The industry of Esports is on the verge of a complete collapse, according to analysers

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Ever since Twitch launched its live-streaming service in 2011, Esports have become the thing in gaming. No longer relegated to specific corners of the Internet behind layers of post-editing, games and the personalities behind them can be broadcast live onto monitors around the world. Streamers started to make an earning off of sponsorships and actually make a living for themselves, and investors started seeing potential in the audience’s desire for watching popular games played by people who could unironically classify themselves as “Professional Gamers”. Esports then exploded onto the scene with games like Dota, League of Legends, Counter-Strike and Overwatch earning millions of views in their respective competitive leagues and the teams earning a distinguished reputation as Esports stars. Yet beneath the veneer of million dollar investments and flashy trophies, there’s a rotting core underneath it all.

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An article by Kotaku recently exposed how dire the situation is for professional Esports, labelling the industry as a “bubble about to pop”. In an interview with Frank Fields, the manager for outgoing sponsorships at Corsair, he revealed that he is highly sceptical of the money being poured into Esports as well the revenue coming out of it. Kotaku clarifies that Fields has been involved with Esports since the very conception of the term and holds a good amount of authority when discussing the nature of the scene. Fields is quoted as saying, “It doesn’t make sense to put that much money into an industry that’s not making that much,” he said.

The sooner we recognize that we’re fooling a bunch of non-endemic people, the better off we’ll be long-term. We’ll be able to fix this bubble before it pops.

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Fields continues on to say that many teams cost upwards of $60 million dollars to purchase; NewZoo a statistics-based site that monitors the financials of games and esports, reported that last year investors spent over $682 million dollars on esports. When Kotaku asked NewZoo analyst, Jurre Pannekeet, on how much revenue the teams invested in make, he’s noted as say that “closer to 89 percent than 50 percent” of Esports teams are operating at a loss. A large percentage of these losses is reportedly coming from player salaries as well as franchise fees charged by publishers and IP owners.

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Fields says that the salaries being dished out to esports players are entirely unsustainable. League of Legends pros are supposedly earning around $105,000 a year which increased to $320,000 once the competitive league was franchised. Beyond salaries, the amount of money publishers are demanding for teams to even participate are ludicrous, with teams in the Overwatch League have to fork over between $30 and $60 million to just participate. So with all of that money being spent, it’s not a good sign that so many organisers are experiencing such heavy losses.

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When Kotaku asked an anonymous Riot employee who is involved in the management of the League of Legends League Champship Series with their esports avenues were making money, he simply laughed.

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In an interview with Sports Business Journal, founder of Complexity Gaming, Jason Lake said, “I just think good, old-fashioned common sense would go a long way here, because the revenue has still not caught up to the size of the demographic and eyeballs.”

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There’s a lot more insider knowledge in the original report, but it seems to boil down to one thing: Esports are in trouble. Big risks have been taken in an attempt to make esports the next “big thing”, but it seems the industry has been trying to fly before it can even work. The complete report can be found here.

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Last Updated: May 24, 2019

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