Could The Hype Around eSports Be Fading? Find Out Why Some Experts Think So

Apparently, the esports industry is not as solid as we thought it was: recent events have shown that its potential is nowhere near what investors had anticipated.

According to Cecilia D’Anastasio, an award-winning journalist specializing in video games, quite a few of America’s most prominent esports teams and organizations are contracting.

For example, two of the most valuable esports organizations according to Forbes -Team SoloMid and 100 Thieves- have made staff cuts that amount to dozens of positions in total.

Moreover, Evil Geniuses, one of the oldest esports groups, shifted its operations to South America and scattered its North American team, as reported by Bloomberg.

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But that’s not all: D’Anastasio pointed out that the venture capital investment in the electronic sports industry is at its lowest since 2016 -except for 2020 and its subsequent pandemic restrictions. As stated in a report by Deloitte, investments were at their highest in 2018, when they hit a record of $5.5 billion.

In addition, while esports organizations were meant to create revenue mainly by selling stadium tickets, merchandising, and sharing profit with game publishers like Sony SONY, Tencent TCEHY, Nintendo NTDOY, and Microsoft MSFT, the market has not been behaving how it was expected.

Firstly, because even though esports do sell tickets, their price is lower than the average American football game. And, above all, industry tracker NewZoo has revealed that each esports fan -of the 261 million people that watch electronic sports at least once a month- produces only $5.30 in revenue per year.

So, what’s next? Some of the esports organizations are beginning to focus more on content creators and streamers, rather than on esports teams.

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In an interview with Bloomberg, Arnold Hur, CEO of esports organization Gen. G., concluded: “It’s important that publishers step in to find a solution to create digital revenue opportunities for the esports ecosystem they have built and benefit from. It’s clear that relying solely on media and sponsorship deals, especially in this kind of market, simply will not work.”

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Photo by Florian Olivo on Unsplash