The Big Game: How They Make Money from Cybersports

Cybersports is a reasonably costly endeavour. But strategic investors have learnt how to make money from it. How business is organised on the professionals of computer battles

Cybersport is a popular trend in information technology: the market volume 2017 was about $1bn worldwide. News about significant investments in cybersport is appearing more and more often. Why investors need it and what benefits both sides of the deal get.

As the digital landscape continues to evolve, savvy investors and enthusiasts are turning their attention to the burgeoning world of cybersports, recognising its potential for significant financial returns. With platforms like 1xbet app download bangladesh offering accessible and immersive betting experiences, the intersection of technology and sports betting is proving to be a lucrative venture for those in the know. This shift towards digital arenas marks a pivotal moment in the monetisation of cybersports, reflecting a broader investment trend in high-tech entertainment and competitive gaming.

The Way It Works

Individual cyber athletes and teams participate in tournaments and marketing activities. Cybersport organisations usually represent them: they take on the roles of agents and managers to leave gamers with one task – to play.

The hype makes it seem like players, managers, agents and roster owners are swimming in money. In reality, this is not the case: there are very few cyber sports organisations that make a profit on their own.

Team Maintenance Costs

Maintaining teams that could compete at the highest level is already relatively high – for example, the League of Legends squad costs about $0.5 million per year. The market is still at the growth stage: there is still not much money and sponsors, but the revenue of cyber sports organisations has not reached the ceiling. According to the author, this is especially true for sources that will generate the most revenue in the future: franchise leagues and strategic partnerships between teams and large companies.

The income of cybersports organisations is made up of the following items:

• Prize money from tournaments. Despite the huge prize money figures, this is one of the most modest sources of revenue for the organisation, as most of the prize money (usually at least 70% and sometimes 100%) goes to the players. Prize money is often delayed or not paid at all. There are also organisational difficulties: for example, the tournament organiser may demand to come to China and collect the prize money in cash.

While these problems gradually fade as infrastructure and practices, including legal ones, grow, it is unlikely that it will ever be possible to build an organisation that pays for itself solely (or at least mainly) from prize money.

• Sports clubs. Cybersport is similar to traditional sports: although the skills required to win competitions are quite different, the competitive spirit itself, as well as the principle of building infrastructure, methods of working with the audience and monetising the brand, and marketing opportunities, are the same. At the same time, the cybersport audience is already overtaking many traditional sports, and if we consider its growth rate, then, according to some (optimistic) estimates, in 10-15 years, it will overtake the number one sport in the world – football.
• Sale of paraphernalia. This option is practically unavailable to single players, but it works well for organisations and teams – the income is directly proportional to the popularity and size of the fan audience. These, in turn, are largely dependent on results, but not only that – the “media” of players also has an impact: their personal fame, popularity and activity on social networks. That is why teams often include clauses in their contracts about a mandatory minimum of activity in social media.

In a few Years, Cybersportsmen Will Be Richer Than Footballers

This is the conclusion reached by many sports clubs that have decided to participate in the growing industry. At the same time, many have limited themselves to taking one or more players to a football simulation game – FIFA – simply because it is near and dear to their hearts. However, the number of FIFA audiences is far from popular disciplines, such as League of Legends (LoL), where the number of viewers of the World Cup alone exceeds one million even without the Chinese audience, and with it takes the bar of one hundred million.

Many have gone further. For example, Turkish football clubs Besiktas and Fenerbahçe have opened squads in the Turkish top league for League of Legends: this game is very popular in Turkey, and the clubs get cross-marketing by attracting cyber sports fans to their football teams, and vice versa. Germany’s Schalke 04 also has a LoL line-up – it competes in Europe’s top division. However, not everyone can easily succeed on this path: for example, the famous Paris Saint-Germain left Cybersport after a year because the team could not get into the top league.

Conclusion

Already, cybersports is a big business that continues to grow. Organisations have more and more opportunities to make high profits, but to get to that level requires investment. 

Otherwise, they are doomed to be in the middle of the standings and teetering on the edge, if not beyond payback.