Secure the revenue streams and maintain and develop them. You need revenue in order to achieve your goals. Understand also how to make profit and secure coming years, and try to scale your business.
If you think about your future team, is your aim to this level:
- TSM – Value: $410 million. Estimated Revenue: $45 million. …
- Cloud9 – Value: $350 million. Estimated Revenue: $30. …
- Team Liquid – Value: $310 million. Estimated Revenue: $28 million. …
- FaZe Clan – Value: $305 million. Estimated Revenue: $40 million. …
How you make the revenue?
Esports teams generate money from tournament prize money, streaming/content creation, merchandise, and sponsorships.
Revenue and profit reports from some of the most popular esports companies are not usually public for people to view. They hide them due to the lack of understanding behind the financial part of esports. Aside from the top brands, most esports teams tend to lose money instead of profit initially.
To thrive in the business of esports, you have to be patient and consistently build. Esports teams generate money from tournament prize money, streaming/content creation, merchandise, and sponsorships.
Tournament Winnings
The simplest way to make money in Esports is to win tournaments. Unfortunately, this is not a consistent way to make money since you will not always be the team winning the largest prize pool. Tournament funds are at best sustainable at the amateur or semi-professional level, as passion fuel to fully commit to pursuing a career. Long term, unless the team wins The International every year, or something equally crazy, tournament winnings alone cant sustain the team.
Furthermore, tournament winnings rely on the performance of quality players, and it is hard to find players who are not willing to join the more infamous teams. If you are looking to start an Esports team it is important to understand that you realize that winning tournaments is not realistic because some of the best in the world will be playing on the major teams. Even winning the biggest esports tournaments will not be enough to keep an organization sustainable long term.
Sponsorships and Partnerships
Thanks to the growing viewership of Esports, you do not have to rely solely on tournament prize pools to make money for the team. In the esports industry, sponsorships make up the majority of revenue for teams. Brands realize the influence of esports, so they are willing to put their faith into esports teams to market their company to an audience.
Electronics companies and hardware are some of the biggest partners in Esports however, supplement companies like G Fuel have sponsored so many different personalities in esports. Analytics company Newzoo predicts esports revenue streams in 2021 and showed sponsorships making up over half of the revenue. In 2020, out of $950.3 million in the 2020 data gathered, $584.1 million came from sponsors. For 2021, they estimate this number to go up to $641.0 million.
© Newzoo
Streaming and Content
Esports teams do not solely invest their money into competitive players. They also look to sign popular streamers to add star power to their team. It may not directly profit the team to sign a streamer, but the potential audience of the stream is what teams should look out for. Popular streamers have a consistent audience, so it makes it easier for sponsorships to take place since there is a consistent audience to market to.
Product placement during partner streams is the end goal, with streamers serving as brand ambassadors for both the esports team and it’s sponsors.
Merchandise
Finally, Merchandise will always bring in revenue if you are a popular esports team. Organizations like FaZe Clan and Cloud9 are household names in the industry, so their ability to sell merchandise is easy because they have a loyal fanbase. It is important to realize that audiences love to feel a part of the team, and merchandise is easy to make that happen. When trying to make money in this industry it is important not to limit your resources.
As team revenue streams increase, the opportunity for a long-term career in esports has become a reality. You can now find plenty of different attack vectors to find success in this sector.
Ads and Apps
Using ads for digital placements is another way for esports teams to make money. As teams and brands grow, they’ll see more traffic on their websites, which can be monetized via ads. Team Liquid showcases this through Liquipedia, a major information hub for everything in esports. With how often the community wants updated information on teams, players, games, etc., placing ads on Liquipedia becomes a stable revenue flow.
Developing software and tools is yet another stream of revenue esports teams can delve into. Though working on other applications takes resources and investment, it can pay off when done currently. The Blitz coaching application, for example, tracks and gathers various in-game data for games like League of Legends, CS:GO, VALORANT, and more to conveniently provide it all for players. Owned by Team SoloMid, a major American esports company, Blitz is currently free but plans to offer premium services to the thousands of players who use it.
Virtual Esports Engagement Platforms
So far, the discussed opportunities on how esports teams can make money are common ideas. But the best company leaders and executives find new initiatives to monetize and make sustainable profits without settling on the norms. North American esports teams came into the spotlight recently with fan engagement platforms. Virtual platforms to mimic the engagement at live stadium events now exist.
Ticket Sales
Like any in-person media experience, ticket sales make up a portion of revenues for esports. While some events have generated reasonable numbers here, the current climate leads to limitations. For example, all matches throughout the League of Legends Championship Series’ regular season are held at the LCS Arena in Santa Monica, California.
To combat this, the franchised Overwatch League announced that they would be going global in 2020. Every team has the chance to host a weekend’s worth of tournaments in their hometown, whether it be in New York City or Seoul, South Korea. According to the Overwatch League’s former commissioner, Nate Nanzer, this would be a way for fans from all over the world to attend games. In return, this helps teams grow larger fanbases in their home city.
Fortnite World Cup. July 28, Arthur Ashe Stadium, Queens, NY.
Still, given the digital nature of esports, one could argue that the opportunity for “ticket sales” may actually reside online. Organizers charging a premium for viewers to watch an advertisement free or enhanced version of the events from the comfort of their own homes could yield a nice return – imagine a virtual reality based in-game viewing mode. The Fortnite World Cup was hosted at Arthur Ashe Stadium (23,000 capacity) over three days. If they had hoped to have ticket sales pay the cost of the prize pool alone ($30 million), they’d need to sell tickets for an average of ~$435 per day ($30 million divided by 69,000, or 23,000 seats a day).