Esports is experiencing an explosive growth trend that has lasted over ten years. The industry attracted billions of dollars in investments and the attention of the entire world due to increasing prize pools, sold-out arenas, and the interest of Gen Z viewers. Brands, venture capitalists, and even traditional sports teams rushed to the scene, all hoping to get a piece of the pie that was frequently referred to as the future of sports. However, with the hype dying down in the last few years, a new challenge to the esports ecosystem has emerged: demonstrating that it can be more than just a spectacle and develop into a sustainable business in the long term.
The shift from adrenaline to accountability is well underway. Numerous well-known esports organizations have reduced their activities, laid off employees, or undergone reorganization. The era of uncontrolled expenditures and overvaluation is being replaced by slimmed-down versions where profitability, stable revenues, and intelligent audience targeting are the order of the day. Where comparisons are regularly made to glamorous areas such as streaming or live roulette online, esports is now being introduced to the reality of growing markets, where stability is the new buzzword.
Esports were experiencing an investment boom between 2015 and 2021. The image of limitless potential was depicted through multi-million-dollar sponsorship deals, franchising city-based models, and the emergence of esports arenas all over the world. Publishers such as Riot Games and Activision Blizzard organized competitive leagues in the form of traditional sports, with guaranteed media rights and merchandising profits.
The operations of teams during this period were funded through tens of millions of dollars based on projected future revenues, rather than current financials. The momentum was maintained for some time. Sports stadiums were packed with people, the number of viewers on Twitch and YouTube was unprecedented, and famous individuals began investing in esports organizations.
The business model that had sustained much of this growth was, however, weak. Many organizations relied heavily on sponsorship revenue and were unable to develop diversified revenue streams. Prize money was haphazard, merchandising revenues were frequently low, and streaming revenues were also dependent on the volatile streaming services. As the macroeconomic environment changed and ad spend became tighter, the fissures in the model started to appear.
Rather than pursuing world domination by paying high-priced rosters and generous content budgets, a significant number of teams began to focus on essential games and target specific viewer groups. It was no longer about being everywhere simultaneously, but about creating a loyal fan base and profitable micro-ecosystems, particularly in game titles such as Valorant, League of Legends, or CS: GO. With esports having gone through a hype cycle and reduced to a more manageable size, operational maturity has increased as well.
Organizations began to diversify their revenue streams and focus more on content creation, online products, subscriptions, and local partnerships. Teams began constructing performance centers and training academies that were not only aimed at developing talent but also at being used as a form of community engagement. These actions indicated a long-term perspective based on player development, local brand, and repeat revenues.
Publishers have a special role in esports. Unlike other conventional sports leagues, where the running of the league is separate from the game, esports leagues are operated by the same companies that hold the intellectual property. This has resulted in innovation and friction. With a slowdown in revenue, publishers started reevaluating their position as league managers, content distributors and commercial gatekeepers.
Others have eased their hold, providing more open ecosystems or revenue-sharing systems to allow a more flexible approach to the teams and creators. Others have gone further to exercise more control over broadcast rights and sell content directly. The unifying factor is a move towards practical cooperation, with sustainability of all involved parties, including publishers, teams and third party platforms, now being on the table.
The emergence of regional leagues and local branding is one of the most promising trends in the sustainable evolution of esports. Esports is booming in new markets, such as Southeast Asia, Latin America, and India, but with a distinctly different cost base and fan behavior compared to North America or Europe.
Organizations that previously focused on international status are adapting to fit local situations. They are also collaborating with local celebrities, producing language-specific content, and matching with local sponsors. Such a local approach not only makes overhead costs more affordable but also makes them more relevant, allowing teams to create stronger fan groups.
In mobile-first gaming nations, the focus is shifting to games such as Mobile Legends, PUBG Mobile, and Free Fire, which require a different approach compared to PC-based esports. The switch to mobile also presents new avenues of marketing and monetization via telecom relations, app integration, and direct-to-consumer sales.
In the future, the most successful esports enterprises may not even resemble traditional sports teams. Rather, they will likely operate as hybrid media companies, a mix of a competitive team, a content studio, and a brand incubator. Already, some organizations have started to utilize their talent pool to create lifestyle content, launch clothing lines, or collaborate with musicians and streamers in crossover events.
Incorporation of creators into esports organizations is not only a trend, but it is a necessary development. Influencers come with their own audiences and engagement rates that are usually more trustworthy than the viewership of live matches. Teams can tap into new revenue streams by selling sponsorships, live shows and even co-branded digital products by bringing these creators into their brand.
There is also the changing infrastructure. Instead of constructing costly stadiums, most teams are investing in online infrastructure, fan platforms, analytics, and membership programs that transform one-time spectators into lifelong members of a community.
The second act of esports is taking place. The former was fuelled by explosive growth and unstoppable hype. Sustainability, strategy, and clever execution will be the following key elements. It will not be through headlines or record-setting prize pools but through efficient operations, fan bases and business models.
The teams and companies that are making the change are already rewriting the playbook, not to pursue fads, but to make something enduring. Esports is not going to die. It is nothing more than growing up.
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