Esports Are Big Money

If you follow esports, you’ve probably noticed a lot of new teams popping up with ties to flashy names like Shaq, Magic Johnson, Steve Aoki, the 76ers, and–of course–the nebulous but omnipresent “consortium of investors.” Outsider investment in esports has been commonplace in other regions for years–Samsung, LGD and Korean Telecom, to name a few. But in North America and Europe, esports were always viewed as being extremely niche by anyone who wasn’t already a gamer–until recently. In the past year and a half, we’ve seen an explosion of money streaming into esports from mainstream pockets in the West. But why? The answer, of course, sits at the top of a mountain of cash. There’s big money to be made in esports: according to SuperData Research, the global esports market is expected to grow to $1.2 billion by 2019. There are also growing winning rates at

That’s because over 200 million viewers around the world tune into esports events every year, and most of them are 18 to 35-year-olds–so-called “Millennials.” Advertisers really want to reach Millennials because they’re just starting to earn money and make their own purchasing decisions. In the US alone, Millennials spent over $200 billion in 2016. Their purchasing habits aren’t set yet, so brands want to get their attention early and secure loyal customers for years to come. As they get older and make more money, brands hope that they’ll return and make bigger purchases. The big challenge for brands is that this age group is especially hard to reach through traditional advertising channels, like TV and print. Many of them have “cut the cord” and abandoned cable, choosing instead to go online. This has forced advertisers to look for alternate channels to reach them, and esports is a promising option. The outside investors buying up esports teams are hoping to get a piece of the pie that brands will eventually come to pay. How much could that potentially be, if esports blows up?

Well, taking a long view of things, the Los Angeles Lakers made over $300 million in revenue last year, a huge chunk of which came from sponsorship and advertising deals. So there’s plenty of money to be made, but for bright-eyed new investors, striking gold in professional gaming is no easy task. Without knowing much about the games, most of these new owners rely heavily on esports “experts” to run the show for them. Immortals is run by 22-year old gamer Noah Whinston, PSG Esports is led by ex-pro Bora “YellOwStaR” Kim, and Team Liquid, which sold the majority of its shares last year to an investment group, is still managed by long-time CEO Steve “LiQuiD112” Arhancet. But this doesn’t always work out for them. NRG Esports, notably backed by Shaq, A-Rod, and the co-owners of the Sacramento Kings, saw their League of Legends team fail to re-qualify for the LCS in their second split, after going through two general managers and multiple coaching staff. They have since disbanded their League team. Despite their inexperience in individual team management, these new owners do have an edge when it comes to running their organizations as businesses.