eSports, no doubt, is something that has hit mainstream within the past few years. Particularly so, within the ongoing pandemic, more gamers have resorted to levelling it up when gaming is concerned. However, it is not just the gamers that are more interested, even investors see great potential in putting money within the business, making it flourish now, greater than ever before. Of course, gamers from the outside, and general fans of eSports will come to question how eSport teams make money, especially with how much has changed within the industry in such a short space of time.
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What are the numbers behind eSports?
eSport has been mentioned by many media platforms as of late such as Forbes, with estimations that the revenues keep on escalating by larger amounts than any other industry within gaming and tech. Currently, eSports gaming revenue is increasing at an average rate of 9% per year. This year especially, is estimated to show the highest increase yet, with $190 billion in total revenue to close the fourth quarter of 2022. Just for reference and comparison, the year 2020 had a total revenue of 856 million, making the gaming industry grow at an exceedingly fast pace.
How does eSports make money?
eSports makes money by different revenue channels within the industry. While some are hugely effective, some will depend on the level of fame and existing exposure the teams have within the media. It is worth noting that the longer an eSports team spends within the eSport industry, the more likely it is that they will have earned more or have more earning opportunities all together.
Sponsorships
The first most imperative way of earning in eSports, is sourced through sponsorships. eSports teams will use sponsorships as a way of amplifying their total net value. Often certain teams will select sponsorships based on their harmony with the public brand that they are trying to endorse. However, not all eSports teams will have the liberty of being picky in their selections. If the eSport team is making waves within the media, and making themselves known across tournaments, they will most likely have the best brand sponsorships, as they will have attracted the most airtime across media platforms. To date, there have been a total of $465.7 million worth of sponsorships spent on eSport teams in the spotlight. Sponsors responsible include, Huya, NetEase, AfreecaTV and so on.
For example, Samsung had partnered with many of the biggest Fortnite teams on the platform, just prior to the release of the Samsung Galaxy mobile device. This was proven to be a large success as a campaign, as of course, it spurred many localised gamers within Fortnite to go ahead and purchase a Galaxy for themselves, especially since the device was perfect to play Fortnite on anyway.
Advertising
Like a sponsorship, brands will pay media outlets during eSport tournaments, to air their brands during vital game times and breaks. While this may be less effective than direct sponsorship deals with eSport teams, it still has hit large numbers and is believed to be responsible for 39% of total eSports revenue within the past few years.
Merchandise
Merchandise sold by eSport teams is probably the most clever and unique way for eSport teams to reel in profits for themselves, without having to rely on a third party to come to them and offer a partnership deal. 100 Thieves, an eSport team who have managed to raise $35 million in merch profits, managed to really earn a great amount of money, despite not coming out on the top as winners within tournaments. Their merchandise was really focused on their strengths and marketed very well through the power of social media.
Winning tournaments
Finally, if eSports teams are lucky enough to get to the end of a LoL tournament for example, and come out as the winner, they can earn a very healthy prize sum to take away. The Dota 2 tournament in 2021, saw the biggest prize fund ever recorded. A total of $40 million dollars was one by the lucky team winners, which consisted of over 90 players. Of course, out of the total 18 teams, there is only one winner. So, you must win, or walk away with hardly anything!
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