Esports: Thriving Industry or Thirsting Niche

Esports has rapidly evolved from a niche hobby into a global phenomenon. With gamers as celebrities, millions of dedicated fans, substantial prize pools, and lucrative sponsorships, the business aspects of esports have gained significant attention. That said, there has been widespread discussion of late as to the financial viability of the fledgling industry in the long term. A key focal point in this discussion has been a major player in the esports space, FaZe, a well-known esports team and lifestyle brand which began experiencing major challenges shortly after the team/brand went public in the stock market. As an example, a Forbes article said, “finding a way to translate internet clout into a legitimate business has been the fundamental challenge for FaZe, which makes money through esports winnings, revenue splits with its talent and brand partnerships with companies like McDonald’s and DoorDash.”

Insider Intelligence took a look at how esports teams operate saying, “just like traditional professional sports, esports teams have owners, franchises, endorsement deals, cash prizes from tournament winnings, and more—all contributing to their annual revenue and total valuation.” Like many emerging industries and brands in those industries, esports and gaming has had its share of PR challenges, including ramifications from being traditionally male-dominated while trying to modernize and ramp up inclusivity. These challenges are compounded by aggressive expansion and capitalization. Continuing to use FaZe as an example, the company nearly had its stock delisted due to poor performance after a slew of odd decisions by stockholders including signing up FaZe esports athletes for tournaments involving games they had never played or had not yet mastered. This is a problematic situation for the continued growth of esports.

This dynamic highlights an incredibly important yet basic concept of brand safety... Knowing Your Partners. There is something to be said for doing your homework as a business. Understanding who your business-to-business partners are as well as your business-to-consumer audience is critical to crafting relevant marketing campaigns and putting those ads in front of an engaged audience.

As the esports ecosystem evolves, it will be fascinating to witness how innovation, collaboration, and continued growth will shape the business landscape of this exciting and dynamic industry. By capitalizing on the fervor and excitement surrounding professional gaming, businesses can tap into a passionate and dedicated audience, fostering brand allegiance. Just be sure to study up before diving in.