Welcome to the third part of this blog series where we intend to cover all aspects of an Esports event and how it shapes out to be an ideal competition for gamers to shape their identity.
So far, we’ve thoroughly discussed the biggest tournaments, tournament games, the financial and social outlook of such events, and the attractive prize pool attached to them.
This blog will now focus on how these Esport events make money in the first place. We’ll analyze all aspects of these events financially and understand how impacting these competitions can be.
We’ll lastly cover what the future holds for Esport events and how gamers can be highly hopeful of the prosperity ahead.
To start off with, there's no standard or fixed revenue for all sorts of Esport events. If we keep things like advertising money, merchanting, and sponsorships constant, there are still various variables like the number of teams participating, organizations attached with it, and what sort of game is being played.
The Esports industry's present level of productivity and prosperity is a result of the contributions made by each enterprise active in the sport. In general, sponsorships, advertising, ticket sales, merchandising, and media rights are how Esports organizations and franchises make their money.
Before we move on to this intriguing journey, find Parts 1 and 2 of this blog series down below in case you missed it.
Sponsorships and Advertisements
Teams like Team Liquid and Cloud9 receive a lot of funding from different businesses. These major corporations raise awareness of both the organization and the Esports scene as a whole. Each organization enters into agreements with sponsors in order to finance their teams' relevant expenses, such as gaming gear and uniforms. In recent years, the jerseys of Team Liquid have included logos from companies like Monster Energy and Honda, while the jerseys of Cloud9 have had logos from companies like Red Bull, BMW, AT&T, and even Microsoft. Similar to how professional soccer clubs do it, this idea basically leverages the team's jerseys as an easy way to advertise for its sponsors.
Streamers on these teams have their own discount codes for sponsored goods as well as other opportunities to promote goods and services. Individual players may also have sponsors in addition to the ones that each team has. In their films, the streamer will highlight the item and encourage viewers to utilize a coupon code to save money. A portion of the sale will go to the streamer, and the business will gain a new client as a result of the deal. Organizations involved in Esports, however, do not profit from the streams of specific players. However, the group does collect funding from sponsors through both on-site and streaming commercials when the squad is participating in a tournament. When competitions are taking place, the majority of viewers are online, and that is where sponsors prosper. Sponsors took home around $456 million of the $1.1 billion that was made in the Esports industry in 2019, proving that they are getting a good return on their investment.
Organizations profit from ticket sales just like in any other sport. Live events and competitions often draw between 10,000 and 15,000 spectators, with the bulk tuning in online. However, attendance figures can be absurdly high depending on the event. There were an estimated 80,000 spectators in the 2017 League of Legends World Championship in Beijing, and an additional 90,000,000 watched online
Also in 2017, Seattle hosted the International Dota 2 Championship, which attracted over 52,000 spectators in person and an additional million online. These competitions take place at neutral sites because Esports teams lack their own stadiums. Teams and the organizers must therefore split the ticket sales. It's possible that owners will start building their own stadiums as a result of the location-based clubs in the Overwatch and Call of Duty tournaments.
Esports groups also make money by selling merchandise, which is again very similar to how traditional sports do. Fans can purchase a variety of clothing items and other accessories on the website of their preferred team. FaZe Clan is one of the most well-known teams on the Esports scene. The organization's clothing, which ranges from hoodies to jerseys to slides to even a FaZe mousepad, is one of the first things you encounter on the website. The organisations Cloud9 and Team Liquid, which have store tabs on their websites, are in agreement.
The use of items within a real-world game is one way that Esports marketing differs from that of traditional sports. Fans can express their support for their preferred teams by purchasing in-game skins. Your in-game character's appearance is referred to as a "skin," and some games have included skins that can be purchased to make them resemble members of elite Esports teams. Activision-2017 Blizzard's income, which totalled roughly $4 billion, was actually more than half the result of in-game purchases.
Players can buy character and weapon skins in games like Overwatch, League of Legends, Halo 5, Gears of War 4, and Call of Duty: Modern Warfare. Fans can buy packs to support any of the Call of Duty league teams in Modern Warfare, dressing their character and gun to match the team's colour scheme. In-game purchases offer a new source of income for game producers as well as Esports teams since they share in the profits from each sale. Additionally, fans can utilize a streamer's content creator code to save money when buying in-game skins if they wish to support that particular streamer. Through this technique, a little portion of the sale will also go to that particular streamer.
While some people buy tickets to see Esports matches live, the bulk of viewers watches the competitions online. To make money, it's critical to own the broadcasting or streaming rights to the major Esports competitions. Then, in order to reach cable or internet audiences, Esports groups must negotiate agreements with broadcasting networks or streaming services. The League of Legends League is one of the biggest leagues that has attracted network deals since it is so large and well-known.
To get their events televised, the majority of organizations must enter into agreements with online streaming platforms. The Amazon-owned Twitch is the most often used streaming service for these agreements. Over seven million streamers were active on the website in September 2020, and fans watched more than 1.5 million hours of programming. Twitch continues to draw more and more people every day as evidenced by the statistics for both hours watched and hours streamed each month nearly doubling between 2019 and 2020. In addition to the previously mentioned sponsors and marketers, the media rights to an Esports organization's event also include valuable real estate. Thus, a portion of the revenue generated by online watching goes to the streaming or broadcasting service, the advertisers, and the Esports organisations.
Something not previously mentioned is the money organizations and teams win when competing in tournaments. That 2017 League of Legends World Championship that had 80 thousand people in attendance also had a $4.5 million dollar prize pool. However, this form of revenue is not guaranteed and is extremely inconsistent. That is why Esports organizations use all of the other methods mentioned to make a majority of their revenue. Plus, while the organization does get a portion of the winnings, typically the reward is distributed evenly amongst team members that actually competed for the reward.
What does the future hold?
Global Esports will have "a year-over-year growth of +21.8 per cent" in 2022, predicts Newzoo. Despite the fact that the total Esports audience will increase to 495 million, "a year-over-year gain of +11.7 per cent," The Overwatch League and Call of Duty League will begin to benefit from holding home events through their city-based team structures once the coronavirus outbreak is finished. Esports will continue to flourish with escalating partnerships like the one the Overwatch League made to air on ESPN, Disney XD, and ABC.
Large businesses find it easier and more familiar to promote on television, and if they find success there, they might then follow Esports to the online streaming scene. More viewers and attention follow, and more viewers equate to greater financial gain for the sector. The games that Esports teams play, in contrast to traditional sports, are constantly evolving. That does not necessarily mean that it is a bad thing, but it does mean that the Esports sector is heavily influenced by game developers. The Overwatch and Call of Duty leagues would no longer exist if Activision Blizzard went out of business. Even with new games being released frequently, the industry is still expanding and shows no signs of slowing down.
The future of Esports organizations is difficult to predict, but one thing is certain: people will continue to play video games. Esports organizations will face the problem of keeping up with the ever-improving technology of video games.
We hope the insights provided were helpful to you in your endeavour to become the next E-sports star! For such amazing content, stay tuned and you should download the Tournafest app from Google Play or the App Store to compete in Esports Tournaments and Scrims for games such as BGMI, Free Fire MAX, and Call of Duty and win exciting prizes! You may also organize tournaments and fetch unmatched perks.
Until next time,