Do Esports Organizations Make Money?

Do esports organizations make money? The simple answer is yes, but there are a lot of factors that go into how much they make. In this blog post, we’ll break down some of the ways that esports organizations generate revenue and how that money is used to support their operations.

What are esports?

Esports are organized video game competitions, typically between professional players. Esports often take the form of organized, multiplayer video game competitions, particularly between professional players. These events are typically sponsored by tech companies or game publishers, and can be held in physical locations or online.

The Different Types of Esports Organizations

There are four different types of esports organizations, each with their own way of making money. The first type is the professional organization, which is composed of teams that are signed to contracts and receive a salary from the organization. These organizations also make money from sponsorships, prize money, and merchandise sales. The second type is the semi-professional organization, which is made up of teams that are not signed to contracts but still receive some form of compensation, such as winnings from tournaments or stipends. These organizations also generate revenue from sponsorships and merchandise sales. The third type is the amateur organization, which consists of teams that do not receive any form of compensation and rely solely on tournament winnings. Lastly, there are community organizations, which are run by fans and do not have any professional teams signed to them. These organizations typically generate revenue through donations and advertisements.

Esports Teams

Though the industry is still in its early developmental stages, there are a number of ways that esports organizations make money. The most common method is through sponsorship deals with brands, who provide financial support in exchange for having their name or product associated with the team. Other forms of revenue include advertising, merchandise sales, and ticket sales from live events. Some teams also generate income by producing content for YouTube and Twitch, or through streaming partnerships.

Esports Leagues

While there are many types of esports, most can be grouped into one of three categories: multiplayer online battle arena (MOBA), first-person shooter (FPS), or real-time strategy (RTS). There are also hybrid games, such as fighting games that incorporate elements of both MOBAs and FPSs. The most popular esport in the world is League of Legends, a MOBA developed by Riot Games. Overwatch, an FPS developed by Blizzard Entertainment, is also quite popular. Esports are commonly played in tournaments, which can be organized by organizations such as game developers or members of the community.

Organizations that field esports teams typically generate revenue through a combination of sponsorships, advertising, merchandise sales, and ticket sales. Some organizations also generate revenue through live streaming platforms like Twitch or YouTube Gaming. Sponsorships are typically agreements between an organization and a company in which the company provides financial support to the organization in exchange for promotion. For example, a company might sponsor an organization’s League of Legends team in exchange for having its logo displayed on the team’s jerseys.

Organizations typically use the revenue generated from sponsorships and advertising to cover the costs of operating their teams, including player salaries and tournament travel expenses. Any leftover revenue is typically reinvested back into the organization or used to support other activities related to esports, such as talent development or content creation.

Esports Tournaments

The answer to this question is a bit complicated. While there are some esports organizations that make a lot of money, there are also many that do not. This is because there are a variety of ways that esports organizations can make money, and not all of them are equally profitable.

Some of the most common ways for esports organizations to make money include tournament winnings, sponsorships, merchandise sales, and streaming contracts. Of these, tournament winnings are often the most significant source of revenue. This is because many tournaments offer large cash prizes to the winning teams, which can amount to hundreds of thousands or even millions of dollars. Sponsorships and streaming contracts can also be quite lucrative, but they typically pale in comparison to tournament winnings. Merchandise sales can be a significant source of revenue for some organizations as well, but it is generally not as profitable as the other options mentioned above.

How Do Esports Organizations Make Money?

Organizations popularly known as esports teams or simply esports organizations are groups of professional gamers who compete in various video game tournaments. These players are signed by the organization, similar to how traditional athletes are signed by professional sports teams.

So how do these organizations make money? Much like traditional sports teams, esports teams generate revenue through a combination of sponsorships, advertising, merchandise sales, and ticket sales from events they host or attend. Let’s take a more detailed look at each of these revenue streams.

Sponsorships
Esports teams have a few different sponsorship options available to them. First, they can sign deals with gaming companies to use their products (i.e. mice, keyboards, headsets, etc.). Second, they can sign deals with other businesses who want to reach the gaming demographic (i.e. energy drinks, snack foods, apparel companies). And finally, they can sign deals with companies who want to advertise on their website or social media channels. These sponsorship deals typically provide the bulk of an esports organization’s revenue.

Advertising
In addition to sponsorships, esports teams also generate revenue through advertising on their website and social media channels. They can sell banner ads directly to businesses or work with an advertising network like Google Adsense to sell ads programmatically. Banner ads and social media posts typically generate a much smaller amount of revenue than sponsorships but can still be significant for some organizations.

Merchandise Sales
Much like traditional sports teams, esports organizations sell branded merchandise to their fans. This merchandise includes things like t-shirts, hats, hoodies, and even coffee mugs emblazoned with team logos and colors. Fans of these teams are typically willing to pay a premium for this merchandise as it allows them to show their support for their favorite team in a more tangible way.

Ticket Sales
Another way that esports organizations make money is through ticket sales for events they host or attend. These events can range from small local tournaments to massive international competitions with hundreds of thousands of dollars on the line. Fans love attending these events to support their favorite players and teams in person and are willing to pay for the privilege of doing so. Ticket sales typically only make up a small percentage of an esports organization’s overall revenue but can be crucial for some team’s success.

Sponsorships

An important way that Esports organizations make money is through sponsorships. Many well-known companies are willing to sponsor Esports teams because they see the potential in this growing industry. By sponsoring an Esports team, a company can get its name out there to a large audience of potential customers. Some of the biggest sponsors in the Esports world include Logitech, Coca-Cola, and Red Bull.

Advertising

Yes, esports organizations can make money through advertising and sponsorships. However, it is important to note that not all organizations are equally successful in this regard. Some smaller organizations may struggle to find sponsors, while larger organizations may command higher prices for sponsorships and be more successful in finding advertising partners.

Media Rights

Organizations in traditional sports such as baseball, basketball, and football typically generate revenue from three main sources: media rights, sponsorships, and ticketing. Media rights are the fees charged to broadcast partners in exchange for the right to televise games. In recent years, these fees have exploded as the popularity of live sports has increased. The NFL, for example, generated $4.9 billion in media rights revenue in 2014, while the NBA generated $2.6 billion during the same period1.

Media rights are also a significant source of revenue for esports organizations, but the industry is still in its early stages and things are changing rapidly. One of the most notable developments occurred in early 2016 when Riot Games, developer of League of Legends, announced that it would be selling exclusive media rights to its North American LCS (League Championship Series) to BAMTech LLC for $300 million2 over the next several years. This was a watershed moment for esports because it represented the first time that a major developer had sold exclusive media rights to an esports property. The deal with BAMTech was followed by a number of other major media rights deals including a reported $200 million deal between Twitch and Blizzard for the exclusive live streaming rights to Overwatch League3 and a $90 million deal between Turner Broadcasting and WME/IMG for ELEAGUE4. These deals have helped propel esports into the mainstream media landscape and they will continue to generate significant revenue for organizations over the next several years as more traditional broadcasters enter the space.

Merchandise

In order to make revenue, each organization has different sources. Some of these sources are merchandise, sponsorships, and tournaments. For example, FaZe Clan is an American professional esports organization that competes in various video games. They have partnerships with Coca-Cola, Olympus, G2A.com, GFuel and more. In terms of tournaments and prize winnings, they have earned around $3,600,000 dollars. Finally, they also sell their own merchandise on their website which people can purchase. So in conclusion to the question, do esports organizations make money? The answer is yes they do through multiple sources!

Tickets and Venue Sales

Organizations make the majority of their profits from ticket and venue sales. The tickets for live events are normally not too expensive, with the most expensive events having tickets that cost around $100. The average price for a ticket to an eSports event is $50. For venues, they will generally make more money off of concessions and other items that are sold at the event than they will off of renting out their space.

The Future of Esports Organizations

It is safe to say that the esports industry is here to stay. With the continuous growth of viewership and the increasing number of tournaments, there is no doubt that this industry will only get bigger in the years to come. But with this growth, comes the question of whether or not esports organizations will be able to sustain themselves financially.

The current model for most esports organizations is based on two things: sponsorship deals and a percentage of tournament winnings. And while this model has worked so far, it is not without its flaws. For one, sponsorships can be very unstable, with organizations often having to scramble to find new sponsors when their old ones pull out. Moreover, a large chunk of an organization’s budget usually goes into player salaries, which can eat into profits if the team does not perform well.

In order for esports organizations to truly thrive in the long run, they will need to explore new ways of generating revenue. One possibility is through merchandising, wherein organizations sell branded apparel and other products to their fans. Another is through content creation, with some organizations producing shows or podcasts that offer insights into the competitive scene.

Whatever direction they decide to take, it is clear that esports organizations will need to start thinking outside the box if they want to stay afloat in the years to come.

Continued Growth

The global esports market is still in its infancy, but it is already a billion-dollar industry and is projected to continue to grow rapidly in the coming years. A big part of this growth will be the continued development of esports organizations, which are currently responsible for Bankrolling professional gamers and running tournaments. But do these organizations actually make money?

The answer is yes, esports organizations do generate revenue, but they are not yet profitable on a large scale. The majority of revenue currently comes from sponsorships and advertising deals, with organizations also making money from player salaries, tournament fees, and merchandise sales. However, expenses such as player salaries and tournament fees often exceed revenue, meaning that most organizations are not yet generating a profit.

There are a few exceptions to this rule, however. The largest and most successful esports organizations, such as Cloud9 and Team Liquid, generate enough revenue to cover their expenses and then some. These organizations have built up a large fan base and are able to command high sponsorship fees and prize pools. As the industry continues to grow, it is likely that more esports organizations will become profitable.

Increased Revenue

Revenue for the esports industry is expected to reach $1.1 billion by the end of 2019, according to a report from research firm Newzoo. This figure does not include revenue from game publishers, which would bring the total to $1.8 billion.

This increased revenue is due to a number of factors, including the rise in popularity of esports, the introduction of new sponsorships and investment opportunities, and the increased prize pools for tournaments.

The increase in prize money has been a major factor in attracting new players and teams to the esports scene. The total prize pool for all esports tournaments was $865 million in 2018, up from $341 million in 2017. This figure is expected to reach $1.65 billion by 2020.

Investment opportunities have also been a major factor in the increased revenue for esports organizations. In 2018, US-based venture capital firms invested $655 million into Esports-related startups. And in 2019, investment into esports startups has already reached $1.1 billion.