Even though Contender Esports is a grassroots esports organization; I would like to touch on a topic that is often discussed and unknown to many that aren’t involved in the pro esports scene. That issue is it’s lack of profitability. Esports is a rising industry and becoming more popular year after year. Tournaments have massive prize pools and teenagers are getting to play video games as a career. People see the team houses or sometimes mansions and training facilities. They see the sponsorship deals and viewership of the events. Having an esports org is awesome and looks cool and that’s why so many people rush to start one only to learn the cold, hard truth. They lose money. The better you want you team to be the more money you will lose. Everyone expects the local community to get behind the org and purchase merchandise. They expect the government to give them funding for their org and they expect local small businesses to sponsor them just because they are an esports org. That’s like the average high school football player saying you should sponsor me because I play football.
Esports are experiencing the same growing pains that tradition sports did. What we have to do is breakdown how these companies are profitable. The number one source of revenue for professional sports leagues/teams is media rights. After that it goes sponsorships, merchandise and ticket sales.
The issue with esports is that unless if tournaments are operated by tournament organizers that don’t own the game such as ESL and BLAST they are not intended to make money. They do them to grow awareness for their game. Companies like Riot and Epic Games (which happen to be located in Cary, NC the same city that Contender Esports is headquartered) want people making in game purchases which is why the League of Legends and Fortnite are free. It is a marketing strategy and it works. Activision | Blizzard are one of the acceptations that want to turn a profit which is why they made an exclusive 3 year $180 million deal with YouTube Gaming. That is not a lot of money and none of it went to the teams unlike how it is in the NHL, NBA, etc. Being an esports tournament organizer is like owning a tech company. It takes years to become profitable and you have a 1 in 5,000 chance at best of succeeding. These organizers must wait until the spectator scene is large enough where companies such as ABC and Fox Sports will pay to stream live esports and for major companies sponsor with some big time money. Pretty much we’re waiting on Disney to throw some money into esports.
In the meantime while waiting for media rights Ubisoft have come up with a solution for Rainbow 6: Siege teams to make money. That solution is profit sharing and is brilliant. They are giving a percentage of in game purchasing revenue to teams in their franchised league. The Esports Observer had an interesting article about it stating: “Esports organizations in the program will receive 30% of net revenue from the sale of in-game items”. The teams were very thankful Ubisoft decided to do this and I’m sure other leagues will follow their model.
Overall running tournaments are a pain due to the technical difficulties. It makes it even more challenging when they ate network tournaments instead of LAN. Not all LAN tournaments are open to spectators and often times esports tournaments will happen with everyone at the same location just because of convenience. Esports tournaments are awesome to go to. I went to the Overwatch 2019 Grand Finals at the Wells Fargo Center in Philly and it was amazing. The atmosphere was better than that of traditional sports. Unlike traditional sports we were still looking at screens. LANs are awesome to go to but require time and money unless if they are local. Since LAN tournaments are pretty much watch parties with the players there I had an idea of the tournament organizing companies selling broadcasting rights to movie theaters, convention centers, stadiums, etc. That way esports events could happen all the time whether gamers travel or not. The Call of Duty League is already considering doing a bubble for the 2021 season. This would be challenging since tournaments are broadcasted for free, but it could possibly work. This will allow for these facilities to make money as well as the tournament organizers. It will also help grow esports in the communities and provide an affordable option for esports enthusiast.
One more thing I will be touching on is live events such as TwitchCon and E3. As of now all meetups, conventions, etc. have been cancelled or moved online. I went to Dreamhack Atlanta 2019 last year and it was fun. There were tournaments, panels, and lots of vendors. To the point I made earlier we were watching screens. Panels can be done online as well because it is just people speaking. With the gamers competing in the tournaments, they would still travel for a LAN. Now I know you are thinking what about vendors and social interaction. Well we do the same exact thing as I mentioned with the watch parties. Have it take place at a convention center where people can watch and vendors can set up. The Raleigh Convention Center is already used for events such as PlayThrough and GalaxyCon.
In summary things have been going online especially in recent times. People are now going into the offices less, ordering food and other items online or curbside pickup, and working out from home. This is not completely online, but is a great way to engage the community and serves as an affordable option. This will also help these companies become profitable so that they are able to continue on hosting these amazing events.