EPTon
Is there any esports team that's profitable?
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luxon
United States117 Posts
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Nakajin
Canada8989 Posts
Maybe back in the day EG and TL were viable for a short while but I doubt it, it's really more of a passion projet for everyone nowaday. | ||
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geokilla
Canada8245 Posts
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Captain Peabody
United States3128 Posts
For these corporations, which are almost always going to be mega-corporations with lots of money to throw around, they're entirely a loss in terms of immediate bottom-line, but are a few line items in a much larger budgeting for advertising/outreach efforts that, while hard to quantify, they believe ultimately lead to more sales. I'm not sure there was ever a time in BW or SC2 when ESPORTs teams themselves were run as enterprises that were supposed to directly generate profit for investors and owners--the idea seems highly counterintuitive, though maybe someone can point to examples? Now, it's very possible that there's a growing mismatch between what advertisers are willing to pay to teams and what it actually costs teams to operate, leading to a shortfall that has to be made up by passionate managers and financial backers and fans, and to a small extent even by passion and fandom among corporate investors. If that's true, though, the problem isn't so much with teams failing to be profitable enterprises in the business sense as with corporate advertising budgeting and viewer numbers and team-running costs and how they fit together or don't. In the long run, the question is really how large corporations (including game studios) estimate the value of ESPORTs investment for advertising and promotion and therefore how it gets budgeted for, and only secondarily how much money it actually costs to run an ESPORTs team. I will say there are reasons why a LoL team would be more expensive than a SC2 team, though. | ||
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Slydie
1935 Posts
E-Sports has not found its sustainable sweet spot yet. | ||
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JimmyJRaynor
Canada17403 Posts
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Vindicare605
United States16121 Posts
esports teams are more akin to athlete sponsorships, like Tennis players or athlete endorsement deals like shoe deals with sports players. The company isn't looking to make money off of them necessarily directly, but just more interested in getting their brand name out in the public space in as many places as possible. Get people who engage in that activity thinking about their brand like ESL with Intel. Anyone actually investing money into esports teams directly right now isn't investing in those teams making money immediately or at least they shouldn't be, what they are investing in is the potential future of esports if it ever gets to the point where its large enough to start making the kind of money mainstream sports do, and we're a LONG way off from that. | ||
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Nakajin
Canada8989 Posts
On June 15 2023 02:15 Captain Peabody wrote: I'm a bit confused by the framing, as I understand it ESPORTs teams don't exist to "make money" or be profitable in the immediate sense. They're almost entirely advertising-driven entities, meaning that they're justified financially not by the team itself making money but by serving as effective promotion for the brands and corporations that sponsor them. For these corporations, which are almost always going to be mega-corporations with lots of money to throw around, they're entirely a loss in terms of immediate bottom-line, but are a few line items in a much larger budgeting for advertising/outreach efforts that, while hard to quantify, they believe ultimately lead to more sales. I'm not sure there was ever a time in BW or SC2 when ESPORTs teams themselves were run as enterprises that were supposed to directly generate profit for investors and owners--the idea seems highly counterintuitive, though maybe someone can point to examples? Now, it's very possible that there's a growing mismatch between what advertisers are willing to pay to teams and what it actually costs teams to operate, leading to a shortfall that has to be made up by passionate managers and financial backers and fans, and to a small extent even by passion and fandom among corporate investors. If that's true, though, the problem isn't so much with teams failing to be profitable enterprises in the business sense as with corporate advertising budgeting and viewer numbers and team-running costs and how they fit together or don't. In the long run, the question is really how large corporations (including game studios) estimate the value of ESPORTs investment for advertising and promotion and therefore how it gets budgeted for, and only secondarily how much money it actually costs to run an ESPORTs team. I will say there are reasons why a LoL team would be more expensive than a SC2 team, though. I'd be curious about the financial scheme of Kespa BW team and Korean lol. Since they opperated in the Televisual market, rather than Internet broadcasting my guess is that maybe they were profitable? Or at least they could actually make money "on their own" by selling broadcasting right to TV channel that then make money through both cable TV subscription as well as TV avertising. I don't know if TV rights were ever good enough to make an esport team profitable, but that would have been a much more traditionnal way for team to make money. ( I'm vaguely aware there was a lot of legal controversy between Kespa and Blizz on who had the broadcasting right to BW, but I never really took the time to dive into it). But yea, outside if that it's the age-old problem that we expect org, esports and teams to be profitable while never having to pay for anything. | ||
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JimmyJRaynor
Canada17403 Posts
On June 15 2023 03:23 Vindicare605 wrote: Traditional sports teams make money by charging people to come watch them play at their home arena, or having exclusive TV deals with networks to exclusively broadcast their games. Those are HUGE parts of their revenue stream in addition to Merchandise that some but not all esports teams have. traditional NA sports teams also make money by scamming governments into giving them free stuff. it is welfare for the rich. | ||
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[Phantom]
Mexico2170 Posts
Esports turned out to be a bubble. It can be profitable in some circumstances, it can be profitable for some teams for a while. But if you start reading about the finances of esports. Lol, CSGO, DoTa, Overwatch, rocket league etc none of them are actually profitable. It could be argued the publicity is worth it for the companies but even that is indirect | ||
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Vindicare605
United States16121 Posts
On June 15 2023 03:57 JimmyJRaynor wrote: traditional NA sports teams also make money by scamming governments into giving them free stuff. it is welfare for the rich. They use the argument that a new stadium for them is good for the whole city because it drives up business for the whole area. Hotels, restaurants, bars, parking revenue, etc. It's partially true but it's a very surface level, and short term argument. It works better with cities that have nothing else going for them, they want to entice whatever sports team to move to THEIR city instead of a more desirable location elsewhere. Thankfully my city: Los Angeles, put a big stop to that with the latest stadium that was built beautifully in LA without a penny of taxpayer money. But Los Angeles has clout to tell Sports Team owners to build their own shit or get the fuck out, because Sports Team owners WANT to relocate to LA because of the media market. Cities like St. Louis don't have that kind of clout. | ||
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WGT-Baal
France3464 Posts
On June 15 2023 03:29 Nakajin wrote: I'd be curious about the financial scheme of Kespa BW team and Korean lol. Since they opperated in the Televisual market, rather than Internet broadcasting my guess is that maybe they were profitable? Or at least they could actually make money "on their own" by selling broadcasting right to TV channel that then make money through both cable TV subscription as well as TV avertising. I don't know if TV rights were ever good enough to make an esport team profitable, but that would have been a much more traditionnal way for team to make money. ( I'm vaguely aware there was a lot of legal controversy between Kespa and Blizz on who had the broadcasting right to BW, but I never really took the time to dive into it). But yea, outside if that it's the age-old problem that we expect org, esports and teams to be profitable while never having to pay for anything. Disclaimer: this is my limited personal understanding of it based of friendly chats with kespa staff at WCG over a decade ago. My understanding is that yes, it was profitable to a point (if you count the marketing benefits), due to the essentially locked structure of the kespa managed teams and tournaments, with also very bad conditions for most players and teams. The tv rights were mostly from ogn and mbc, which later somewhat dried up then died, but the big companies behind the teams (Samsung and co) considered it worth it from a marketing standpoint. But in korea specifically this was a huge market, and a similar model already exists for most sports (baseball for instance) and as a result it was easier to integrate. On top of that, players and teams rarely had to actually travel far (no intercontinental flights/hotels and associated costs) which also made it easier to manage everything, given the size of the country. That would be impossible in, say, the USA How long it stayed that way once the novelty wore off i don't know | ||
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phodacbiet
United States1740 Posts
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Nakajin
Canada8989 Posts
On June 15 2023 07:11 phodacbiet wrote: I honestly would love to have a talk show where people interview progamers post gaming career. I always wonder how many are doing. I am sure the big names like Flash, Bisu, Jaedong are doing well, but what about the players that are mid or bottom tiers? Do they go to school and get regular jobs? Or do they just work at GS25 now? It's a bit tangential, but jinjin did an interview with Cloud a while back (kind of a mid-tier BW pro apparently) who now runs a restaurant, very good interview. Edit: Didn't post the good link | ||
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Blargh
United States2103 Posts
On June 15 2023 07:11 phodacbiet wrote: I honestly would love to have a talk show where people interview progamers post gaming career. I always wonder how many are doing. I am sure the big names like Flash, Bisu, Jaedong are doing well, but what about the players that are mid or bottom tiers? Do they go to school and get regular jobs? Or do they just work at GS25 now? There are a few interesting ones, but usually they're bigger names. Elky and Yellow (old BW pros) ended up with Poker careers. Yellow also does some TV shows. Huk was working with OWL (Toronto Defiant) as GM and then president of gaming, whatever that means) for a while. Idra went back to school/physics I believe. Boxer streams / creates content / plays poker / whatever for T1. Polt is also an analyst / GM for League of Legends who was on T1 and now HLE. I think a lot of them end up being tangential to esports. It's hard to leave the one industry you have skills / relevance to. But I also wonder about the mid-low tier gamers. I think some of them actually have jobs while they compete still. Some just move on to other games. | ||
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luxon
United States117 Posts
On June 15 2023 05:41 [Phantom] wrote: There is not a single esport scene that is profitable. Not a single one. This is the hard hitting answer I was looking for. I'm so surprised by this esp since Dota still has 8 figure prize pools. It still all comes down to viewership - I find it hard to believe that viewership aka attention cannot be monetized. It's how every sport, streaming service, and youtube/tiktok print money. In the video he cites examples of teams not being able to generate viewership for their content. On the other hand, Ninja is incredibly wealthy, worth well into 8 figures USD. Are these other games not drawing viewers either? | ||
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Balnazza
Germany1276 Posts
On June 15 2023 08:03 luxon wrote: This is the hard hitting answer I was looking for. I'm so surprised by this esp since Dota still has 8 figure prize pools. It still all comes down to viewership - I find it hard to believe that viewership aka attention cannot be monetized. It's how every sport, streaming service, and youtube/tiktok print money. In the video he cites examples of teams not being able to generate viewership for their content. On the other hand, Ninja is incredibly wealthy, worth well into 8 figures USD. Are these other games not drawing viewers either? Ninja does not have any big expenses though and that is the difference. For example, the LEC (League of Legends) dictates that any LEC player who has atleast played 18 games needs to qualify for "minimum wage", which the LEC declares as 60K in Euros. So even if you only pay the bare minimum, any of the ten teams pays its five players atleast 360K a year. Of course, if you want the big names, you have to pay more to win more. Then you have a gaming house for your team, which isn't exactly some small flat anymore. I only have seen the Schalke team house a few years back, but that alone was really good. You also have coaches, analysts and probably even physios for your team aswell, who might not earn as much as your players, but still need good payment. You also might have some social media presence, so you probably have a social media manager, maybe even camera guys and other assistants. And the fun part? Winning the LEC Season Finals would only give you 65K, so it practically just pays for one players minimum wage. Now of course that isn't the only prizemoney and there are sponsorships and what not, but with this alone you might be able to understand why Esports isn't exactly reigning in the big money for the teams. And I believe LoL and the LEC is still on the good side, while in other games with less stable income the ruinous behavior is a much bigger problem | ||
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NoobSkills
United States1603 Posts
On June 14 2023 20:34 luxon wrote: I just watched the below video on how someone set 7 figures on fire for two years trying to start a LoL team. I dont know anything about any esport that's not sc2, but I thought the other ones were doing well, having 10x the viewership and sponsorships. If brands are trying to get out and even the largest games are losing $, do the unit economics work out to sustain a profitable team? Is there any sc2 team that actually makes $? Or in 10 years when the dust settles, will it just be the Tobi's of the world keeping a team (aka pet hobby of a billionaire who's willing to eat the loss). https://www.youtube.com/watch?v=UbOsE1FT8nk on There are far too many factors in esports to fully answer, but my guess is most if not all are unprofitable and the bigger the team the bigger the drain on cash and inflated the team's value is. Are we talking in the era where some leagues have million dollar entry fees with such little revenue share and generation you'd have to play for 30 years to get a return on your investment? Are we talking in the era of world wide travel and the cost of moving 5 people all over and paying for everything for them? Are we talking about teams that don't want to generate a profit, but instead inflate the value of the organization to secure more funding or perhaps a bigger buyout check? Are we talking about the KESPA age where a bunch of kids were forced to sleep in a dorm room, lived just a bit away from the studios where 99% of the matches were played and all of the stream/tv and sponsorships were seen by the people it needed to be so ad revenue or brand revenue was put forward all the time meaning you could charge sponsors more. Are we talking about the where some teams are paying millions to players because there is a limited talent pool and they've already invested so much that they need to win to justify their existence? Or are we discussing teams that hire content creators under the umbrella of their competitive gaming organization? Not saying they can't be a part of the org, just that their salaries are liabilities that are on the team org's profit sheet, but they contribute nothing to the competitive team itself. Somewhere along the line I'm sure there were profit seeking teams such as EG might have gained back through player obligation (those cheesey commercials etc) most of the money they spent on players. I'm sure some of the KESPA teams made money. I'm sure way back even the COD/CS teams made money too. But nowadays teams are living on the edge of what they can handle for many reasons. The big game companies trying to take over esports and have sucked out a ton of profitability of something they had nothing to do with originally. Some teams are inflating rosters and worth as much as possible, so when it comes time to sell they can say well we generated X last year in revenue even though they spent X+a few mill in that same time. And there are some teams with owners who are existing off the money their players make, and just trying to ride on the bubble until it pops. Edit: the larger part was there are different people taking a lot of money out of esports during different eras different games different tournament. There are different team styles and leagues. But overall I think the team aspect if you look at the books you'll see some crazy broke teams, you'll see some teams where the CEO is living the high life while players starve, but rarely will you find a team that is solidly profitable. | ||
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Monochromatic
United States998 Posts
The minute a gaming company gets involved the scene dies. Sure, there's tournament fees, but the real killer is that 100% of control of the product belongs to the gaming company. You cannot create a lasting business when you are forced to be subservient to a company with different core interests. | ||
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NoobSkills
United States1603 Posts
On June 15 2023 11:49 Monochromatic wrote: Under the current model Esports will never be profitable. Esports is only feasible when the game company has no involvement in the scene - i.e. Korean Brood War or grassroots Melee. The minute a gaming company gets involved the scene dies. Sure, there's tournament fees, but the real killer is that 100% of control of the product belongs to the gaming company. You cannot create a lasting business when you are forced to be subservient to a company with different core interests. Twitch streamer about to figure that part out really quick. | ||
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