How — and Why — Sports Conglomerates are Investing in Esports

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Every time you hear about a new promotional Gatorade flavor with a basketball team, or a sponsorship worth more than your house for a football player you’ve never heard of, that same company is likely putting money into their choice of esports teams as well.

At this vital stage in the industry’s development, countless investors are finding a tremendous return on investment for the largest esports companies. For example, TSM, currently the largest esports team, is worth almost half a billion dollars — beating out two traditional NHL franchises in valuation.

Of course, there’s a mountain of differences between the two forms of competition, and an even larger gap between the two concerning revenue. However, the past two decades have been full of turning points for the industry, transforming it from late-night LAN parties for a couple of bitcoin (hindsight is 20/20) into celebrations that fill stadiums.

Photo by Florian Olivo on Unsplash

Early adopters of video games, especially that have been deep in the scene since the beginning, were labelled nerds and shunned by ‘real athletes.’ Slowly but surely, these few standouts grew in numbers, and now have begun to truly make a dent into traditional sports’ assumed place in our lives. According to the New York Times, between 2008 and 2018, the 45% of children aged 6–12 that participated in sports decreased by 7%.

The COVID-19 pandemic has been yet another nail in the coffin killing youth interest in sports. In June 2020, 19% of adults said their child did not care about playing sports, a percentage that increased to 28% by September 2021. With numbers growing at this rate, the attitude of many sports franchises has turned on a dime. Long gone are the huffy, holier-than-thou attitudes of many athletes, making way for deep pockets and a stack of RGB keyboards.

Photo by Ali Yılmaz on Unsplash

Teams in the NFL, NBA, and FIFA have been invested in League of Legends teams for years. There are a few celebrity founded organizations that have started from the ground up to become internationally renowned. David Beckham founded Guild Esports in 2020, which has since earned over $500,000 from tournament wins alone. Although that number is striking on its own, it’s nothing but a fraction of what larger franchises have earned — for example, Cloud 9, which has teams in several different games, has earned over $11 million through almost 900 separate tournaments.

The rapid growth of the industry has everything to do with its fans and avid viewers. In 2022, the viewer base of causal and enthusiasts averaged just above 600 million viewers, a massive jump from previous years.

Proudly grasping a growing list of investors in one hand and a mouse in the other, those early esports pioneers are finally able to say “I told you so.”