These days, esports organizations have become global enterprises of enormous proportions. It’s even reported that the industry is projected to reach about $4.8 billion in worldwide revenue by 2025!
But, how do they actually make a profit? From nine-figure sponsorship deals to streetwear drops, we have compiled the details that’ll give you insights into the workings of these teams.
Media and Streaming Rights
In 2023, the League of Legends World Championship attracted an insane 140 million viewers, rivaling that of traditional sports. At this point, media rights have become an essential source of income. Esports leagues sell exclusive broadcasting rights to the highest bidder, just like the NFL or the Premier League.
Platforms like Twitch and YouTube pay a lot to broadcast major tournaments. Even Riot Games, the publisher behind League of Legends, has negotiated multimillion-dollar deals to broadcast its regional leagues and world finals. Having this steady flow of cash adds a layer of financial stability for the league.
Prize Money (And Why It’s Not the Whole Story)
Think about the big prize money. For example, Dota 2’s legendary tournament, The International, has distributed over $200 million since it began. This means that winning a major event can make a team a multimillion-dollar payday.
But despite what everyone thinks, the prize money is not everything. It’s more like a handsome bonus that comes along with it. Keep in mind that the actual total is further divided among the organization, the players, coaches, and support staff. At the end of it, it’s not a sustainable financial model for the league to continue its daily operation.
Sponsorships and Brand Partnerships
Sponsorships take up a whopping 40% of the industry’s total income! By sponsoring a popular team or gamer, a company can reach young, tech-savvy audiences.
Just as Bodog sponsored the Canadian Football League, Esports sponsorships are no different, and these strategic alliances fund everything from player salaries to state-of-the-art training facilities.
Take a look at the landmark partnership between Red Bull and TSM (Team SoloMid). They reportedly have a $100 million deal spanning five years. Now, how exactly does this work? By placing the Red Bull logo everywhere in TSM’s universe, their product will be seen by the team’s fans every time. Just like Team Liquid, which has Monster Energy and Honda logos. And Cloud9, with their partners from BMW, AT&T, and Microsoft.
Merchandise
And of course, you also have your merch. Fans want to represent their favorite teams, so they are dedicated enough to buy their apparel and collectibles. It’s a pretty good way to build a community by proving loyalty through financial support.
For example, organizations like FaZe Clan have reported sales of $40 million in merchandise alone in 2023. They operate like modern streetwear brands, bringing in limited-edition drops and collaborating with iconic designers and labels.
Digital Content
In this industry, gamers are also known as influential content creators with massive followings.
Look at Ninja, for example. He earned an estimated $10 million in 2023 by streaming on Twitch and YouTube alone. Organizations that he worked with benefited from this by sharing ad revenue and offering exclusive sponsorships.
You also have teams that produce their own premium content. This includes docu-series, behind-the-scenes videos, and podcasts. By consistently providing content for their fanbase, whether sponsored or monetized, it becomes its own source of income.
Live Events & Digital Currency
Since the scene is constantly changing, most organizations have several methods to back up their funding, such as:
- In-Game Goods: Game publishers have been getting involved with teams more often to sell virtual items. Team skins, like in League of Legends, or branded weapon charms in VALORANT, provide a portion of every sale directly to the organization.
- Live Events: Live tournaments have returned as major money-makers. The 2023 League of Legends World Championship, for instance, generated $33 million from ticket sales, VIP packages, and event-exclusive merchandise.
- Franchise Leagues: Leagues for top-tier games like League of Legends, Overwatch, and Call of Duty now operate on a franchise model. Teams pay buy-in fees worth millions of dollars to secure a permanent spot. In return, they receive a share of all league-wide revenue, including media rights, sponsorships, and merchandise.
- Web3 & NFTs: Teams are now also experimenting with NFT-based digital collectibles, blockchain reward systems, and tokenized fan clubs to create new forms of engagement and monetization.
Overview of Esports Revenue Streams
| Revenue Stream | Key Players / Examples | How It Works |
|---|---|---|
| Sponsorships | TSM & Red Bull, Team Liquid & Monster | Brands pay for logo placement, branded content, and access to the team’s audience. |
| Media Rights | Riot Games selling LoL broadcast rights | Streaming platforms and TV networks pay for the exclusive right to show tournaments. |
| Merchandise | FaZe Clan’s streetwear drops | Selling team-branded apparel, collectibles, and high-fashion collaborations. |
| Creator Content | Ninja’s streaming empire | Organizations take a cut of revenue from their players’ personal streams and videos. |
| In-Game Items | LoL & VALORANT team skins | Game publishers share revenue from the sale of virtual items branded with team logos. |
| Live Events | LoL World Championship Finals | Revenue from ticket sales, VIP experiences, and concessions at arena-scale tournaments. |
| Franchise Fees | Call of Duty League, Overwatch League | Teams receive a share of the league’s total revenue in exchange for a large buy-in fee. |
Final Thoughts
Most successful esports organizations know they are now building global brands that resonate beyond the game tournaments themselves. To sustain all these ventures and the main team, they need a mix of entertainment, content creation, and fashion.
