Have you ever wondered how esports teams make money? It isn’t victory that keeps teams afloat. Esports teams can struggle to stay profitable at times, and unfortunately, due to Covid, it was extremely difficult. Many teams, however, are still thriving, and the major esports teams were not as concerned. Here’s how esports teams make money for those looking to break into the industry. There is no doubt that Esports has grown into a global phenomenon in the last five years. Many new opportunities have arisen as a result of streaming, competition, and community. So, what options are teams considering staying financially afloat?
Turning A Profit in the Business of Esports
Revenue and profit reports from some of the most popular esports companies are rarely made public. They conceal them due to a lack of understanding of the financial aspects of esports. Aside from the top brands, most esports teams initially lose money rather than profit. To thrive in the esports industry, you must be patient and consistently build. Tournament prize money, streaming/content creation, merchandise, and sponsorships all generate revenue for esports teams.
Tournament Winnings
Winning tournaments is the simplest way to make money in Esports. Unfortunately, because you will not always be the team with the largest prize pool, this is not a consistent way to make money. Tournament funds are only sustainable at the amateur or semi-professional levels, where passion fuels the commitment to pursue a career. Long term, unless the team wins The International every year, or something equally insane, tournament winnings will not be enough to keep the team going.
Additionally, the performance of quality players is what determines tournament success, and it is difficult to find players who are unwilling to join the more infamous teams. It is crucial to realise that winning tournaments is not realistic if you want to start an Esports team because some of the best players in the world will be playing for the top teams. Even winning the biggest esports competitions won’t be enough to keep a business viable in the long run.
Partnerships and Sponsorship
Because of the growing popularity of Esports, you don’t have to rely solely on tournament prize pools to generate revenue for the team. Sponsorships account for the vast majority of revenue in the esports industry. Brands recognise the power of esports and are willing to put their trust in esports teams to market their products to an audience.
Electronics and hardware companies are some of the biggest partners in Esports. Supplement companies like G Fuel have sponsored so many different personalities in esports. The analytics firm Newzoo forecasts eSports revenue streams in 2021, with sponsorships accounting for more than half of the revenue. In 2020, $584.1 million of the $950.3 million in data collected came from sponsors. This figure is expected to rise to $641.0 million by 2021.
Streaming and Content
Esports organisations do not only invest in competitive players. They are also looking to add star power to their team by signing popular streamers. Signing a streamer may not directly benefit the team, but the potential audience of the stream is what teams should look for. Popular streamers have a consistent audience, which makes sponsorships easier to arrange because there is a consistent audience to market to. The ultimate goal is product placement during partner streams, with streamers acting as brand ambassadors for both the esports team and its sponsors.
Merchandising
Finally, if you have a popular esports team, merchandise will always bring in revenue. Organizations like FaZe Clan and Cloud9 are well-known in the industry, so selling merchandise is simple because they have a large fan base. It is critical to understand that audiences want to feel like they are a part of the team, and merchandise makes that possible. It is critical not to limit your resources when attempting to make money in this industry.
As team revenue streams grow, the possibility of a long-term career in esports has emerged. There are now numerous attack vectors available to help you succeed in this industry.
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