The Collegio Pittsburg's student voice since 1916
Nash Trumbly reporter
From StarCraft to Valorant, the past 20 years have seen the meteoric rise of E-sports across the world. According to the Fortune 500, the E-sports industry is worth almost $1.3 billion dollars, creating hundreds of thousands of jobs ranging from players to marketing. This unprecedented growth has enabled several E-sports organizations like Cloud 9 and T1 to become titans of the scene, forming dominant rosters in several games.
While this expansion has certainly created opportunities, we are starting to see this strategy backfire dramatically. The reality of the industry is that simply forming teams to compete at the highest levels of any given game is not enough; organizations must find ways to monetize their business. Investors who were once happy to pump money into the stage, no doubt enveloped by the exciting opportunity, are starting to ask questions – and expect results.
A perfect example of problematic E-sports monetization is the Seattle-based Evil Geniuses. Since their creation in 1999, the organization has won over 180 titles in various games and has become the third highest earning organization from E-sports tournaments, according to Esports Earnings. Most recently, they have become major players in every popular E-sport, including Counter Strike, League of Legends, and Valorant. Yet, despite their successful tenure, the company has struggled with consistency, laying off many of their marketing and business operations staff over the last year. With related stories coming out of other storied organizations like TSM and CLG, many predict the industry is heading into an E-sports Winter.
So, if competing is not making these organizations money, what will? First, let us talk about how other sports organizations make their money. Revenue for traditional sports can be divided into 4 categories: Ticket sales, merchandise, broadcast rights, and marketing deals. Applying these revenue streams to an E-sports organization, ticket sales are off the table. The teams themselves truly get little from ticket sales, as most go to tournament organizers like Riot Games or Valve. On top of this, competitive games are always streamed to viewers around the world for free, so they are not making any money broadcasting.
Instead, the value of these organizations lies in their branding. By making their unique brand more appealing to viewers, they can sell more merchandise at a higher cost and make themselves appealing to potential sponsors looking for ways to reach the gaming audience.
100 Thieves, a new organization founded in 2017, has found amazing success with this model. They field teams in several top leagues but emphasized producing content in and out of E-sports.
100 Thieves CEO and Owner Mathew ‘Nadeshot’ Haag puts a lot of focus on continuing to build this brand outside of E-sports.
“E-sports has not been monetized to the level a lot of outside investors expected… I know it is a super competitive market, but we have this road in the gaming community, where we know, people are going to try it, so let us build a brand that does not have any ties to the gaming community and do something bigger,” Nadeshot said on his podcast earlier this year.
Despite their aggressive marketing being controversial, the results show how effective it is. Forbes magazine ranked 100 Thieves the second most valuable E-sports organization of 2022, with an estimated revenue of $40 million, and by far the fastest growing organization of the year.
E-sports may be flatlining, but cases like this show how the industry can use this chance to start fresh, with a focus on building a brand and making their organizations more monetizable. Without these changes, we may not have very many organizations left to root for.