Ever wondered how esports teams earn a living from video gaming? It is not winning prizes that actually keep esports teams afloat. Actually, some teams struggle to stay profitable.
However, a majority of esports teams and gamers are doing relatively great. For those looking for breakthroughs in the esports space, this page covers the means to that end.
It is an undisputed fact that over the past half-decade, esports has exploded into a global phenomenon, thanks to the competition, streaming platforms, and the global community. The new industry has created a plethora of opportunities for gamers from all walks of life. Below are some of the ways to profit from the esports market.
The Esports Industry in Numbers
Video gaming is among the fastest-growing modes of entertainment across the world, with revenue surging over 9% each year. By the end of 2022, the global video gaming industry is projected to surpass $190 billion in revenue.
According to a recent publication by Newzoo, esports revenue stood at $856 million in the year 2018, and the figure is expected to grow to $1.79 billion by the end of 2022. These figures cover merchandise, media rights, advertising, ticket sales, game publisher fees, and sponsorships.
The opportunities presented by the young esports industry extend far and beyond what has been realized currently. For instance, if I was to watch my favorite streamer play at a Fortnite World Cup and end up purchasing the skin they used, will Epic count that as esports revenue?
While the waters might be a bit murky for individual gamers, they are a tad clearer for teams. Teams are easier to monetize.
Do you consider yourself an expert at analyzing the strategies and tactics of professional esports athletes? Do you understand the League of Legends or CS: GO competitions? Are you good with numbers and odds? If your answers to these questions are in the affirmative, esports betting could be a great source of revenue for you.
Most online betting platforms are now offering esports betting odds. Punters can bet on esports events pretty much the same way they do in traditional sports. While this is still a new betting terrain, it’s fast-growing and potentially profitable.
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Sponsorships are a key revenue channel for esports brands. As of 2018, sponsorship accounted for about 40% of esports revenue according to Newzoo. The following year, 2019, esports sponsorships generated about $456.7 million. Sponsorships have an amplified impact on endemic brands.
As with any other sponsorship agreement, they are aimed at creating brand awareness around company products. The message can be further strengthened when esports teams agree to compete using the sponsor’s gear.
Endemic esports sponsors include brands like MSI, AfreecaTV, Huya, NetEase, Razer, and Bilibili, among others. Non-endemic brands are also known to sponsor esports events in a similar way as they sponsor traditional sports.
That means direct sponsorship of events and teams, product placements, rights to use the intellectual property, and more. The virtual aspect of esports makes it possible to incorporate a blend of traditional and modern marketing opportunities. It is not uncommon to see branding on players’ jerseys and players’ avatar skins.
For instance, Samsung partnered with Fortnite to grant the exclusive Samsung Galaxy Fortnite skin. This skin was originally made available to esports gamers who pre-ordered the Samsung Galaxy Note 9.
We have seen advertising and sponsorship grouped as the same thing on several occasions. While separating the two can present challenges in specific instances such as where to attribute revenue, it is critical that we split them for this discussion.
Advertising accounts for about 60% of the esports’ industry revenue according to 2018 statistics. Advertising revenue is that which is collected from content presented to the audience of esports events.
Given the ad content consumption patterns among the esports audience, linear TV makes up a relatively smaller number of views compared to traditional sports. The large majority of esports ad consumption is generated through streaming platforms.
Therefore, ad revenues for esports teams can be classified as content revenue or revenue collected from dealings with streaming operators. The deals cover rights to advertise on players’ streams.
As with traditional sports, merchandise sales are a key revenue stream for esports brands. One of the top esports organizations, 100 Thieves, describes itself as an esports organization and new lifestyle company that has established an intersection between entertainment, gaming, and apparel.
100 Thieves is one of the organizations that have taken a differentiated business approach, focusing more on strengths. The organization recently raised $35 million for expansion, and other esports organizations are paying attention.
Another esports team, Team Liquid, signed a partnership agreement with Marvel in 2019 for the sole purpose of introducing superhero-themed merchandise such as Captain America-styled jerseys. Another team that is leading on the merchandising front is Fnatic with its clothing line collaboration with Hello Kitty.
Unlike conventional sports, merchandise in the esports world can be either physical or digital. eSports in-game purchases tied to teams and organizations are yet another source of revenue.
This is rather obvious, but it’s still worth discussing. Another way to make money in esports is by winning tournaments. During the 2019 Fortnite World Cup, the finalist Bugha walked away with $3 million which was the prize money for the first place.
However, what many people do not realize is that a portion of Bugha’s prize money went to his team, Sentinels. While it is obvious that organizations want to see their teams win in competitions, it’s not universal for a team to take a cut of a gamer’s tournament winnings.
Most esports organizations prefer benefiting indirectly from their team’s success, often during negotiations for new sponsorship agreements. Sponsorships are more valuable when the team or organization is doing well in tournaments.
Becoming a Twitch Streamer
Another lucrative opportunity is to stream your esports gameplay on Twitch, the world’s leading video game streaming platform. Unlike YouTube streaming, Twitch allows professional gamers a chance to make money playing their games of choice and winning over subscribers.
After building a community of Twitch followers, you can easily monetize your audience as yet another source of revenue.
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