The entertainment industry and esports are intimately intertwined, forming part of a broader ecosystem that has long since become a mainstay of our world. As of today, esports is one of the hottest topics on the table – both for discussion and investment.

High-profile global brands are vying for a spot on the sponsor list of esports teams. Gaming venues are decking out their halls with dedicated streaming rooms and training spaces, even fully-fledged esports arenas for 5v5 gameplay (that’s five players up against another five, for the uninitiated!). It’s becoming more common to spot the live stream of an esports tournament playing on a big screen in sports cafes and even your neighborhood pizzeria. Month by month, esports is growing, reaching new heights in popularity.

Yet, despite its expansive presence, the origins and workings of this global ecosystem remain a mystery to many. Where does the money in esports come from? Who are these esports athletes, and how are esports teams organized? Can esports serve as a marketing tool to attract new customers? We will tackle all these questions and more in this article, providing a deep-dive into the world of esports.

In simple terms, esports refers to competitions between two or more players or teams in a video game. These contests can be either individual or team-based, mirroring traditional sports, but with athletes showcasing their skills through computer games. 

Esports, short for electronic sports, is a form of competition using video games. Esports often takes the form of organized, multiplayer video game competitions, particularly between professional players, individually or as teams.

At first, glance, categorizing esports as a ‘sport’ may seem a bit far-fetched. But the reality is participation in any video game tournament demands severe physical and psychological preparation, much like traditional sports. For this reason, esports was officially recognized as a sport at the Olympic Games in 2021.

• There are over 200,000 video games worldwide (although, if we take into account indie games, the number actually exceeds one million). But out of all these, only about 8-10 are considered esports games or disciplines. 
• Esports has broken into the top 10 most popular sports worldwide, with the American NFL sport currently holding the top spot. 
• Esports is growing at a staggering rate of 25% per year. 
• The total global audience for esports exceeds 600 million people. These statistics illuminate the incredible reach and impact of this digital phenomenon.

Today, China holds the title of the largest esports market in the world. The overall market value of esports is estimated at over 1 billion dollars, underscoring the significance of this form of sport and entertainment globally. Facts like these only highlight the importance and prominence of esports in our world today.

There’s a wealth of information in the media sphere about the history of esports, with most sources pointing toward its emergence in Japan in the 1980s. This was the year when Taito Corporation unveiled a new video game – Space Invaders – to the world. Moreover, they announced an unprecedented global tournament for their video game. Arcades featuring Space Invaders popped up all over Japan and beyond its borders. These could be found in cafes, shops, hypermarkets, and even on the streets. That year, several tens of thousands of arcade machines were produced, and the tournament attracted over 50,000 participants.

The actual “catch” of Space Invaders lay in its competitive aspect. After all, players’ scores were displayed on a leaderboard on each arcade machine. The desire to break records and make it onto these leaderboards was widespread. This feature of Space Invaders was its ace in the hole, kick-starting the world of esports.

Following the advent of Space Invaders, successive video games and arcade machines strove to incorporate similar ranking or competitive systems. This marked the beginning of the competitive digital gaming landscape we now recognize as esports.

For a long time, esports evolved slowly, often used as a marketing tool. For instance, when a new video game with competitive elements was released, tournaments would be organized around it. This attracted players, and the product received advertising and publicity. This method still works to this day, but its impact on the development of esports is less significant.

Esports started to increase with the emergence of gaming venues, and these venues began hosting the first full-fledged tournaments, fostering the development of esports and the community around it. After some time, ‘Tournament Operators’ took over esports’ growth and tournaments’ organization. However, today, organizing tournaments in gaming venues has regained its popularity, which is a positive development. Moreover, the presence of full-fledged 5v5 esports arenas and viewing zones for esports matches are becoming increasingly common.

Around the world, universities and colleges are introducing faculties and entire programs dedicated to esports. These educational programs train future professionals in the esports niche and esports athletes. In addition, established esports teams are opening their academies, where they train and prepare young esports athletes.

Esports has become so popular that its events are followed by millions of viewers worldwide. The most popular esports discipline is considered to be the video game League of Legends. In 2022, the League of Legends World Championship was watched by nearly 142 million viewers in total.

*Most popular esports tournaments in 2022 

Viewership is a crucial indicator in both esports and traditional sports. It demonstrates not just the number of fans of a particular discipline but also implies advertising integrations and media rights sales. I will delve into this topic further down.

It is a misconception to consider any player who sits and plays a video game an esports athlete. A real esports athlete must possess not only gaming skills but a range of essential qualities and abilities, such as:  

• Non-standard, logical, and analytical thinking 
• Reaction speed 
• Ability to work and communicate in a team, understanding the behavior of others
• Ability to interact with information 
• Practicality 
• Prudence 
• Adaptability 
• Psychological resilience 

Team players earn the most in esports. They receive monetary rewards from the prize pool and have relatively high contracts, sponsorships, and additional income from their media resources. Currently, the highest-paid esports player is Johan Sundstein, known as “N0tail”. As of today, he has earned $7.18 million. He is a member of the European Dota 2 team “OG.”

In general, if we take a portrait of an average esports athlete, we would get the following picture – typically, these are young men aged between 15 and 25, with salaries ranging from $100 to $20,000. However, considering the average esports player’s salary for 2022, the amount is around $5,000, and contracts with some players can reach up to $4,000,000.

Gaming venues have always been and continue to be a part of the global esports ecosystem. It is in these venues that many current esports athletes first started playing and training. A future esports professional may sit and play in one of your local gaming cafes. This is why such venues should actively promote esports culture and attract customers.

For instance, in Brazil and Latin America overall, it has long been popular to invite esports athletes to cyber cafes to conduct training sessions and lectures for those interested. In Central Asia, it is increasingly common to see particular areas for viewing esports events in the halls of cyber cafes. Similarly, there are often separate, closed rooms for streaming and training.

Various government bodies have been increasingly seeking assistance from gaming venue owners in organizing esports events, using it as a tool for their PR and developing esports in the country.

Overall, cyber cafes are wonderful places for the community, uniting people around a common passion for computer games and esports.

This question intrigues many. Tournament prizes? Yes, they are substantial and sometimes reach a whopping $40 million. However, these are earned solely by the winners, after tax deductions, and in practice, almost all of this money goes to the players – the esports athletes – rather than the team owners or tournament organizers.

So what does the entire esports ecosystem rely on?

SPONSORSHIPS               MERCHANDISE AND TICKET SALES                 MEDIA RIGHTS                STREAMING 

The primary income in esports undoubtedly comes from sponsors. Sponsors invest money in both the organization of tournaments and esports teams and individually in players, all for advertising and PR.

Source: statista.com

The sale of media rights generates roughly as much profit as streaming. Despite the COVID-19 pandemic, ticket and merchandise sales continue to grow yearly. According to the Statista Advertising and Media Outlook, revenue derived from each esports segment is expected to grow by a few percentage points every year.

To sum it up, let’s compile all the information we’ve gathered and form a comprehensive esports ecosystem together.

• Game Developers.
  Without video games, there would be no esports, so they are undoubtedly part of the ecosystem.
• Tournament Operators.
  Next on the list are the tournament operators. These are organizations like ESL, WePlay Esports, DreamHack, and others that host tournaments for various disciplines worldwide. We’re talking about offline events that attract esports teams, sponsors, and media.
• Broadcasting.
  Events need to be broadcasted, which relates to the broadcasting sector, which also includes the sale of media rights.
• Esports Teams.
  Esports teams, as well as individual esports athletes (in solo disciplines), play a crucial role and create demand in the services market for various team and player management agencies.
• Team Management Agencies + Cyber Cafes.
  Cyber cafes play a vital role in the esports ecosystem. They serve as venues for local and qualifying tournaments, breeding grounds for potential esports athletes, and aid in community building.
• Tournament Platforms.
  Online tournament platforms foster and support esports. They allow the organization and hosting of tournaments for anyone interested. You don’t have to be an esports athlete to participate in a tournament, win prizes, and earn recognition from other players.
• Talent and Staff.
  It’s essential not to forget the people “behind the scenes.” Hundreds, if not thousands, of people from various specialties work on broadcasting and event preparation.
• Media.
  Thousands of media resources regularly publish esports news, reviews, and statistics. This is an inexhaustible source of traffic for many business sectors and sponsors.

As you can see, this is a mechanism where each cog works to support a massive organization called esports. Not too long ago, much of the above was only in the project stage and seemed insignificant. But esports evolves like any other ‘organism,’ whether it’s a business or a product. New niches and directions open up in it that did not exist before, and we do not know what esports will look like in 5-10 years.

Perhaps in the near future, there will be new esports disciplines using VR (Virtual Reality) or AR (Augmented Reality) devices.

It’s intriguing to wait and see what role gaming venues, which have started to actively develop in this direction, will play in the esports ecosystem.

Lastly, I would like to share some interesting facts from the world of esports with you.

• The first tournament occurred between students at Stanford University as early as 1972, and its winner received a subscription to Rolling Stone magazine. [FACT]
• 45% of gamers in America are women. [FACT]
• There is anti-doping control in esports. [MYTH]
  While this is not the case yet, it is heading in that direction. The use of psychotropic substances to increase concentration and reaction time is not new, so such control bodies may appear in esports soon.
• Previously, the concept of “esports” or “tournament” could be equated to marketing – as a tool for boosting game sales and PR in general. [FACT]
• After the release of Space Invaders in Japan, the game became so popular that it led to a shortage of 100 yen coins. This was even mentioned in the “Guinness Book of Records.” [MYTH]
  This is a coincidence. That year, the bank stopped issuing coins of this denomination.
• The largest and most popular esports tournaments are held in the League of Legends (League of Legends World Championship) discipline. [FACT]
• In traditional sports, the average revenue per fan is $15, while in esports, it is up to $5. [FACT]
• As of October 2022, Dota 2 has the largest cumulative prize pool in esports ($290.54 million). [FACT]
• The Free Fire World Series, 2021 in Singapore, peaked at 5.4 million viewers and set a new world record! [FACT]
• In 2023, the annual prize pool of esports is expected to exceed $500 million. [FACT]
• Approximately 80% of Americans are not interested in or have never heard of esports. [FACT] They have the NFL?