We all know that the esports market is growing rapidly and has enormous financial potential. However, few fans understand exactly how esports teams make money. Top-tier founders of esports organizations have repeatedly stated that competitive gaming is a much more difficult industry to make money in than people realize. So, such companies need to diversify their sources of profit in order to stay afloat and grow. In this article, we will discuss these financial channels, and you will understand how the most reputable esports organizations earn millions of dollars.
Tournament prizes
Esports teams can make money from tournament prizes, but it’s not as simple as it sounds.
The first step is to qualify for a tournament – and that can be extremely difficult. If a team qualifies, they’ll compete against other teams in their region (or country) for a chance at winning the prize pool. Sponsors or investors who are interested in promoting their brand through esports typically fund it.
Once a crew has qualified and won their place in the tournament, they’ll play against other teams who have also made it past the qualification rounds. The squad that wins the most matches out of all these competitors will be awarded the prize pool from sponsors and investors, and it can reach fairly large amounts of money.
Sponsorships
Cybersports teams make money from sponsorships in a number of ways. For example, they can sell the naming rights for their team or the rights to use their logo on merchandise. The teams can also get sponsorship deals with companies that want to advertise through the team’s broadcasts or social media.
On top of these more straightforward forms of sponsorship, there are also more unusual options available. For example, some esports teams have been sponsored by soft drink companies – something that would not seem obvious until you consider how many hours’ players spend playing games without eating or drinking anything.
In fact, this last point is an interesting one: many esports teams are sponsored by companies that make snacks and drinks because they know how important hydration is when it comes to gaming.
Merchandise
The merchandising industry is also a huge moneymaker for esports teams. They can make their own products and sell them to their fans or license the use of their logos and images to other companies that already produce merchandise. When these companies sell products with an esports team’s logo on them, they pay the team a royalty fee. This is also known as licensing.
Some squads have their own stores where they sell merchandise directly to fans. If you’re interested in buying some apparel or accessories with your favorite esports team’s logo on it, check out their official store.
Streaming
There are two major ways esports teams make money from streaming. The first is through advertisements and sponsorships, which are like commercials on traditional television. Advertisements play at the start of a stream, while sponsorships can be integrated into the stream itself.
The second way to make money off streaming is through subscriptions. These are membership fees that viewers pay to watch a channel for a set period. Some examples of subscription services include Twitch Prime and YouTube Red.
