And where does the money come from?
Young kids enter a stage while a massive crowd cheers frenetically at them. They look somewhat clumsy and shy, but people don’t seem to care about that. In the crowd’s eyes, they’re rockstars.
Esports gamers are the new kid in the block. They’re considered professional athletes and they’re starting to get paid as such.
Where does the money come from?
Global revenue for esports is expected to reach $1.1 billion this year (2020). That would be a 15.7% increase from last year ($950.6 million). Now, with COVID-19, that number might change, but the industry is still in its infancy and there’s great growth potential.
The industry’s huge success over the recent years reflects on the salary of its main players: professional gamers. There are 3 main sources of income for them: team’s salary, tournament’s prize money, and streaming.
Sponsors: The Team’s Revenue Source
The biggest revenue source in the esports market comes from sponsorships. It accounts for 40% of the industry’s total revenue. Now if you take into account brand investment as a whole (media rights, advertising, sponsorship) you get an astonishing 82% of the total market. So brands are the soul of the esports market. Here’s the 2018 distribution of revenue streams so you get the idea:
When it comes to esports teams, approximately 90% of their revenue comes from sponsorships and advertising. Sponsorship might come in the form of advertisement in the player’s jerseys, similar to what you see in other sports. Pro gamers salary relies heavily on sponsors, though indirectly through partnerships with their teams.
Side note: Esports teams might also sell merchandise like t-shirts, mousepads, and other gaming-related stuff. Nevertheless, esports consumers don’t spend a lot on sports merchandise, which is heavily influenced by the fact that Esports stadiums are still small and there are not as many people attending (and wearing merchandise to support their team) to justify huge merchandise sales.
Like any other sport, there’s a prize pool for each tournament. The richest price compensation to date comes from the Dota 2 International Tournament of 2019 with $34.3 million distributed among 18 teams (90 players total). The first prize got $15.5 million while each player got a nice sum of $3.1 million.
As a point of reference, we could compare it to let’s say the tennis US Open of 2019. It had a pool prize of $57.2 million, distributed among approximately 500 players. The first prize player got $3.85 million, so both tend to be huge amounts of money.
In 2017, the average tournament prize pool in esports was around $27,500 with a total amount of 4166 tournaments worldwide. There were fewer tournaments in 2018, but the mean pool prize rose to $44,000 (with 3489 tournaments worldwide).
Pro gamers spend a lot of time training, either with their teams (8 hours a day minimum) or on their own (for some players that adds up to an additional 4 hours per day!). So you see there’s not much time left for streaming.
Viewers devour content constantly. They expect to see their streamers on a regular basis, so it gets quite challenging to balance those two roles. Only rockstar gamers can retain high viewership despite inconsistent streamings.
Assuming they’re regulars, here’s how they get paid through streaming. A pro gamer will likely use Twitch as their mainstreaming platform (it’s the most popular one today for gaming). For context’s sake, the average streaming time in Twitch is 29.8 minutes (point of reference, YouTube: 21 minutes) and 15 million people visit it daily.
As a Twitch streamer, a pro gamer has 4 revenue sources:
- Donations from fans: all the money goes to streams directly (minus the fees for money handling by PayPal or the credit card company)
- Paid subscriptions: set at $4.99 per month, Twitch takes 50% on average. For top streamers (10.000 plus viewers for each stream) it might take “only” 30%. One of the best-paid streamers is Tyler Blevins (a.k.a “Ninja”) with 200,000 paid subscribers and earning $500,000 a month.
- Ad revenue: streamers can have both pre-roll ads (displayed at the beginning of the stream) or during the stream itself (less common). Another famous streamer, Jeremy Wang (a.k.a “Disguised Toad”) only uses pre-roll ads and earns about $10,000 a month.
- Sponsorships: one way is to be paid to play a specific game. A streamer will get between one cent and $1 per viewer per hour, so a top streamer might get $10,000 for an hour of streaming. Other sponsorship revenues might come through sponsored videos ($5,000 for a 30-second ad on Youtube) and live appearances (range between $5,000 and $10,000).
So how much would a pro gamer earn in a year?
Now let’s figure out the mean yearly salary of a pro gamer.
- Team’s salary: $4,000 monthly average ($48,000 annually)
- Tournament’s prizes: $8,300 annually (median earnings per player)
- Streaming: $1,500 per month (only a few get $5,000 so I’m judging much less for a regular pro gamer streamer)
Therefore, an average player would make around: $74,300.
And what about the top player? The Danish 26-year-old Johan Sundstein (a.k.a. N0tail), captain of the OG team earned $3 million in 2019. He’s amassed a fortune of $6.8 million but remember, pro gamer’s career tends to last 4 to 5 years average. So keep that in mind when you compare it to overall winnings of other sports.
If you’re interested in other rich pro gamers, here’s a video you’d like to watch:
Interested in pursuing a career in esports?
You’ll have to work hard to get in but you can start by doing some of the following things.
- Equipment: you’ll need hardware, software, videogames, and a high-speed internet connection to set you up. It’s like a musical instrument…it’s your training device and you’ll spend a lot of time with it.
- Training on a specific game: The big bucks come are in the Dota 2 community. The first 44 top-earning esport players of all time are all Dota 2 players. Afterward, you start seeing some Counter-Strike and League of Legends players. And that’s it for the top 100 earning esport players of all time. So if you’re into pro gaming, you might consider these games first.
- Formal education: it’s not essential, but there are some interesting colleges offering programs and scholarships in esports. Here are some options in the US and in the UK.
- Playing tournaments: you can start in friendly local amateur tournaments that usually run during the weekends. It’s a good way to get out there, see others play, and learn about the community. On the next step you have amateur leagues that run weekly such as the Indy Gaming League, a community with over 5,000 members. It’s a bigger commitment but you get to be more engaged and work constantly on improving your skills.
Esports is a fascinating industry that’s growing rapidly each year. Millions of people are engaged in watching other people play, and pro gamers have reached an unprecedented status in sports. They are getting a vast amount of followers and working as hard as professional athletes.
There’s a lot of money coming with this level of competitiveness and exposure. Most of it comes from tournament prizes, but it’s not easy to get to the top of the game. If you’re not so lucky to get to the top in your rather short gamer career, you can still get a decent amount of money through a variety of income streams.
Rockstar or not, pro gamers are on the rise.
If you’d like to read other articles on Esports, I’d recommend these ones:
By Pavle Marinkovic on .
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