Over the past two decades, esports has managed to grow from a tiny niche community including mostly passionate fans to a global phenomenon that boasts millions of dollars in prize money, huge contracts for the best players, and some of the biggest sponsors in the world. The biggest markets have developed their own opportunities for esports betting online, and the top players have become household names in some regions too.
Despite this huge amount of success seen within the market, stories continue to emerge of orgs that are struggling to get by, players being released from contracts for salaries that can’t be maintained, and other issues that cause uncertainty within the scene. We’ll take a look at what is missing for esports’ growing success, and if it can continue on the path of growth without these changes.
Inflated salaries are becoming an issue
One of the most notable things that many critics point out is within the player salaries, whilst still growing most professional players didn’t expect a huge pay-day, often attending tournaments where the prize for first place could be just a few thousand dollars to cover travel expenses. Things have changed, however, with some of the biggest tournaments offering millions of dollars, and organizations paying salaries that would make traditional sports stars green with envy.
With limited cashflow opportunities, however, these huge salaries have become an issue for some organizations to pay, if teams aren’t winning and sponsor issues continue, paying hundreds of thousands of dollars seems absurd, and the fallout has already been seen with orgs like Evil Geniuses and Sentinels announcing financial troubles on more than one occasion.
Broadcasting changes may be necessary
Broadcasting within esports over the past decade has become something of a double-edged sword, by providing major events for free on platforms like Twitch, it has helped the huge explosion of these games and has likely been one of the core reasons for many fans to get involved with these games too. The downside to streaming these games on Twitch, however, is that there’s no money in it.
Major traditional sports earn billions of dollars per year through broadcasting rights, it’s something that helps teams stay afloat along with merch sales and ticket sales to stadiums – but this is an area where esports differs, without any team owned stadiums, merch sales alone can’t prop up the teams with sponsors, and the lack of broadcasting revenue is something many critics have pointed towards as being a major issue, particularly as a large number of fans have shown disinterest in ever paying to watch their favorite team.
Sponsor inconsistency is difficult to manage
Sponsors are an important part of any team too and being a big driver of revenue even within traditional sports, but there has been some inconsistency for these sponsors across esports. The biggest case has certainly been the collapse of FTX during its fraudulent exposure, leaving big orgs like TSM high and dry. Other examples are more nuanced, however, where some sponsors may be displayed in one esport, they may not be allowed to be on display in another. Evil Geniuses take another hit here, picking up the Thunderpick sponsor across their CS and DOTA teams was a huge signing, but after announcing the release of their Counter-Strike teams and Riot Games’ not being fond of this type of sponsor, the org could be in some trouble within the next few months.
For now, it seems esports is moving from strength to strength and shows no signs of slowing down as many markets continue to grow both in player numbers and in viewers, but there are some cracks starting to show beneath that glossy veneer and something may need to change eventually for the continued success of esports.