Do Commercial Esports Have a Future or is it a Bubble?

- Advertisement -

Many gamers would love the opportunity to be able to play their favourite titles for a living. For several decades, such a prospect was nothing but a pipe dream, but today, for a small group of talented players, it is now a viable and often lucrative career option. 

According to Esports Earnings, a website that tracks the careers of esports players and the tournaments that they compete in, more than $1 billion have been paid out across over 46,000 tournaments. 

The most successful players include Johan Sundstein (N0tail), a Danish Dota 2 player who’s managed to rack up more than $7 million from esports; Jesse Vainikka (JerAx), a Finnish player who has earned $6.5 million from playing Dota 2; and the Australian Anathan Pham (ana), another Dota 2 player who’s raked in just over $6 million of spoils. 

- Advertisement -

Esports Earnings lists 110 players that have made at least $1 million from their competitive video gaming, and nearly 300 that have made at least $500,000. 

This money comes from the huge business that has been built around competitive gaming.  Video game publishers and traditional sports league owners have been investing heavily in esports as a way of marketing their products to new demographics. Similarly, sponsors and advertisers pay millions to tournament organisers and teams to get their brands shown to the hundreds of millions of fans around the world. 

advertisement

The sports betting industry has also got involved in esports. iGaming companies are in fierce competition with each other for market share, so use things like free bet promotions to attract new customers. Offering odds on esports tournaments has been another technique they’ve employed, with the betting markets for competitive video game events growing quickly over the last couple of years. 

TV companies and digital streaming platforms have also joined the esports party by buying up the rights to broadcast tournaments to their viewers, both on traditional networks and over the internet. 

- Advertisement -

Altogether, these different stakeholders have come together to turn esports into a billion-dollar industry that has excited many investors and fans alike. 

Is Esports Profitable?

In early November 2021, The Washington Post reported that the League of Legends esports division of Riot Games has yet to turn a profit. This is despite the fact that the company has been actively trying to turn the arm into its “own dedicated business” for several years.

This isn’t the first time that questions about the profitability of esports organisations have been called into question. In 2020, Béla Kurzenhauser wrote an opinion piece for PSU Vanguard in which they likened owning an esports team to “cutting a hole in your bank account” due to huge expenses of player wage bills leaving very little behind for team owners and league organisers. 

In an October 2019 interview with Kristine Leahy, Mark Cuban, the owner of the NBA’s Dallas Mavericks, described esports teams as “an awful business” in the United States. 

Bubble Territory?

Not being profitable now doesn’t mean a business can’t be profitable later. Tesla didn’t record its first full-year profit until January 2021. Facebook didn’t become cashflow positive until 2009, five years after it was first founded. In 2021, Deliveroo joined the London Stock Exchange despite making a loss in every year of its existence. 

Therefore, the news that the Riot Games League of Legends esports division is not currently profitable does not, on its own, spell disaster for the company, the game, or esports as a whole. 

In fact, Riot’s head of esports, John Needham, commented on the lack of profitability by saying that the company has been focused on ensuring esports teams can become profitable first since, without them, there is no esports at all. 

It’s also important to consider the fact that esports have been great marketing tools for video game publishers. They are a way to show off their content at its best to millions of viewers, some of whom will then go on to play the games themselves and buy new skins and other content

If there is a wider economic downturn, it is possible that esports could suffer as the current sponsors will begin tightening their purse strings temporarily as they look for ways to keep hold of more cash. 

Aside from this, the lack of profitability isn’t necessarily a sign of an existential problem within esports. Instead, it’s just proof that the industry is still in its infancy, just like tech companies, social networks, and electric car companies once were.

- Advertisement -

Recent Articles

Related Stories