Are eSports Players earning too much?

Esports professionals and Twitch streamers are earning a lot more than boxers, tennis players and footballers these days. Take Kyle “Bugha” Giersdolf, a 16-year-old who won $3 million for the Fortnite world cup in June as an example. Despite being his first major career win, the American took home $1.1 million more than what Grand Slam finalists earn.

In the world of video game streaming, it’s no longer uncommon for elite players to gross $5 million or more per year. Tyler “Ninja” Belvins, for example, earned $10 million in 2018. The YouTuber Felix “PewdiePie” Kjellberg made an even bigger sum of money the same year: $17.5 million.

So, how do eSports players make money? And why would someone pay millions to people whose entire lives revolve around video games?

Sponsorships

Sponsorships account for 40% of all money made in the eSports industry. Fortune 500 companies like Google, Coca-Cola, Toyota, and Red Bull shell out millions of dollars to partner with leagues, teams, and players every year.

Online-based brands lead the list of conglomerates with enormous partnerships deals with eSports. Twitch, for example, has a $90 million contract to broadcast tournaments involving the popular multiplayer game, Overwatch.

The most successful teams and players also seal sponsorship deals frequently. Cloud9, an organization that competes in League of Legends, Overwatch, Fortnite, and more games, has an active contract with BMW. Japanese brand, Honda, on the other end, has a partnership with the Dutch cum US-based group, "Team liquid."

Brand sponsorships in eSports are too rampant that some critics think it's not very good for the industry. Some players earn 80% of their annual income from brand partnerships. That means any sudden end to these contracts can seriously hurt revenues for some of the most talented players in the world.

Tournament Winnings

Winning tournaments is every eSports organization’s goal. That’s why many of them bring together dozens of players who can compete in a wide range of games. Cloud9, for example, has players who compete in all major video games: League of Legends, CS: GO, Fortnite, PUBG, to mention a few.

As a result, the organization has won over $9 million from major competitions. Its closes competitors, team SoloMid and Faze Clan, have won just over $10 million through championships. The most successful eSports team, however, is Team Liquid, having garnered over $33 million from prize pools.

Individually, eSports players earn between $20,000 up to $5 million per year, depending on their performances. View the average eSports player salary here. Also, find a breakdown of exactly how much money streamers and professionals make from various income generation sources.

 As an overview, here are the most successful eSports players and their overall winnings.

• Kuro Takhasomi—Team liquid Player, $4.19 million
• Johan Sundstein—Team OG player, $3.7 million
• Amer Al-Barkawi—Team Liquid/Team OG, $3.7 million
• Ivan Ivanov—Team Liquid, $3.5 million
• Lasse Urpalainen—Team liquid, $3.5 million

Needless to say, Team Liquid is home to the world’s most talented eSports players. However, there are thousands of more players who earn decent incomes each year by winning video game competitions.

Media Rights

Twitch and YouTube are no longer the only media networks battling for the rights to broadcast eSports games.                 Facebook wants a piece of the pie, and so do ESPN and Sky Sports UK. Facebook joined the eSports bandwagon early in 2019 to stream ESL games exclusively.

Both ESPN and Sky Sports UK also have multimillion partnerships with eSports organizations to broadcast video game tournaments. Unlike Facebook, however, the established media channels charge viewers to watch their content.

Regardless, money coming from media companies has been helping eSports players tremendously. The $90 million Twitch paid to Overwatch has elevated the video game into a global organization that makes the dreams of thousands of players come true. Overwatch has been holding tournaments nearly every week, similarly to ESL, since it partnered with Facebook.

Advertising

While eSports fans generally hate adverts, they are unavoidable in the entertainment world. They are a major source of revenue for organizations and players. To provide some context, Mercedes Benz has a love-hate relationship with fans of the ESL organization.

After its endorsement deal in 2017, the car automaker has been paying millions of dollars to sponsor ESL eSports players. Of course, both fans and the ESL love that aspect of the company. But on the other end, Mercedes has regularly been criticized for creating ads that are irrelevant to eSports fans.

Coca-Cola, however, seems to get everything right when it comes to advertising. The beverage company sponsors Tespa, a brand that organizes video game competitions across North American colleges. Together with BMW, Honda, and other brands that frequently advertise in eSports tournaments, brand advertisements contribute 19% of income earned in the eSports industry.

Ticket Sales

While Epic Games might have shelled out $3 million to the 2019 Fortnite World Cup winner, it earned a lot more money in ticket sales alone. During the three-day event held at the Arthur Ashe Stadium in New York, the Fortnite creators charged at least $19,000 attendees $50 each. By the time the world cup was over, Epic Games had made over $5 million from ticket sales.

Most eSports leagues don't gross such vast sums of money when their entire income sources are combined. But among the major leagues, including Overwatch and ESL, ticket sales contribute a significant portion of annual revenues.

Esports teams would probably earn a lot more money from ticket sales if their fans were concentrated in specific cities. But due to the nature of the sport, most leagues struggle to get fans to drive hundreds of miles to watch their games live.

The Takeaway

Although eSports is a relatively new industry, it’s already employed thousands of people who make a livelihood playing video games. The most successful eSports players earn millions of dollars each year. And when they retire, they transit to streaming, yet another profitable niche in the industry.

Brand sponsorship is the most dominant income source for major leagues and teams. However, players also earn money by winning competition, streaming, and selling merchandise to their fans.