A look at the different ways that esports companies make money, from sponsorship to advertising and beyond.
The Business of Esports
The esports industry is booming, and companies are raking in the cash. But how do they do it? How do esports companies make money? Read on to find out.
The global esports market
The global esports market was valued at $696 million in 2017 and is projected to grow to $1.5 billion by 2020, according to a report by Newzoo, a games and esports analytics company.
There are a number of ways that companies in the esports industry make money. The most direct way is through player salaries and prize money. Games companies also make money from the sale of virtual goods, such as in-game items and characters, as well as advertising and sponsorships.
Players in professional esports teams can earn a good wage, with the top players earning millions of dollars per year. Prize money is another source of income for professional players, with tournaments offering large cash prizes.
Games companies also make money from the sale of virtual goods, such as in-game items and characters. In some games, such as League of Legends, players can purchase “skins” for their characters which change their appearance. These skins can be purchased using real-world currency, and the proceeds go to the games company.
Advertising and sponsorships are another source of revenue for companies in the esports industry. Brands will often sponsor teams or events in order to reach the esports audience, which is typically young and male-dominated.
The most valuable esports companies
While the business models for non-endemic companies in esports vary, for the most part, they leverage their core business and expertise to enter the esports space. For endemic companies, on the other hand, their business model is almost exclusively based on esports. This is because endemic companies are themselves a part of the esports ecosystem and have a deep understanding of the scene. As a result, they are able to effectively monetize their products and services within this ecosystem.
The most valuable esports companies are those that have a diversified portfolio of products and services that they can offer to both gamers and non-gamers alike. These companies have a strong understanding of the esports industry and have been able to create successful business models that capitalize on this understanding.
The following are some of the most valuable esports companies in the world:
1) Eskilson Esports: Eskilson Esports is a leading provider of gaming equipment and services. The company has a wide range of products that includes gaming keyboards, mice, headsets, controllers, and other accessories. In addition to this, Eskilson Esports also offers coaching services, event management services, and content creation services.
2) G2A: G2A is an online platform that provides digital goods and services. G2A’s core product is its online marketplace which allows gamers to buy and sell digital goods such as game keys, in-game items, and virtual currencies. G2A also offers a wide range of other products and services such as game streaming, content creation, marketing, and payment processing solutions.
3) Twitch: Twitch is a live streaming platform that was acquired by Amazon in 2014 for $970 million. Twitch allows gamers to stream their gameplay live for others to watch. In addition to this, Twitch also offers a range of other features such as chatrooms, podcasts, vlogs, and Esports events.
4) MLG: MLG is a professional gaming league that was founded in 2002. MLG operates tournaments and leagues across a wide range of games such as Call of Duty, Halo 5: Guardians, Gears of War 4 Pro Circuit,, Overwatch APEX League,, Hearthstone Championship Tour,, CrossFire Stars,, Vainglory 8,, etc. In addition to this, MLG also runs its own online platform which allows gamers to watch live streams of tournaments and events.
5) ESL: ESL is the world’s largest independent eSports company. ESL operates tournaments across games such as Counter-Strike: Global Offensive (CS:GO), Dota 2,, League of Legends (LoL), StarCraft II (SC2), Overwatch,, etc.. In addition to this ESL also offers online platforms where gamers can watch live streams of tournaments and matches., ESL also has its own TV production studio which creates original programming related to eSports.,
The revenue streams of esports companies
The global esports market generated revenue of $655 million in 2017, a year-over-year growth of 41.3%. This figure is expected to reach $1.4 billion by 2020. The majority of revenues come from three sources: media rights, advertising, and sponsorship.
Media rights are the fees paid by broadcasters to platforms in order to show live esports content. This revenue stream accounted for 38% of the total market in 2017 and is expected to grow to 49% by 2020. The two biggest broadcasters of esports content are Twitch and YouTube, which generated $104 million and $52 million in revenues respectively in 2017.
Advertising is the second largest revenue stream for esports companies, accounting for 32% of the total market in 2017. This figure is expected to grow to 36% by 2020 as more brands look to reach the young, male demographic that makes up the majority of esports fans. The most popular form of advertising in esports is through sponsorships, which accounted for $266 million in revenues in 2017.
The final revenue stream for esports companies is merchandise and tickets, which generated $27 million in 2017. This figure is expected to grow to $32 million by 2020 as more fans attend live events and buy merchandise from their favorite teams and players.
How Do Esports Companies Make Money?
Esports companies make money in a number of ways. The most common way is through sponsorships and advertising. Esports companies will also make money by selling team merchandise and through ticket sales for events.
Advertising and sponsorships
Esports companies make money through a variety of means, but the most common are advertising and sponsorships. Advertising is typically done through exclusive deals with companies that want to reach the esports audience. These deals can be worth millions of dollars, and they help to offset the cost of putting on events and running leagues.
Sponsorships are another big source of revenue for esports companies. Often, these deals are worth even more than advertising deals. Sponsorships can come from a variety of sources, including game publishers, hardware manufacturers, and even non-endemic brands that see the value in reaching the esports audience.
Media rights and broadcasting
In recent years, with the mushrooming growth of online streaming services like Twitch and YouTube, esports has gone from something you might catch on ESPN2 on a Saturday afternoon to must-see programming watched by millions of people around the world. This growth has presented a huge opportunity for companies to generate revenue by selling broadcasting rights to these events. In 2018, media rights deals generated $280 million in revenue for esports companies and that number is expected to more than double by 2020.
Merchandise and ticket sales
Merchandise and ticket sales are the most common ways that esports companies make money. Many esports companies have their own line of merchandise, ranging from T-shirts to mouse pads, that they sell to fans. In addition, many large esports tournaments sell tickets to spectators who want to watch the competition in person.
Another way that esports companies make money is through sponsorships. Much like traditional sports teams, esports teams often have sponsorships with companies that want to advertise to their fans. These sponsorships can take many forms, but they often involve the company paying the team to display its logo on their uniforms or equipment.
Gaming hardware and software sales
In order to generate revenue, esports companies typically rely on a combination of gaming hardware and software sales, sponsorship deals, advertising, and merchandise sales.
1. Gaming hardware and software sales: Many esports organizations have their own branded line of gaming hardware and software that they sell to fans. For example, 100 Thieves has its own line of apparel, accessories, and even energy drinks.
2. Sponsorship deals: Esports companies often sign sponsorship deals with big brands that want to reach the gamers demographic. These deals can be worth millions of dollars. For example, in 2019 Cloud9 announced a $50 million deal with one of the world’s biggest carmakers, BMW.
3. Advertising: Esports companies generate revenue by selling advertising space on their website and streaming platforms like Twitch. For example, League of Legends (LoL) World Championship Finals had nearly 90 million views in 2019, making it one of the most-watched sporting events in the world. This massive audience attracts brands that are willing to pay top dollar for ad space during the event.
4. Merchandise sales: Many esports organizations have their own line of branded merchandise that they sell to fans. This can include t-shirts, hats, hoodies, and even action figures.