make Money?
Ever wonder how esports teams make money? It’s not winning that keeps teams afloat. Esports teams can sometimes struggle to stay profitable, and unfortunately, due to Covid, it was very difficult. However, many teams are still thriving, and the major esports teams did not have as many worries. For those looking to breakthrough in Esports, here’s how esports teams make money.
There is no doubt that over the last five years, Esports has blossomed into a worldwide phenomenon. Thanks to streaming, competition and community, it has created so many new opportunities for people. So what avenues are teams exploring to keep themselves financially positive.
Turning a profit in the business of esports
Revenue and profit reports from some of the most popular esports companies are not usually public for people to view. They hide them due to the lack of understanding behind the financial part of esports. Aside from the top brands, most esports teams tend to lose money instead of profit initially.
To thrive in the business of esports, you have to be patient and consistently build. Esports teams generate money from tournament prize money, streaming/content creation, merchandise, and sponsorships.
The simplest way to make money in Esports is to win tournaments. Unfortunately, this is not a consistent way to make money since you will not always be the team winning the largest prize pool. Tournament funds are at best sustainable at the amateur or semi-professional level, as passion fuel to fully commit to pursuing a career. Long term, unless the team wins The International every year, or something equally crazy, tournament winnings alone cant sustain the team.
Furthermore, tournament winnings rely on the performance of quality players, and it is hard to find players who are not willing to join the more infamous teams. If you are looking to start an Esports team it is important to understand that you realize that winning tournaments is not realistic because some of the best in the world will be playing on the major teams. Even winning the biggest esports tournaments will not be enough to keep an organization sustainable long term.
Sponsorships and Partnerships
Thanks to the growing viewership of Esports, you do not have to rely solely on tournament prize pools to make money for the team. In the esports industry, sponsorships make up the majority of revenue for teams. Brands realize the influence of esports, so they are willing to put their faith into esports teams to market their company to an audience.
Electronics companies and hardware are some of the biggest partners in Esports however, supplement companies like G Fuel have sponsored so many different personalities in esports. Analytics company Newzoo predicts esports revenue streams in 2021 and showed sponsorships making up over half of the revenue. In 2020, out of $950.3 million in the 2020 data gathered, $584.1 million came from sponsors. For 2021, they estimate this number to go up to $641.0 million.
Streaming and Content
Esports teams do not solely invest their money into competitive players. They also look to sign popular streamers to add star power to their team. It may not directly profit the team to sign a streamer, but the potential audience of the stream is what teams should look out for. Popular streamers have a consistent audience, so it makes it easier for sponsorships to take place since there is a consistent audience to market to.
Product placement during partner streams is the end goal, with streamers serving as brand ambassadors for both the esports team and it’s sponsors.
Finally, Merchandise will always bring in revenue if you are a popular esports team. Organizations like FaZe Clan and Cloud9 are household names in the industry, so their ability to sell merchandise is easy because they have a loyal fanbase. It is important to realize that audiences love to feel a part of the team, and merchandise is easy to make that happen. When trying to make money in this industry it is important not to limit your resources.
As team revenue streams increase, the opportunity for a long-term career in esports has become a reality. You can now find plenty of different attack vectors to find success in this sector.