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How do esports organizations make money?

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How do esports organizations make money?

How do esports organizations make money?

Fri Oct 15 2021 06:35:00 GMT+0000 (Coordinated Universal Time)

If you follow esports organizations, you might be asking the question ’How do esports teams make money?’. More than the success they attained by capturing the hearts of fans through winning tournaments and gaining popularity all over the world, esports organizations are involved in other businesses.

Esports organizations earn through various means. More than the prize money from tournaments, they profit through ticket sales, marketing, sponsorships, and merchandise. Of course, these largely depend on the organization and the games they compete in.

It is important to know that as much as each organization competes with each other, they all have crucial roles in making the esports industry grow and be more profitable.

Merchandise sales

Like most traditional sports organizations, esports teams make money by selling merchandise. If you go to the website of one of your favorite esports organizations, you'll see that they sell products like shirts, hoodies, and mousepads.

An edge esports organizations have over traditional sports is that they can sell merchandise within the game itself. Through virtual items like skins, fans can show their support for their favourite teams.

In games like League of Legends, some skins are even made to look like the members of the esports teams themselves. In other games like Call of Duty, Valorant, and Overwatch, players can also purchase character and weapon skins. Fans can buy packs to support their favourite league teams, and customize their character and weapon to fit the team's design scheme.

In-game purchases are not only a source of income for game producers but also for esports teams since they directly benefit from each purchase. For example, when SKT T1 won the League of Legends world championship in 2016, they were awarded a skin line for players to purchase. The organisation received 100% of the revenue from these sales.

If fans wish to support a specific player or streamer, they can purchase in-game skins using that person's content creation code. This perk allows that streamer to receive a cut of the products sold using his code.

Pro guides and gaming camps

To earn more income, some organizations offer digital products such as video guides. For example, a professional player can publish a guide on a course learning site like Udemy that they can sell. Esports teams can even compete with platforms like GamerzClass by providing not only paid courses but a subscription-based platform as well.

Sponsorships

Esports organizations earn a lot of money from sponsorships. Companies that sponsor teams are beneficial not only to the team but to the entire industry.

When sponsorship deals are signed, companies provide esports organisations with equipment, uniforms, transportation, and sometimes even beverages. For example, the esports team Edward Gaming has included logos from Nike, Razer, and Intel on their jerseys because they receive equipment from these brands. This strategy, similar to professional soccer teams, uses the team's jerseys as an easy advertisement for its sponsors.

Furthermore, streamers in esports organizations have their own discount codes for sponsored products. In their videos, the streamer will highlight the product of the sponsors and encourage viewers to use their promo code to earn a discount. The streamer will get a cut of the sale, usually about 5% of the revenue, and the company will gain a new customer.

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Content Creation

Another way esports teams make their money is by creating content through various platforms like Twitch, YouTube, and Tiktok. More than just relying on their pro gamers, these organizations sign well-known streamers to their company as a way to provide the organisation with exposure and branding.

Though signing a streamer may not benefit them right away, the potential audience of the stream is what these teams are looking for. The collaboration helps both expand their brand by attracting more sponsors and partners for their campaigns.

Streamers and esports organizations can also earn money through donations and subscribers via streaming services such as Twitch.

Donations can be as little as two dollars or as much as tens of thousands of dollars, depending on the channel. These channels can accept donations via PayPal or by 'cheering’, which is done with virtual Bits that can be converted to cash.

Developing software

Another source of money for esports teams in the development of software and technology. Working on these software requires resources and investment, but it can pay off if done properly.

The Blitz coaching program, for example, tracks and collects various in-game data for titles such as League of Legends, CS:GO, and Valorant to present it to players in a convenient manner. Blitz is now free but will soon offer paid services to the thousands of gamers who utilize it. It is owned by Team SoloMid, a big American esports corporation, and is a way for them to generate more revenue.

Winning tournaments

The most well-known way that esports organizations make money is by winning tournaments. The only catch with this is that winning a tournament requires assembling a talented team that can perform well.

Since it is the ultimate goal of each organization, they pour lots of resources into making sure their teams have a chance to win. Organizations sign the best players into huge multi-million dollar contracts to improve their chances.

Once they do win, however, the publicity and profit they receive are off the charts. In 2019 alone, the distinguished The International Dota 2 tournament had a prize pool of over $30 million dollars.

The future of esports is bright

With so much money being poured into the industry, there is a lot of room for innovation. As time goes on, esports teams will find ways to increase their income even further, as more and more companies choose to invest in esports.

Nowadays, esports has made its way into the gambling industry, where sites like Bitcasino are leading the way for esports betting. The next time you ask yourself ‘How do esports teams make money?’, you know the answer is that there are a lot of ways, and there will be more. 

Words by: Jack Adriatico


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How do esports organizations make money?