Nowadays all the indicators of esports competitions are growing up. Major players are entering the industry and it brings upon big money. It is against this background that famous advertising clients join esports. Thanks to the growth of the popularity and big money in esports, more and more businessmen invest their funds in esports teams.
But do the opportunities always cover the risks? The specialists of the esports site EGamersWorld will tell you about opportunities, problems, and examples of investment in esports.
What does a profit of esports teams consist of?
First of all, before studying the advantages of investment in an esports project, it is important to take a look at approximate income items constituting the cumulative budget of any esports team. The income items of esports teams can be divided into several parts:
- Sponsorship agreements. The essential part of the income consist of sponsorship contracts. For instance, teams often collaborate with manufacturers of energy drinks, computers and software, and even cars. Besides, sportsbook companies and electronic trading platforms also often become sponsors. Speaking about football disciplines, you should not ignore professional clubs. Esportsmen get real contracts with football clubs.
- Prize money at events. Esports of the highest achievements implies constant participation in tournaments. The winners of such tournaments can gain $250 000 as a one-off payment. Now imagine that there are approximately ten wins a year. That is the way the income of a team sums up.
- Sale of merch. Fans, the same as in big sports, often buy branded jerseys or accessories of teams. However, the sale of the merch comes out of the results of a team at tournaments. You should agree, nobody will buy a T-shirt from a Tier-3 team.
- Franchise. The situation is established in the way that more and more esports disciplines discover franchising. Global Leagues co-opts the best teams that get fixed dividends.
We can study the esports income till the crack of doom. But what advantages can attract investors to the industry?
Firstly, this is hasty growth. It is an open secret that recently the esports audience has grown up. And the growth is not only in the quantity, but the average age of the target audience. Consequently, the older the target audience is, the higher its paying capacity is.
Secondly, teams’ prospects of entering the stock market. It can seem to be a strange advantage, however, the teams are already making their plans about the broker’s board.
Problems hidden in esports investment
Investment is always connected with risks. It is impossible to say for sure that the set course will be the right one. So the risks, investments are correlated with, function as the main problem for the majority of investors.
There is no doubt that before investing, you need to study the market itself attentively. Investment in esports is a venture capital funding in its pure form. However, you should look for a really promising project.
Positive and negative examples of investments
USM Holdings’ investment in Virtus.pro is a successful example of investment. Along with investing, the results of the organization got on the rise across several disciplines.
An example of a bad experience of investment is a purchase of the organization Gambit by ??S. One the one hand, the team won a major (e.n. PGL Major Kraków 2017, CS:GO) being under the leadership of the largest network operator. However, some time passed and the team hit rock bottom.
Investment is not only a chance to pour cash into a promising industry. A passport to investing success is predicting and entrepreneurial feeling which someone lacks.
Esports has grown from kids’ entertainment to a true business that is managed by “big men” very fast. Organizations get more and more opportunities for getting considerable profit. However, to reach the level, you need rather significant funds, otherwise, they are doomed to be in the middle of the tournament bracket and to teeter on the brink and even maybe beyond the payback. But to invest, it is not enough just to have money. A good strategy always functions as a formula for the success of any project which here is an investment in esports.
