Today, the world’s leading E-sports organizations call for tens of millions of dollars of successful capital to be normal. According to Forbes, some organizations are now worth more than 200 million USD. They receive huge investments from the outside, expected to earn even bigger amounts in the future.
However, what they do with the money to make profits and how much profit will fall into the range is still “secret”, very complicated and difficult to understand.
If you thought E-sports was making money from prizes from tournaments, you’re wrong.
So how are E-sports organizations investing tens of millions of dollars to make money? The answer is they don’t earn any money now, if you look at the annual income. E-sports organizations are currently operating based on investors’ future expectations. They try to expand the field of attendance, appearing everywhere in the world to spread their presence in the E-sports market.
The Cloud 9 organization is a prime example. They own 96 players, coaches, E-sports managers playing in 12 different subjects. That is why their October 2018 round of funding raised so quickly, bringing it up to $ 50 million.
Investors rated E-sports as “effectively” or “healthy” start-ups, meaning that the large sums of money they poured in would be definitely more profitable in the future. That makes them willing to sacrifice some initial profits to help organizations like Cloud 9 grow, moving forward in the long run.
But strangely, even without making a profit, the current E-sports organizations still have many other ways to make money.
According to Newzoo, the world’s leading E-sports financial analysis company, E-sports revenue has been growing strongly in recent times. 2019 marked the first milestone of $ 1 billion in history (up 26.7% compared to 2018), expected in 2020 it will rise to nearly $ 2 billion. According to Newzoo, the revenue of E-sports will reach 1,096 billion USD.
This huge number comes from “brand investment”, including media, advertising and sponsorship copyrights. The money will eventually go to the tournament, mostly. For example, the annual Overwatch League grossed $ 45 million because it premiered on the Twitch platform. But the E-sports organization will make a big profit.