How Do Esports Leagues Make Money?

Wondering how do esports leagues make money? We break down the different ways in which esports leagues generate revenue to help you understand.

Introduction

Esports leagues are professional competitive gaming leagues. Much like traditional sports leagues, esports leagues typically feature multiple teams that compete against each other in a variety of tournaments and matches. Some of the most popular esports games include League of Legends, Counter-Strike: Global Offensive, and Dota 2.

While many people assume that esports leagues do not make any money, the reality is that these leagues can be quite profitable. The vast majority of revenue for esports leagues comes from three main sources: sponsorships, advertising, and prize money.

Sponsorships are perhaps the most important revenue stream for esports leagues. Big brands are eager to sponsor teams and events in order to reach the league’s large and engaged fanbase. For example, Coca-Cola is a major sponsor of the Overwatch League, one of the most popular esports leagues in the world.

Advertising is another significant revenue source for esports leagues. In addition to selling sponsorships, many leagues also sell ad time during their events. This ad time can be sold to brands or used by the league itself to promote its own products and services. For instance, Twitch, one of the world’s largest live streaming platforms, frequently runs ads during esports broadcasts.

Finally, prize money is also a major source of revenue for esports leagues. Many competitions offer large cash prizes to the winning teams, which provides an incentive for players to participate and helps to generate excitement around the league. In some cases, such as with Valve’s Dota 2 tournament The International, fans can even contribute directly to the prize pool through crowdfunding.

The Business Model of Esports Leagues

Much like traditional sports leagues, esports leagues make money through a combination of things like sponsorships, advertising, media rights, and ticket sales. In this post, we’ll go into more detail about each of these revenue streams and how they work.

Sponsorships

Most esports leagues make the majority of their revenue from sponsorships. Brands are eager to align themselves with the growing esports industry, and see sponsoring a league or team as a way to reach the valuable millennial and Gen Z demographic.

There are different types of sponsorships, but most involve some form of branding or advertising being displayed during league broadcasts. This could be anything from simply having a logo on a team’s jersey, to having a dedicated advert break during matches. Some brands also choose to sponsor specific events or tournaments within a league.

Esports leagues will also sell advertising rights to their websites and digital platforms. This allows brands to reach League of Legends and Overwatch fans even when they’re not watching matches, and helps generate additional revenue for the league.

Media Rights

Media rights are one of the primary ways that esports leagues generate revenue. Traditional sports leagues make the majority of their money from selling media rights to broadcasting networks, and esports leagues follow a similar model. By selling the exclusive rights to broadcast their events to streaming platforms, esports leagues can generate a large amount of revenue.

Exact numbers are difficult to come by, but it is estimated that media rights deals make up around 60-70% of the total revenue for major esports leagues. In 2018, it was reported that Riot Games generated $380 million in revenue from media rights deals for the League of Legends Championship Series (LCS). In 2019, it was estimated that Blizzard Entertainment generated $50 million from media rights deals for the Overwatch League (OWL).

Other revenue sources for esports leagues include sponsorship deals, ticket sales, and merchandise sales. However, these sources pale in comparison to the amount of money generated from media rights deals.

Merchandise and Tickets

Esports leagues make money in a few different ways, but the biggest is through merchandise and tickets. Fans of esports teams are very passionate and will buy anything with their team’s logo on it, from t-shirts to hats to mousepads. Leagues also make a lot of money from ticket sales to their events. These events can be huge, with tens of thousands of people in attendance, and ticket prices can be quite high.

The Future of Esports Leagues

Esports leagues are run much like traditional sports leagues, with teams, players, fans, and sponsors, but there are a few key differences. For one, esports leagues don’t have the same revenue streams as traditional sports leagues. So how do they make money? In this article, we’ll explore the different ways that esports leagues make money and what the future of esports leagues looks like.

Increasing Popularity

The popularity of esports has been on the rise in recent years, with more people playing and watching competitive video gaming than ever before. This has led to the formation of several professional esports leagues, which are organizations that host competitions between gamers. These leagues are similar to traditional sports leagues in many ways, but they also have some key differences.

One of the biggest ways that esports leagues differ from traditional sports leagues is in their structure. Most traditional sports leagues, such as the National Basketball Association (NBA) or Major League Baseball (MLB), are organized as cartels. This means that there is only one league for each sport, and all of the teams in that league compete against each other. In contrast, esports leagues are organized as a series of independent tournaments.

This means that there are multiple esports leagues for each game, and each league has its own teams and players. This structure allows for more flexibility and opportunity for gamers, but it also creates some challenges for the leagues themselves. One of these challenges is figuring out how to make money.

Most traditional sports leagues generate revenue through a combination of ticket sales, television rights, and sponsorships. Esports leagues have similar revenue streams, but they also face some unique challenges when it comes to generating income. For example, ticket sales make up a much smaller portion of revenue for esports than they do for traditional sports. This is because most esports tournaments are held online, which eliminates the need for physical tickets.

Television rights are also difficult to sell for esports tournaments because there are few televised events and most viewers watch online instead. As a result, sponsorships are currently the primary source of revenue for most esports leagues. however, this revenue model is not without its problems. Many brands are hesitant to sponsor esports tournaments because they perceive the audience to be young and male-dominated.

Despite these challenges, the future of esports looks bright. The popularity of competitive gaming is only increasing, which means that more people will be looking for ways to watch their favorite players and teams compete. This will create new opportunities for both existing and new esports leagues to generate revenue and grow their audiences.

New Business Models

The traditional model of selling tickets and advertising to generate revenue is not well suited for esports. The majority of fans watch esports online, making it difficult to sell tickets to live events. And because esports is still a relatively niche interest, advertisers are not yet willing to pay top dollar for exposure to the esports audience.

This has led some leagues to experiment with new business models. The most common one so far has been selling sponsorships for in-game items, such as virtual weapons and clothing. This allows leagues to generate revenue without interrupting the viewing experience for fans.

Other revenue streams include charging fees for spectators to watch matches online, and selling broadcasting rights to streaming services like Twitch and YouTube Gaming. So far, these new revenue streams have not generated enough money to sustain most leagues on their own. But as the esports industry continues to grow, it is likely that leagues will find more creative ways to make money.