The eSports bubble could explode. At least, this is what a report by Cecilia D’Anastasio indicates. The Kotaku journalist has asked several experts, and many agree that the structure of electronic sports is inflated and unsustainable. The sector is a bubble that could explode.
Could the eSports bubble really explode?
According to the report by D’Anastasio, one of the main problems in the sector is opacity. This makes it difficult to know exactly what income is received from the industry.
The large amount of money that is invested is also a problem. Many people, including celebrities like Drake and Michael Jordan , are entering the sector because they see it as very profitable investment. But the problem is that the eSports sector has not yet shown that it can return that money.
In addition, we also have the problem of wage growth. Since, these are at “completely unsustainable” levels. The recent exceptional growth is due to the arrival of the franchising system. These investing giants have injected a lot of capital. But at the moment, the experts of the industry are not sure investments will pay off in the end.
Jurre Pannekeet, analyst at Newzoo, has been able to access the income of 14 different eSports teams. It turns out that most of the big organizations have their fair share of losses. Although Pannekeet does not want to give concrete figures, he affirms that the percentage of the team that are in trouble could be higher than 70%.
D’Anastasio also spoke with an employee of Riot Games. The unnamed source has decent knowledge about the revenues of the LCS, the biggest North American competition of LoL. According to this employee, the objective of this competition is to prevent the loss of money in an “indefinite” manner . That is a good way of saying that iot is not sure about how much profit they will gain in the future.
Some voices are not pessimistic
All the experts who have participated in the report want to see the development eSports industry, but they also warn that it must be sustainable. Frank Fields, the sponsorship manager at Corsair, believes that: It does not make sense to put so much money in an industry that does not move that much. Nonetheless, Fields is not alarmist, and believes that the sector will become sustainable before the bubble explodes.
Another source of the story is a another unnamed personality from the competitive landscape of the Overwatch League. This subject does believe that the eSports bubble could explode, but he does not consider it such a serious problem. Since he says that: If there is a bubble, let it explode, let everything go back to a sustainable place and start building from there.
We will have to see in the next couple of years that how much this industry can benefit from the enthusiastic fans.