Tag: E-sports organizations (page 1 of 1)

How do E-sports organizations make money? (Part 2)

“How does money flow into the E-sports organization? From the content the organization makes. Let’s take the TSM example to explain this problem. They are one of the rare organizations with annual profits. How do they do that? They own a lot of famous streamer, “Mr. Mylixia said.

“In those celebrity streams, they add advertising, polish the brand that is sponsoring them. That’s how E-sports is making money.”

“Do you know what the truth is? The E-sports organization that makes money is not thanks to E-sports. They make money by the above way. Smart organizations will stick to famous streamers, deal with them so that the couple mutually beneficial. They become a better agency for managing, developing and developing talent for streamers.”

Advertising contract

For Mylixia, “content” is always the most important to success. When doing “content” well, big brands will come to E-sports organizations.

To get good advertising contracts, the E-sports organization needs to create the “content” that viewers want. Most E-sports organizations now choose Twitch, asking their players to stream on the platform. They even have players brought in to stream only for others to watch, not to play.

That’s why Mr. Mylixia calls the current E-sports organizations a distribution agency, managing talented streamers.

How E-sports organizes polishing images for players, attracting big brands is the key. Looking at TSM, the image of their League of Legends players is now tied to Dr. Pepper, the famous beverage brand in the US. Even many of their fans now name the team Team SodaMid.

The ability to create “content” or help TSM fly like a kite in the wind when Fortnite ascended the throne. They are one of the organizations that know how to take advantage of the fever created by Epic Games products worldwide. According to statistics, 5 streamers of TSM organization are currently in the top 22 most viewed channels in recent months. Names like Dakotaz, Myth, Daequan, HighDistortion and Hamlinz have all become teen idols.

How do E-sports organizations make money? (Part 1)

Many viewers know of the huge numbers of total E-sports prizes or record-breaking streaming views on Twitch. However, not everyone understands the “secret” E-sports organizations use to make money.

Sponsorship deal

Similar to football, the sponsor’s image for E-sports organizations appears on jerseys, streaming channels, at every major event and photo shoots. Of the nearly $ 1.1 billion in E-sports revenue expected in 2019, $ 456 million comes from sponsors, accounting for approximately 41.4%.

Major brands have jumped on E-sports “pie” recently. They sponsor, appearing in every corner, from fast food, competition gear to player costumes. Some brands decide to sponsor a major tournament too, such as a 4-year Nike deal signed with League of Legends. Others want to be associated with the player image, like Red Bull has just partnered with Ninja.

Ninja, the famous Fortnite streamer has just become the image representative for Red Bull.

In general, E-sports is the story of a small screen but is watched by young people on many different media. Young people who love games are a group of customers that are difficult to reach for major brands but are willing to spend money on E-sports. So for big brands, the goal is always to brand the famous players for as long as possible. As for E-sports, they are responsible for bringing the brand image to appear on the media as much as possible.

One of the organizations that do a very good job is Team SoloMid (TSM). Built from an LoL website, TSM has now strived to become one of the world’s largest E-sports organizations. They are also currently one of the few E-sports organizations that have positive cash flow, meaning that their annual profits go to the organizer.

The key to TSM’s success is “content” – content, intellectual property – they create. Mr. Devin “Mylixia” Nash, CEO of Counter Logic Gaming at the recent stream also commented on TSM’s way of making money.

How huge is the revenue of E-sports?

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.