As the esports industry faces economic difficulties and the departure of major players, some view these challenges as opportunities for renewal and growth. Andy Miller, chairman of NRG Esports, believes that the current landscape presents an opening for new organizations to capture existing fans.
A Harsh Market
While the Madison Square Garden Company tried to exit the esports business by selling its teams, it was unable to find buyers willing to pay enough to recoup their investment. Consequently, the company opted to merge its League of Legends team with NRG Esports, paying the latter several million dollars to take on the costs and salaries associated with the team. Although this may seem like a setback, Madison Square Garden retained a minority stake in NRG’s parent company, ensuring a continued presence in the esports industry.
David Hopkinson, president of Madison Square Garden Sports, acknowledges that the current climate is challenging but maintains optimism about remaining a significant investor in the esports industry. This sentiment is shared by Andy Miller, who sees an opportunity to capitalize on the exodus of major players and teams and attract a significant portion of the existing fan base.
One potential source of revenue for esports lies in in-game item sales. Riot Games reported that the sale of in-game items themed around esports events in their game Valorant generated $42 million in 2022, with half of the proceeds going to participating teams. This demonstrates the potential for monetizing esports through in-game transactions and offering incentives for fans to support their favourite teams.
What to Leverage
Although the industry faces considerable challenges, there are positive aspects that can be leveraged. The youth demographic of esports viewers appeals to advertisers, and the industry can capitalize on this by offering targeted advertising opportunities. Additionally, addressing the declining viewership and finding ways to reinvigorate interest in esports events is crucial for long-term growth.
John Needham, president of esports at Riot Games, acknowledges the problems within the industry and the pressure to find solutions. The esports dream has been a significant selling point, and when teams struggle to generate investments based on that dream, it is seen as a failure. This recognition emphasizes the need for the industry as a whole to adapt and evolve to meet the expectations of investors and fans alike.
In conclusion, while the esports industry is facing challenging times, there are opportunities for growth and renewal. By capitalizing on the youth demographic, exploring new revenue streams, and addressing the issues impacting viewership, the industry can overcome its current obstacles and pave the way for a prosperous future.