How do Esports teams make money?

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In the last decade, the eSports industry has turned into one of the fastest-growing entertainment branches worldwide. More than thousands of eSports teams have been established in recent years. Video game companies like Riot, Valve, and AVB have created competitive leagues that encourage other organizations to join the eSports ecosystem. Considering these teams need consistent revenues to survive in this newly shaped industry, the question of how do eSports teams make money comes to mind. There are several revenue opportunities for eSports organizations such as sponsorship deals, prize money, and merchandise.

Tournament Prize Money

One of the simplest way to earn money for eSports teams is winning tournaments even though this revenue stream is inconsistent. Game companies that organize tournaments set a price pool, then distribute it to the teams according to their achievement.

For example, in 2021, Dota 2’s annual The International put up a 40 million dollars prize pool and topped the list of tournaments with the most prizes. eSports teams may consider pushing the possibilities to gather a competent roster considering that the amount of money given increases from year to year. Only the top teams get their share of the pie according to their final standings. 

For instance, the CIS Esports organization NAVI earned over 4 million dollars by winning 8 of 16 tournaments that they took part in last year. Newly established eSports teams should not rely on winning prize money if they want to become perpetual in the sector. Even the most successful teams that have won many tournaments realized that this revenue stream is not sustainable in the long run.

Global Annual eSports Prize Pools

Image credit: Statista

Sponsorship deals

With leagues and tournaments attracting more viewers, many featured companies from varied industries such as BMW, KIA, Coca-Cola, Beko, Red Bull started investing in the eSports sector. They are also making sponsorship deals with eSports teams. The primary reason companies show interest in competitive leagues is to contact young audiences they could not reach through traditional media channels. We know that people at a young age spend their free time on digital media channels like Twitch, YouTube, and Reddit instead of television, radio, or events.

Companies put their logos on the teams’ jerseys to highlight their products. On the flip side, the eSports organizations that advertise companies in leagues, tournaments, or social media earn money for it. Last year, North American team TSM signed 10-year naming rights deal with cryptocurrency trading platform FTX, for $210 million, setting a record as the biggest agreement in eSports industry history.

Merchandise

Even though the merchandise is not relevant to the gaming industry, eSports teams can enhance their annual revenue by selling jerseys, products, shirts, hoodies, etc. Besides that, they can make merchandise deals with companies like Team Liquid did with Marvel. eSports teams have to look to the industry from a broad perspective, given that they have trouble finding a consistent revenue stream. 

Most, if not all, teams have thousands of followers on their social media channels and have their website, policy, office, and CEO. They act as a company while seizing all opportunities to generate revenue. Why not try to sell them their products? 100 Thieves, the NA organization founded in 2018, lead merchandise sales in the eSports industry. Although their products are expensive compared to the average, they run out within minutes.

Image Credit: Newzoo

Whether eSports has just entered our lives, there is a fact that this industry snowballs year by year, and companies are aware of the potential of eSports. Along with being popular among teenagers, adults have showed an interest in eSports in recent years. Think that thousands of people come together on a digital platform to support their teams as they improve their social skills by communicating with others. eSports makes it possible.

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