So, I have a dirty little secret to reveal that anyone “in the industry” would hate to hear if it were to ever get out:
eSports isn’t profitable.
Oh sure, a few notable athletes and teams can make money, but those are the exceptions and not the rule. Every league and almost every team needs a sugar daddy to stay afloat, and as soon as those investors notice that they’re not making a return, it all collapses like a house of cards.
Don’t believe me? Let’s take a look at League of Legends. Ostensibly the biggest eSports league on the planet with millions of players and even more millions in prize money to be won, Riot Games doesn’t make a single cent off their professional eSports division. In fact, Riot has invested “way over” $100 million into making League of Legends the biggest eSports league in the world, and they’ve yet to see a return on investment.
What about second place, Dota 2? Also not profitable. The International might have the biggest prize pool in the world, but Valve crowdfunds that prize pool with in-game sales and matches what players pay from their own pocket to further inflate the final number. Winners take home a huge windfall, but those are the precious few.
A 2015 analysis found that the top 5 players in the world take home the lion’s share of all available cash prizes in Dota 2. The top 50 players make more than all remaining players combined. And of the teams that took part in The International 2015, 72% of them broke up after they failed to place.
Imagine if 72% of major league baseball teams disbanded if they didn’t win the World Series, or if the top 50 players made more money than every other player.
But maybe we shouldn’t be so surprised: income inequality in the United States is the highest it’s ever been. According to a recent report from Forbes, the top 10% have more wealth than the rest of the country. The top 1% have fully one-third of all wealth in the US. And the bottom 50%? The majority of Americans? They have less than 2%. If anything, eSports is just mirroring the world we live in.
So why hasn’t eSports totally collapsed then? Well, you could argue that some of it already has. Blizzard largely shut down its eSports division in 2018, taking everyone by surprise. The Overwatch League, perhaps the most interesting and successful of the Blizzard eSports leagues, has seen high-profile departures of many of their key casting talent, leading many to speculate if they might be the next to fall.
The problem wasn’t that Blizzard didn’t have a thriving eSports scene - they did. The problem was that it just wasn’t making them any money. Even their most famous game is on a razor-thin margin and Activision seems ready to pull the plug if they can’t turn the Overwatch League into a money maker.
Despite all these high-profile warning signs, millionaires and billionaires still throw money at eSports, desperate to be on the ground floor when it finally does take off. The only problem is that throwing this much money around is inherently destabilizing to the market. Everyone is so desperate to be on the ground floor when things finally do start making money that they don’t realize it’s a long-game. Profitability takes time, and every time someone pulls the plug on a team, a league, or anything else, it keeps setting eSports back as a whole.
Every time it looks like eSports might finally arrive, the finish line keeps getting moved back. At this rate, I’m not sure if eSports will ever truly make it.
