Cybersport is a rather expensive and rich industry. But strategic investors have learned to make money while investing millions in it. How the business is arranged and what are the money making things we have never thought about? Let us get all this straightened out.
Cybersport – Condition, Scale, Financial Metrics
Cybersport is a popular trend in the field of information technology: the market volume in 2017 amounted to about $1 billion worldwide, and it continues to grow. News of major investments in eSports is becoming more frequent every day. Why do investors need it and what benefits do both parties have? Tournaments with multi-million prize pools are held on a regular basis. So you can review https://egamersworld.com/dota2/matches Dota 2 matches not to miss out any major happening in the industry.
Individual cybersportsmen and teams participate in tournaments and different marketing activities. As a rule, cyber-sports organizations represent them: they take on the functions of agents and managers in order to leave gamers with only one task – to play. The costs of maintaining teams that could compete at the highest level are quite high right now. For example, the League of Legends line-up costs about $0.5 million per year.
The income of cybersports sponsors consists of the following “businesses:”
- Prizes at tournaments – Despite the huge amounts of prize money, this is one of the most “poor paying” sources of the organization’s revenue since most of the prize money (usually not less than 70%, and sometimes all 100%) goes to players. Prize money is often delayed in paying or not paid at all.
- Sports clubs – Cybersport is similar to traditional sport, although the skills necessary for winning a competition are quite different. The competitive spirit, the principle of building infrastructure, ways of working with the audience, monetizing the brand, and marketing possibilities are still same.
- Sale of attributes – This option is practically inaccessible to single players, but it works fine for team sponsors and organizations. The income is, of course, directly proportional to the popularity and size of the fan audience of a particular team. They, in turn, largely depend on the results of team performance, but not only. The players’ media coverage also affects them: their personal image, popularity, and activity in social networks have the final say.
- Revenues from franchise competitions – Initially, the organizers and participants of esports tournaments represented their own financial interests. However, with the growth of the market, players’ salaries and infrastructure costs (gaming locations, coaches, psychologists, social welfare, and so on) increased. Thus, even the most popular teams in the world had to work as the whole to stay in the top. The solution is to switch to the franchise system, when the league shares revenues with the participating teams. This usually happens the following way: organizations pay a substantial entrance fee, but they cannot leave the league. That is, they buy a place once for all time or at least for a long time. For example, in 2018, the American League in League of Legends switched to such a system.
Of course, the list of income sources, their level, and specs can be extended. The industry of cybersports is actively evolving, so more new ways of making money are to appear.