Esports will see a price check; however, it is a momentary blip in its fast paced growth

Esports will see a price check; however, it is a momentary blip in its fast paced growth

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The esports industry is growing at a phenomenal pace today. There are investments coming in from multiple sources. However, there is a small section in the esports industry which feels that the industry is seeing high levels of inflation. The rapid expansion of the esports industry comes on the base of the promise for future revenue. Many organisations want to enter the segment early and cement their position for the future. So it is not a big surprise to see a lot of money floating in esport.s

The Overwatch League is one of the newest entrants in the esports industry. It changed the dynamics of esports and how the business model of esports leagues works. With a structured franchise model, it invited sports teams and investors to take part in Season 1. According to reports, the price of a franchise in Season 1 was around $20 million. Season 2 franchise prices will see organisations pay up between $30 to $50 million. These numbers are unprecedented in esports and they are huge investments by non-endemic organisations.

However, there are multiple reports suggesting that the Overwatch League teams are not making enough money on their investments. Ofcourse no one expected them to turn a profit in the first year itself; that would be an unreasonable expectation. However, despite having huge numbers, the revenue from the average user simply is not enough right now. As such Overwatch League is already cutting down on certain expenses. We have already seen them cut down on the observers and hire some freelancers to do their job for the upcoming season.

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CS: GO is the poster boy when it comes to esports. The game has a huge third party involvement and a massive player base. IT started the esports revolution for many and it still remains a mature esports title. However, with the growth of esports, we are witnessing massive salary paychecks for the players. Some of the best-known teams in the scene today are very unsuccessful. Teams like G2, Faze Clan have failed to produce results, especially in the face of the Astralis dominance. We do expect these teams to pick up their slack very soon. However, from an organisational standpoint, they are a loss-making investment. We might see a salary price correction very soon in CS: GO.

Player salaries need to be sustained with results and the sale of merchandise. For many organisations, merchandise sales remains a problematic issue. Online sales of merchandise are not at the same level as that of regular sports. While Overwatch League Franchises are going all-out to increase their merchandise sales, CS: GO teams often face troubles.

We will continue to see the growth spurt for esports. With the Overwatch League, League of Legends, Dota 2 and CS: GO leading the way forward, we can expect more investments. However, a price check for esports salaries and investments is definitely on the horizon. However, with the increase in merchandise sales, this correction should turn to growth in the near future.

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