If you were to take a look at Forbes’s 2020 ranking of the ten most valuable eSports companies, you might assume that all is well in the eSports industry. When the eSports and entertainment company FaZe Clan announced it planned to go public with the help of a merger with SPAC, it came at a time when the company was worth $650 million and projected to reach $1 billion. This massive evaluation, however, did not come to fruition. Instead, FanZe topped out at $400 million in 2020.
The reason for the discrepancy between the company’s projected and actual worth can be summed up by the “and” used in its description. FanZe is an eSports company and an entertainment company, and the company’s initial evaluation was propped up by the entertainment side of its business, not its eSports division. This is the case for many eSports companies whose revenue isn’t solely dependent on eSports but on eSports and a combination of other sources.
Industry Odds – Gambling on Consumer Choices
eSports fans, like all sports fans, are a varied bunch. And just as you wouldn’t expect a diehard hockey fan to necessarily be a WNBA fanatic, it’s not guaranteed that a Fortnite fan might also be a League of Legends spectator. eSports companies, then, have the delicate job of predicting which franchises will draw in crowds and which will not, a precarious game made even more precarious based on its consumer base, which tends to skew young (16 to 34, on average). This group is primed to change hobbies as they grow and develop or as responsibilities shift to other avenues. Couple that with the plethora of video games currently available, and you have a recipe for uncertainty.
A Challenging Industry
Changing consumer patterns aside, the industry also must contend with additional roadblocks, including the media’s inability to catch up to viewership demands and talented players commanding staggering monthly salaries. Additionally, eSports teams have restrictions that other, similar businesses do not.
An eSports team cannot, for instance, sell game contraband without the express permission of the game’s publisher. This is because eSports teams–unlike artists and writers, for instance–do not own the product with who they’re associated. And since the revenue from an eSports competition generally goes toward paying the players, company revenue is not necessarily tied to the success of a single tournament.
Many eSports companies have pivoted to producing original content to pair with their eSports products to combat these revenue obstacles. This, however, returns to the eSports industry problem, which is dependent on alternative sources of revenue to be profitable. This approach depends on consumers buying into the company as well as the esports they originally tuned in to see.
The Big 10 in eSports and What They Can Tell Us About the Industry
Despite its challenges, there’s glory to be had in the eSports world, and top teams and players are the recipients of that glory. According to NerdStreet, the top 10 eSports organizations in 2022 are as follows:
- OpTic Gaming
- GE Esports
- Team Liquid
- Natus Vincere
- 100 Thieves
Even with CEO scandals and lackluster showings from some crowd favorites on the list, the continued presence of eSports spectators and participants is a good sign that the industry is ultimately on the right track. After all, eSports would be over and done without people to play and people to watch. That an audience exists for it is a clear sign that all hope is not surrendered. And with the push toward alternative investment methods (i.e., the introduction of blockchains and NFTs into eSports), the future isn’t, perhaps, as barren as previous reports indicate.
This optimism extends down the line, from number one ranked OpTic Gaming to number ten ranked 100 Thieves. While the former enjoyed a 2022 season as the undisputed kings of first-person shooter (FPS) games and the runner-ups of the VALORANT world championship, the latter enjoyed an August filled with wins, including at the Call of Duty Championship. That a team with a great year and a team with a great month are both represented on the top ten list means there’s room for everyone in the winner’s circle.
The importance of eSports organizations may lie not in the revenue they generate or the number of wins they achieve but in the piece-by-piece victories that make up each team’s individual story. Spectators, after all, love a good comeback and surprise victory. In an industry where a bad day can separate the best from the worst, the thrill of the sport may be just enough to keep organizations afloat.