Money by alex 2017-06-19

eSports, the $5 billion industry

Have you wondered how some people make staggering amounts of money by playing online games? The numbers don’t lie, there are players right now that make more than a $1,000,000 every year. The numbers are getting bigger at a very fast pace, eSport prize pool for major tournaments is getting gigantic every year.

The eSports are becoming a sensation in the past decade; the eSports prize money in all major tournaments is mind-blowing. What started as something small and done just for fun is becoming serious business; pro players are making staggering numbers and making careers of playing games. How many of us would want to just play and win money? The day is here now.

The prize pool just for the International 2016 Dota 2 tournament has been $20,770,640. Yes, you read that correctly. While for the League of Legends 2016 World Championship it has been $5,070,000.

The humble beginnings

eSports is to some people still a relatively new concept and it is still hard to understand how people can win money from playing games, but that number is decreasing very fast since the number of the casual gamers is increasing as well the professional players. While eSports is expected to become a $5 billion industry by 2020; it wasn’t like this when it first started. It had very humble beginnings. The beginning was slow, only small tournaments with a modest prize pool of only hundreds of dollars, but then came the game changer, broadband internet. This made it possible for everyone to play online. Starcraft was the craze back in the day. It became so famous that even a professional league was created, the Ongamenet Starleague. It had quite a long run, from 2000 to 2012. The prize for the winner of the league was $20,000. In a sense this paved the way for DotA (Defense of the Ancients) which had a small fanbase in the beginning but managed to become a monster hit. Still it was only small circles that knew that professional eSports scene existed and the prize pools were drastically smaller compared to the ones that we have.

eSports, the $5 billion industry

Players earning millions

When League of Legends was released on the 27th of October 2009, many things would change. It took LoL 3 years to become the most played PC game in Northern America and Europe and that was great news for the eSports scene because by 2012 the 3rd World Championship was on the way and the prize pool was already massive, the total amount was $2,050,000, but first let’s go back to the humble beginnings of Season 1 World Championship held in Sweden. The prize pool was $99,500. Many more tournaments were organized by third parties like Intel Extreme Masters or Major League Gaming. A big step was made when Riot Games announced on August 2012 that they would be creating two leagues in North America and Europe that guaranteed salaries for the players and it had a regular schedule, this was a milestone in many ways because gamers realized that you can make a living from doing this, it wasn’t only small tournaments anymore. They divided the leagues into two splits, the Spring Split and the Summer Split; each had a $100,000.00 prize pool not counting the salaries of the players. On the other side, when DotA 2 came out it just continued the hype that DotA 1 had and when The International was held the prize pool was a jaw-dropping $1,000,000.00. The International is Valve’s tournament held annually, other tournaments were held and in a way it became a competitor for League of Legends money wise. The eSports scene was being formed rapidly with a staggering success, and managed to convince even the hardcore naysayers that it wasn’t just a bunch of young people playing games; serious money was being made from it.

CS:GO is back!

DotA 2 and League of Legends weren’t the only ones running the eSports scene; other competitors were catching up as well. In 2012 Counter-Strike: Global Offensive was released, many third party tournaments were being held across the world, so Valve decided to create their own tournaments called the Majors that so far had a prize pool of $250,000. This was only a taste of what is about to come in the next few years.

Taking the world by storm $1 million at a time

By 2014, the professional eSports scene was well established and many teams were already recognized household names. It already started to look like the “conventional” sports except the fact that this “sport” was already making more money than many older and traditional sports. It was ridiculed by so many sports analysts, but they didn’t taking into consideration one thing, the gaming community was growing and with it the gaming prize money. It wasn’t just teenagers anymore, teams with coaches and strategy analysts were being created and they were getting well paid for it. Another thing that helped the eSports scene reach the staggering prize pools was that some of them were made through crowd-funding.

The next phase of eSports scene was when they started becoming mainstream, so the media outside of websites started paying attention as to how much the players were getting paid. The eSports prize income was getting bigger at an unbelievable rate, that meant that some professional players were already getting paid hundreds of thousands of dollars just from their teams without taking into account the fact that they had sponsors lining up. Companies that produced computers and gears used for gaming saw this as a chance to increase their profits.

In 2014, League of Legends World Championship was held in South Korea. This event was jubilant in a way because the Finals of the World Championship were held in an open stadium where more than 40,000 fans were attending. The prize pool was already $2,130,000. The winners, Samsung Galaxy White won $1,000,000. The world paid attention to this, very carefully, because it garnered so much attention, 27 million people watched the grand finals and millions of dollars paydays were being made.

DotA 2 was making even larger numbers when it came to prize pools. The prize pool managed to go to $10,923,977. In just a few years, they managed to multiply the prize money many times. The winners of The International, Newbee, won $5,025,029. The finalists, Vici Gaming, won $1,474,737. The prize pool money of this amount is hard to reach even in many traditional older sports. A revolution is being made, in front of us. 18 year olds being paid millions, when they were just playing games for fun 4-5 years ago, now they were performing in gigantic stages in front of tens of thousands of people and being watched by millions more from their computers, while earning money for doing what they love.

The $20 million tournament

2016 was a gigantic year for eSports when it came to profit. League of Legends has now created a very stable and well-established format. There are professional leagues divided in regions such as: North America, Europe, China, Korea, Taiwan etc. With an astounding fanbase and Riot making sure that players get paid from their teams regularly or face fines. The 2016 World Championship was the biggest so far for this game. While the prize pool was initially $5,070,000, the final prize pool reached $6,700,00 and it was the biggest prize pool so far for League of Legends. LoL is not the only one racking huge profits, cs go tournament prize money for the ESL ONE Cologne was $1,000,000. Taking into account that cs go is gaining popularity, it is expected that in 2017 the prize money will get only sweeter for the participants of these tournaments.

While we were talking for these three games we must not forget that other games like Smite and Halo 5:Guardians have managed to give their players a huge payday. Smite World Championship 2015 managed to reach millions as well, $2,612,000 to be more exact. Halo 5: Guardians World Championship 2016, reached a purse of $2,500,000. Call of Duty managed to reach the 1 million $ mark on many tournaments as well in the past few years with ease.

When it comes to breath-taking numbers DotA 2 continues to smash records year after year.

The title holder for the highest prize money in eSports, The International 2016 takes the crown, it had a pool of $20,770,460. Let that number sink in. I know it’s hard to believe. It’s just an overwhelming amount of money for one tournament. Players earn a lot more, dota 2 prize pool continues to get more massive each year since the game has “Majors” as well. 5 Majors were held last year each of them with an astonishing $3 million prize pool. That is over $35 million in just one year. League of Legends has the “Spring” and “Summer” splits that are increasing the prize pool each year, nevertheless they have still a long way to go in order to reach the numbers of DotA 2.

Trouble in paradise?

As in every other business, it isn’t all sunshine and rainbows. For example in League of Legends, there have been cases where players weren’t being paid regularly when they weren’t on Riot’s payroll. Some minor scandals have caused problems across the gaming world. Thankfully nothing very impactful happened as to change the concept of the business model of League of Legends. This game has created stars known to millions of fans throughout the world. Lee “Faker” Sang-hyeok is a legend by now. Only 20 years old, he has already been crowned as “The Unkillable Demon King”. He has managed to win almost every title there is to win, and with that winning millions of dollars. He recently re-signed with SK Telecom T1, which is rumored to be around $2.5 million. Just like in other sports players changing teams for a better payday is not a foreign concept. When we talk about top eSports earnings, the name of Jian “Uzi” Zi-Hao comes to mind, when traded to Royal Never Give Up was rumored to have been transferred for more than $7 million.

While these pros have reached enormous numbers, it is not the case for all the professional players. Gamers can earn money not just by entering tournaments and trying to win the prize pool money, almost all of them stream regularly and manage to win a decent amount of money by donations from their fans. Yiliang “Doublelift” Peng is one of the professional players that recently decided to quit for a bit in order to stream. While the official statement was that he decided just to take a small break because he was mentally and physically exhausted, it is rumored that he decided to stream full time in order to make more money. It is not a strange thing for sure. Many amateur streamers already make quite a comfortable living just from streaming. You can consider it a full time job. They have millions of subscribers in their YouTube channels and hundreds of thousands of followers in their Twitch channels.

Despite all of this, there is light at the end of the tunnel. With the media attention that they have been getting in these past few years, investors have also decided to change their mind about the eSports professional scene. In Europe and North America, professional football and basketball teams have bought entire teams. In League of Legends there have been many notable changes in ownership. The professional basketball team, Philadelphia 76ers just last year decided to acquire Apex Gaming and Team Dignitas. It isn’t the only instance where teams were acquired completely.

More money to be made in the future!

The future seems to be bright and along with it the eSports prize revenue; after all it is a multibillion dollar industry. Global eSports revenue is expected to exceed the $5 billion mark by 2020; surpassing the numbers of National Hockey League (NHL) that has $3.7 billion in average revenue and even catching up to one of the most famous leagues in the world The National Basketball Association. According to Forbes Magazine the 2014-15 season had managed to reach the revenue of $5.2 billion. The cybersport prize money keeps seeing larger figures it seems almost every month now.From the humble beginnings of playing for only maybe a couple of hundred dollars achieving these astonishing numbers, it took a very smart sense of investment and patience in a way. Knowing that video games are yet to be fully exploited financially, what used to be considered maybe childish by many, now it is a legitimate business model, where many young and talented people are considering playing professionally as a viable career choice.

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