Adam Fitch: Winning doesn’t mean success in esports

Adam Fitch
IEM Katowice 2020

Esports is viewed as a rapidly growing industry, a lucrative investment opportunity that will reap major rewards in the future. With companies rushing to get involved, and new entities being formed just to operate within the industry, it’s commonly believed that success in esports would be massively fruitful if you get in early. But what is success?

“The achieving of the results wanted or hoped for,” that’s how the Cambridge English Dictionary defines success. It’s not an uncommon word in any capacity but how it manifests itself depends on the situation. In the world of business, success is widely used as a synonym for making a profit.

And don’t get me wrong, esports is nothing if it’s not a business at this point. While many fans often like to only concentrate on the competitive aspect of the industry, and rightfully so, there would be none of the additional benefits that come with achieving victory if the competition wasn’t supported by companies. Put plainly, if there wasn’t a financial ecosystem built around the act of competing, esports would simply be people playing video games competitively for pride.

So, does success unanimously take the form of profit for almost every company that inhabits the esports industry? The answer is, of course, yes — but the winning formula varies wildly across the ecosystem. The means of acquiring revenue, and thus being a success, is a nuance that’s sometimes missed in conversation.

Astralis winning BLAST Global Pro Series.
Astralis are considered one of the most successful teams in all of Counter-Strike, though they reported a financial loss of $8.5m for 2020.

What is success in esports?

Esports wouldn’t exist without the players, it’s that simple, and a lot of players would struggle to dedicate themselves to competing if it wasn’t for the financial and infrastructural support of team organizations. What does success look like for them?

While competitive success seems like the obvious answer, it’s widely known that prize money cuts are heavily skewed in the favor of the players who earn it. Competitive success is an aspect of organizations that helps to produce success (see: financial gain) but does not, in itself, do much to affect the bottom line.

Teams have sponsors, merchandise, content, and revenue sharing from rights holders as the typical pillars of revenue. Winning an event can help to sell more jerseys, provide exposure to advertisers, and get more eyeballs on content, but inherently doesn’t provide much in a material sense to the teams. So, success for players is not the same, generally speaking, as success for the teams that house them.

For tournament organizers, a successful event can be considered one that runs smoothly, provides a satisfactory ending, and pleases viewers. Financially, though, success is still synonymous with profit in this case. If they lose money hosting an event then, no matter how enjoyable it was for those spectating, it won’t fulfill the ultimate goal of the company. Building good faith with those who help to pay the bills is a worthwhile cause but that alone isn’t plausible forever. So, solid ticket sales and on-site sales are real targets for TOs, as are strong viewership and effective activations as those can lead to happy, well-paying sponsors.

DAMWON Gaming posing with their trophy from the League of Legends World Championship in 2020, widely regarded as the biggest event of the year.

For brands and advertisers, they’re attaching themselves to players, teams, and tournament organizers to receive attention. What most sponsors and advertisers want to convert that attention to is — you guessed it — sales. They want to meet the success metrics they set out at the beginning of a deal, and if they’re spending money to advertise their products or services then realistically they want to generate more money than they’ve spent. They’re the largest source of revenue in the industry, I speculatively believe they’re keeping it afloat, so you have to imagine that esports can be fruitful for those who go about it the right way.

Just as esports wouldn’t exist as a discipline without players, the industry would not exist without the presence of developers and publishers. These companies make the games that are utilized for competition and — in the case of Riot Games and Ubisoft, for example — are also the entities that produce esports events.

Whether they’re hosting events themselves or licensing the games out to third-party organizers, success is still financial return but it comes in different forms. Esports is a surefire way to market a game to existing and prospective new players alike, providing shit tonnes of exposure from grassroots all the way to professional play.

Esports can convert non-players to customers, increase the lifespan of current players through both enjoyment and the endeavor of improvement, and encourage the purchase of in-game microtransactions. Esports is marketing, esports is monetization.

From the top-down, esports is simultaneously all about competition and all about making money. The methods of success varies drastically depending on the type of company you observe, but success itself is almost universally down to profit.

About The Author

Based in Lincolnshire, UK, Adam Fitch is a leading business journalist covering the esports industry. Formerly the lead business reporter at Dexerto, he demystified the competitive gaming industry and and spoke to its leaders. He previously served as the editor of Esports Insider.