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Generating Revenue for Your eSports team – Harrison Gold

Thu 7th Apr 2016 - 6:33pm : General

Likely one of the biggest concerns troubling eSports managers, or rather, any small business owner as a whole is that of revenue.

Money does, in fact, make the world go ‘round. That saying can easily be applied to the eSports world. With money, comes entry fees for your eSports team, travel fees, lodging, food, apparel, web-hosting, VOIP server, staff and player salaries, sign-on bonuses, etc.

Really, an eSports team is, in fact, a lean business. It is feasible and possible to run a tier-two or tier-one eSports organization (with some exceptions, such as travel) on standard monthly expenses (barring salary) of <$1,000 USD/month. We don’t include salary in this figure due to the immense variations spanning across organizations. Exceptions may include salary, which for most businesses is the biggest expenditure, and travel fees, however, I consider those in a separate category apart from standard monthly operational expenditures, due to the performance-based nature of the players reflecting a possible, but not probable cost. Worth mentioning: some leagues like Electronic Sports League, or ESL, have historically provided travel and lodging free-of-charge to qualifying teams for their major events.

This article will discuss the various channels one in eSports management can seek to acquire additional streams of revenue.

Web-Stores

“If you build it, they will not come” – me.

Just because one has a web-store, which is a phenomenal source of income, does not mean that sales will inherently come! Like any sports industry, there historically are direct correlations to team performance and sales of merchandise.

If your team isn’t doing well, consider incentivizing sales with discounts, semi-annual sales, giveaways, BOGOs and other promotions. Nobody likes paying full price for anything. A sneaky, and perhaps unethical, yet psychological tactic is to overprice your merchandise but offer a “permanent” discount. If this can be reflected on the web-store itself, with perhaps a permanent modification with a strikethrough, this would be clear to the potential customer they are getting a discount and potentially drive up sales marginally.

On the other hand, if the team has great performance, consider the margins you have. You potentially could increase margins to maximize the profitability of apparel! The team’s optimal performance may not last long, so why not capitalize on it now? Please don’t take this advice and increase the margins by 40%, a simple 10-15% is more than sufficient.

Tie in social media! Consider a giveaway for the best photo of your product! A few notable organizations do this regularly: fans submit photos of said organization’s t-shirt, and subjectively, the organization decides the best photo and will send the winner more product. Consideration should be made as to the winner to ensure there are no unreasonable shipping costs and they would continue to provide activation for your brand.

Advertising

Not typical of eSports organizations due to the proliferation of prior sponsorship agreements, advertising is another possibility. I advise approaching this area with caution, and consulting with an industry expert. Pricing is a difficult equation and many factors must be considered, such as: banner size, location, bounce rate, impressions, pageviews/user, unique views/month.

One such equation to price out a standard-size banner for 30 days is:

Unique DAILY pageviews / 10 = $

Of course, you may consider reducing the price to simply close the sale, or increasing the price if there is significant demand for space on your website, or if you are in the 10,000+ unique page views daily range. This is a very rough estimation as to pricing, and again, it is best advised to consult with an eSports marketing or advertising consultant should your organization venture down this route

If you’re considering advertising, your organization should likely have someone on staff already qualified to handle the task-at-hand, but eSports staff is another article to be released later.

Sponsorship

By far the most proliferative source of income for eSports teams, sponsorship is a mainstay in most sports. Historically, with a professional endorsement, fans wish to emulate pros in their equipment. Take competitive bicycling for example. Endorsements provide massive activation and income for the sponsor as the target audience has a large disposable income and the sport is largely equipment based, or marketed to fans to be that way. While eSports hasn’t successfully marketed themselves on a similar model, sponsorships are still by and large a reliable income, especially when coupled with a long-term contract.

Gaining income from sponsors is much easier said than done. Typical industry sponsors include those with branded peripherals or hardware, such as headphones/headsets, keyboards, etc. It may be easier for them to simply disperse product, as capital is usually more needed for the sponsor’s own business operations, but should you have enough leverage in the form of social metrics and a well-detailed activation plan, a team may earn financial support. This is usually the case with teams with upwards of 15,000 twitter followers and facebook likes, and around 5,000 website impressions daily, and a professional, experienced marketing staff to pitch and leverage deals.

Structuring financial support varies. Sometimes, a one-time flat fee is paid, sometimes a monthly fee is paid to the sponsee over the term of their contracts. The monthly stipend is far more common, however. Additionally, pro re nata financial support may be granted in contracts for LAN events. In turn, teams must be creative to provide massive activation opportunities.

Your organization must be viewed as a professional one in the eyes of a sponsor, through-and-through. Your proposal packet must be comprehensive and you may even wish for your own contract. It is for these reasons why it is again very advisable to hire someone on staff, or contract out a sponsorship campaign, that has experience in architecting and executing sponsorship campaigns.

Streamers

Though I’m not sure who coined this concept, it sure is a novel one! Having streamers align with your brand can provide another stream of income. Though contracts vary widely, it is generally practiced that the organization will collect a percentage of the streamer’s revenues. In return, the brand helps market the streamer as one of their own. The typical streamer of this niche is not a pro-gamer and is a young, usually attractive female. Inherently, with a market majority of testosterone-laden young males, there is always an audience.
Consider contracting notable community streamers if you’re able to leverage your website and brand in order to promote them further.

Prize money

While assuredly an unreliable and unpredictable source of income, it would be remiss if this subject wasn’t touched upon, even briefly.

While some teams can assuredly win some form of financial prizes monthly, I am of the camp that it’s not sustainable or responsible to rely on this concept. Prize monies vary widely and the volatility of the business you’re in alone should be common sense enough that this isn’t reliable. You can’t truly predict a win or lose. “Anything can happen.”

Closing

This article is intended as a brief guide to the current practices that eSports teams use to generate revenue. It is best advised to consult with an industry expert, or even hire one on your staff, should you move up from a small eSports organization, to a top-performing one that needs money! I personally recommendhttp://esportscareer.org should you go down that route. This is not an end-all article! There are plenty of other ways to generate an income, one must be creative!

 

Source: http://esportsentrepreneur.com/generating-revenue-for-your-esports-team-harrison-gold/

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