Business trends: how to make money from esports?

Computer clashes and online battles are one of the most popular entertainment in 2018. But only recently have businessmen and professional investors seen the potential of this area as a way to make money. It is already expected that in the coming years the best brands in the world will compete for sponsorship opportunities in eSports. How does the esports business work? How should you invest in eSports? How to make money in this area?

Esports is one of the most popular IT trends. The market volume in 2017 alone was nearly US $ 1 billion. Millions of dollars are constantly invested in this area. What is the meaning and benefit of such investments?

Cybersportsmen regularly participate in professional competitions, where they represent certain organizations. These companies take on all the tasks, and the player himself just needs to play well and win.

But by themselves, sports organizations and players do not generate profit, but receive it from other sources. The market itself is now at an early stage of formation, because there are not enough funds and investors, but the profit is steadily increasing, although it has not reached the highest point. This is especially true for profitable sources.

Sports organizations generate revenue from a variety of sources.

Tournament winnings.

Almost every tournament in which e-sportsmen compete has a cash prize. Although many consider these winnings to be the only source of revenue, the prize money is the smallest revenue because most of the money goes to the players themselves and not the companies.

Also, these funds are constantly delayed or not paid out to winners. For example, a competition is held in Germany and the organizers may require the main company to come to China to collect the money.

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Yes, now this business is developing and these problems are gradually disappearing, but they still exist. And many analysts believe that it will never be possible to fine-tune the work of esports organizations so that they work exclusively with player wins.

Sports clubs.

Essentially, eSports is no different from traditional sports. There is a different approach to the job, the equipment and the skills needed, but the idea itself, the brand, earnings, working with the public, marketing and other factors also work.

Already today, many experts say that e-sports players will soon become more famous and richer than football players. And the public itself is already turning away from those interested in traditional sports.

Professional players form special clubs, which are essentially the same companies. They recruit, train players and provide the necessary gadgets for the job.

There are full-fledged football clubs (eg “Besiktash” or “Fenerbahce”) that recruit e-sportsmen for League of Legends. The advantage of this is that traditional football attracts more fans who were initially interested in eSports specifically for their club.

Cross-marketing techniques are beneficial for everyone. And there are many such companies.

Not everyone can do it, but for many it works quite profitably.

attributes.

One of the most profitable sources of income available to sports companies or organizations is the sale of branded merchandise and equipment. Self-employed players cannot do this, because the income will depend on the popularity and “promotion” of the company.

Here it is important not only to engage in the development of the organization, but also to popularize the player himself. In many ways, it's the player and his personality that draws fans in. That's why, when signing contracts, clubs include clauses such as esports player activity, participation in events and communication with supporters.

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These fans and potential players, as in the usual show business, are ready to spend money on branded items. These can be not just ordinary T-shirts and souvenirs, but also professional equipment. For the most part, clubs and similar companies sell computer mice, mats, fans, and other accessories.

Profit from franchise tournaments.

After the esports market began to develop, profit distribution systems also emerged. Before that, all companies and the players themselves worked essentially separately or absolutely together.

This means that a self-employed player must finance himself, pay for travel and buy tournament participation. And if they win, they can keep all the money for themselves. Or players from large companies are fully subject to the contract. The company can pay all costs, but a large percentage of the earnings will go to them.

But even the world's professional gaming clubs always work “in the red”. The best solution in this case is to switch to a franchise system. Its essence is that the league shares the profit with the players or teams.

To stay in the league and participate in subsequent tournaments, you need to pay entry fees. They are made by a specific company, in which the players will participate.

This is how the American NA LCS League of Legends works this year. The same system is also in Activision Blizzard's Overwatch League – more than 10 teams simply bought seats for $ 20 million.

Sports clubs, companies or private entrepreneurs have become investors in sports teams. And almost all the profits that the tournaments offer, offering profits of almost US $ 4 million, will go straight to the investors.

investing in electronic sports

Investing in eSports is a profitable business

Esports is not a business for everyone.

The problem is that most entrepreneurs think of business like this:

  • invested funds;
  • elaborated the sales system, set up the channel;
  • sold a product or service;
  • made a profit.
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But in this case, the main target audience for esports is the so-called generation Z – users who may not be buyers now, but will in the future. The audience is now in the millions and is constantly growing.

And professional investors understand that today the cost of a contract may be large, but in a few years it will grow exponentially. However, there may be no profit during this period.

Today, cybersportspeople mainly deal with:

  1. The creators of gaming devices and equipment.
  2. Developers of electronic keys for games.
  3. Online platforms and casinos cooperate with game manufacturers.
  4. Banks advertise players, issue cards with cashback.
  5. Energy drink manufacturers buy ads.

But lately, even companies that seem to have an audience that is not what eSports can offer. For example, Audi and Mercedes.

They take into account that soon the main audience for this type of entertainment will grow and will be able to buy their products or advertise the brand. And then buying advertising will cost a lot more.

Forward-thinking investors are choosing to invest in eSports now. One of the many factors that business owners need to consider is that the fees for a profitable investment are rising every year. Sports partners are constantly looking for these investment options.

Investing in esports is a way to reach this team's audience and the esports market in general. Over time, an entrepreneur can make huge profits if he chooses the right investment system.

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