Sponsorships are one of the oldest ways in which eSports organizations have been able to support themselves. Sponsorships in eSports work much like in more traditional sports, with a brand advertiser paying the team or pro gamer a fee in return for some form of co-branding or co-marketing activities. eSports sponsorships have come a long way over the past 20 years, evolving from deals where a team might receive free merchandise to big deals with brands as large as HTC and Nissan.
The fact that teams receive most of the sponsorship money raises the important question of what percentage of overall revenue goes to the players – through a direct salary or otherwise. In many established sports, players are guaranteed a certain percentage of various team/league revenue sources. That kind of leverage is the result of aggressive collective-bargaining over long periods of time, and though some have called for unionization in eSports, itu2019s a long way off.
Image | Shutterstock“Image Credits:Shutterstock (opens in a new window)Generally speaking, the teams receive the bulk of sponsorship money in eSports. This money is then expected to trickle down to the players in the form of paid expenses, gear, and (at the highest level) salaries. Sponsorships for individual players are fairly rare at the moment. Currently, competitive exclusions limit the type of additional sponsors that a pro gamer can partner with outside of his or her team.
The rise of salaried pro gamers has been a watershed moment in eSports. A contracted salary, even if it is a relatively small one, provides a level of stability and predictability that allows a gamer to make the decisions required to go pro. Unlike in traditional sports, pro gamer salaries are rarely discussed openly. One reason for this is that the base salaries tend not to be particularly impressive when compared to even an average profession.
“Image Credits:Andrej Vodolazhskyi (opens in a new window) / Shutterstock (opens in a new window)For instance: the League of Legends Championship Series, arguably the highest-profile eSports league, institutes a minimum annual salary of roughly $25,000 per player. In 2014, Michael Ou2019Dell, the owner of top eSports organization Team Dignitas, stated that the u201cbasic salaryu201d for his League of Legends players was $50,000 per year. Recently a source revealed that Team SoloMidu2019s Counter-Strike: Global Offensive (CS:GO) team would become the highest paid CS:GO team at $3,000 per player per month.”Another aspect of pro gamer salaries is that often, many or all players on a team will be paid the same amount. Anyone who even loosely follows the salaries of professional athletes will know that this is highly unusual. Star players in traditional sports will, generally speaking, always out earn their peers – sometimes by astronomical amounts. One can reasonably predict that eventually star players in eSports will attempt to leverage their market power to get higher salaries; how this will affect the stability of teams remains an open question.”
Content creation is when pro gamers create online content such as live streams, YouTube videos, and social media posts. Ultimately, the goal of content creation is to build an audience and ensure a high level of engagement from that audience; this in turn can attract lucrative sponsorships and brand partnerships.
“Image Credits:Oleksiy Mark (opens in a new window) / Shutterstock (opens in a new window)Live streaming on video platforms such as Twitch is the most popular form of content creation for pro gamers. By streaming, pro gamers can receive a share of revenue from ads run during their stream, as well as a share of monthly fees generated when viewers subscribe to their Twitch channel. Additionally, many streamers use this as an opportunity to solicit donations from fans – an activity that can be shockingly lucrative.”According to eSports and gaming research firm Super Data, in 2015 gaming-related content creators will bring in a total $2.9 billion from advertising and sponsorships, $638 million in direct donations, and $252 million in paid subscriptions. It is not unusual for an individual pro gamer to earn well over $5,000 a month from streaming and content creation alone.”Thus, content creation can lead to pro gamers having revenue sources that are disassociated from the competitive aspects of gaming. The audiences that pro gamers build through content creation will often stay with them even after their professional careers are over. This can serve as an important u201cnext stepu201d for some retired professionals, although not many players make the transition from pro to full-time content creator.”
In-game markets are the most unique revenue source for eSports professionals. An in-game market is a market for digital goods that is either part of or associated with a game. For example, within Counter-Strike:Global Offensive (CS:GO), there are specific digital items called u201cstickersu201d that are decorated with either the logo of a professional team or the digital signature of a professional player. Fans purchase these stickers and place them on in-game items to demonstrate their support of certain teams or players. When a sticker is purchased, the player or the team associated with it will receive a percentage of the sale. While these items are only sold for a few dollars, the existence of millions of fans creates massive revenue potential.
Sticker sales associated with the August 2015 CS:GO tournament, ESL One: Cologne, resulted in almost $4 million in total payouts to the 16 teams that were involved.
“Image Credits:Mark J. Terrill / APCS:GO is a unique example where players can receive a direct share of in-game digital sales, but other games have an indirect way of providing players with access to this revenue stream. Both DOTA2 and SMITE, two popular top-down strategy games, have major tournaments with prize pools that are largely funded through the sale of in-game items. The often quoted $18 million prize pool for the DOTA2 world finals was funded through the sale of a digital item created specifically for this purpose. The $2.4 million prize pool for the SMITE World Championship in 2014 was amassed in a similar fashion.”In-game markets represent a whole new world of digital merchandising that is unheard of in traditional sports. By building the right tools, the developers of eSports games can provide fans with unique ways to endorse and support their favorite players and teams.nnImage | stockshoppe“Becoming a successful pro gamer requires natural talent, hard work, and sacrifice. To be the best and fight your way into the top-paying tournaments takes real world resources: time, money, and will power. This is why, over the past two decades, pro gamers have had to struggle to secure diversified sources of income. eSports is still an emerging industry, and its business models reflect that. But the hard work put in by pro gamers to date has created a world in which—if you are passionate about and dedicated to eSports—it is in fact possible to make a very good living doing what you love.”Image Credits:nasirkhan (opens in a new window) / Shutterstock (opens in a new window)
Many of us spent our teen years dreaming of someday turning our talent for video games into a viable career, and right now many mainstream news outlets are reporting on the development of pro gamers doing just that. Understandably, coverage has been somewhat sensationalized by a significant focus on a handful of multimillion-dollar tournaments. In reality, the road to a viable income has been a long and hard one for professional players, and tournament prize pools represent just one facet of the pro gaming value chain.
The business of being a pro gamer is, in actuality, a highly diversified one. This is partially a result of the fact that, for the vast majority of its history, eSports has been a true labour of love for its participants. In order to survive, teams and players have had to be both creative and aggressive with how they earn a living.
This article will take a deep dive into the different revenue streams available to pro gamers, from player salaries to in-game markets, with a focus on those revenue streams that are unique to eSports.
Auwal Isa-Odidi is President and Co-Founder of Waypoint Media, a full service eSports advertising platform. There, he helps brands understand and connect with the growing eSports audience.