Is eSports too dependent on sponsors?

In a rather ironic short posted to eSports weekly,  Steven Arhancet, co-owner of Team Liquid, and Jason Lake, owner of Complexity, discussed the involvement of sponsorship in eSports. Host Kevin Knocke opened the segment with an astounding figure of 80% which makes up eSports revenue, which begs the question – Is eSports too dependent on Sponsors? Short answer, yes. But is this a bad thing?

The short segment is rather ironic, noting the Coca-cola logos plugged all over the screen, but a few important points are discussed. I understand most people don’t enjoy correlations between eSports and conventional sports, but an interesting point was made on Reddit.

User /u/xStayHungry posted the following comment.

“I did some research on the NFL’s revenue split out of curiousity.

http://www.sponsorship.com/iegsr/2015/04/06/NFL-Sponsorship-Revenue-Totals-$1-15-Billion-In-20.aspx

Sponsorship revenue accounted for $1.15b of the NFL’s roughly $9.2b total revenue in 2014. That’s 12.5%. So, on it’s face, 80% for esports seems incredibly high. But because esports is internet-based and reliant more on viewership than ticket sales, it may not be a perfect comparison. Regardless, I think teams are getting smarter about how to monetize all those eyeballs. It won’t be all before we start seeing more creative things pop up that help support teams and players financially that are more in line with their core competency.”

What followed was a short discussion on just how one-dimensional eSports can be when it comes to the revenue generated from large events. The outlier here being the Dota 2 International and other crowd-funded tournaments, such as the newly announced Halo World Championships.

Let’s look closer to home

Not too long ago we had a discussion with tournament host Luca Tucconi, CEO of Orena, where he shared his thoughts. Tucconi wished to introduce a pay-to-enter model which would see players taking a large portion of the cash generated from signups. Tucconi had the following to say:

”The main idea behind moving into paid cups and other platforms which will be released in the near future, is to allow Orena to invest in itself without relying solely on exterior “sponsor based” support. This also means we can control our setup from the ground up, guaranteeing our high standards of “Online” and “LAN” event production. With our premium cups and upcoming ladder system, the competitors and community at large now have a “more” direct influence in the growth of local e-Sports.”

The use of “sponsor-based” support would be directly driven from signups, of course welcoming exterior sponsorships as well. This is a major “problem” around the world (I say problem when discussion the one-dimensional nature of eSports), and the problem is prevalent in South Africa too. You may recall my Do Gaming Championship article where I discussed their prize pool, and not to cry over spilt milk, but this is a perfect example of the damage sponsor driven eSports revenue can do. In this case, there really wasn’t any revenue to start with. For example, take the largest prize pool at DGC (~R230 000) and note that only R60 000 was cash. This is just a rough figure. This means that only 26% of the actual confirmed prize pool was cash which was spread over the three top teams.

So that should answer the question, eSports is in fact way too dependent on sponsorships, but how do we move away from this? Well, we don’t really want to at this stage, at least in South Africa. We don’t have major television networks and rich team owners interested in the advertising just yet. Sponsor-driven revenue is here to stay, but it needs to be more if we want to create the proper competitive infrastructure for our teams and players.

Like esports?
Check out esports central

Last Updated: November 10, 2015