The Lucrative Business of Esports: How Do Teams Make Money?
Over the past few years, esports has become a global phenomenon, attracting a massive audience around the world. With a fanbase of almost half a billion people, it’s no surprise that this industry has become extremely lucrative, with the market value estimated to reach $1.8 billion by 2022. As expected, esports teams have become increasingly popular, with some organizations generating millions of dollars in revenue each year. In this article, we’ll explore the different ways esports teams can make money, including sponsorship deals, tournament prizes, merchandising, streaming, content creation, and endorsements.
Sponsorship Deals
Sponsorship is one of the most significant sources of revenue for esports teams. Sponsorship deals are arrangements where companies provide financial support to teams and players in exchange for branding and visibility. Some of the most popular sponsors in the esports industry include Intel, Coca-Cola, and Nvidia, among others. These companies provide support in various ways, such as sponsoring tournaments, providing equipment, and participating in promotional activities.
Esports teams can secure sponsorship deals by proving their relevance in their respective games. Teams that perform exceptionally well in tournaments or have a strong social media following are typically more attractive to sponsors. The amount of money that teams can earn from sponsorship deals varies depending on their popularity, relevance, and the nature of the sponsorship deal. Some teams can earn millions of dollars from sponsors each year, which can cover expenses such as salaries, training facilities, and travel costs.
Tournament Prizes
Esports tournaments are another significant source of revenue for teams. Tournaments usually involve multiple teams playing a particular game in a competitive environment, with the winning team being awarded prize money. The prize money for tournaments can range from a few thousand dollars to several million dollars.
Some of the biggest esports tournaments in the world include The International Dota 2 Championship, League of Legends World Championship, and Overwatch League. These tournaments have huge prize pools, with some events having prize pools that exceed $30 million! Winning a tournament is not only a great achievement for a team, but it also means exposure to millions of viewers globally. Besides, it can potentially lead to lucrative endorsement deals and other opportunities that can benefit the team in the long run.
Merchandising
Merchandising is another significant source of revenue for esports teams. Teams can sell branded merchandise such as t-shirts, hats, and jerseys to their fans. In the past, merchandise was mostly sold at events, but now most teams have online stores where they can sell their merchandise to a larger audience.
When teams sell merchandise, they not only generate revenue from the sale of products but also create brand awareness. Merchandising provides teams with a platform to create unique designs that fans can associate with their brand. Moreover, merchandise has high-profit margins, which makes it a great way for teams to supplement their revenue streams.
Streaming
Streaming is an essential part of the esports industry, enabling fans to engage with their favorite teams and players. Streaming platforms such as Twitch and YouTube Gaming have given rise to a new generation of influencers who can make a living from their streams. Twitch, for example, is estimated to have over 15 million daily active users, which makes it an ideal platform for reaching out to a wide audience.
Streamers can make money in various ways, including donations, subscriptions, and ad revenue. Most streamers also have merchandise, which fans can purchase directly from their platforms. Teams can earn money from streaming revenue by creating branded content, such as streams that feature their players or content that promotes their brand.
Content Creation
Creating content is one way that esports teams can earn revenue indirectly. Teams can create content through videos, podcasts, and social media content. Content creators can earn money through ads and sponsorships. For example, a YouTube video that has sponsors featured or ads running can generate revenue through views or clicks. Teams can take a percentage of the revenue generated by content creators, which can provide them with ongoing revenue streams.
Endorsements
Endorsements are agreements where esports teams or players promote the products or services of other companies. Endorsements can take different forms, such as advertisements, social media posts, or live events. In most cases, endorsements involve payment from the sponsor in return for the advertised product or services. Endorsements can benefit both the team and the sponsor, as it can increase sales for the product or service, while also creating brand awareness for the team.
Just like any other industry, esports continues to grow and evolve, which means that the revenue streams available for teams will continue to diversify. As technology and platforms continue to advance, esports organizations will have new opportunities to generate revenue streams. The ability to understand the industry’s evolving nature and harness opportunities will be essential for esports organizations to thrive in the future.
Conclusion
Esports teams can generate revenue through various channels, including sponsorships, tournament prizes, merchandising, streaming, content creation, and endorsements. Each revenue source presents unique opportunities and challenges, and understanding the esports industry’s evolving landscape is essential for teams to succeed. The esports industry’s potential for growth presents an exciting future, with opportunities for teams to generate more revenue streams while also expanding their fan base.
