The Truth About Esports Orgs and How They Make Money

[00:00] Esports organ orgs have a lot of history

[00:03] of failing or needing to make mergers to

[00:06] stay alive um how I guess first of all

[00:09] can you explain to the people how

[00:11] Esports orgs make money just in general

[00:13] yeah so a lot of them have a tough time

[00:16] making money and throughout the covid

[00:17] years A lot of them were only making

[00:19] money through cash injections right um

[00:21] so a lot of these guys are trying to

[00:24] make money through not the actual

[00:26] Esports business but businesses which

[00:29] are to

[00:30] to set Esports business right you see

[00:32] that the Hun thieves they're trying to

[00:33] push their merch at one point trying to

[00:35] push a game and also trying to push a

[00:37] drink um and so a lot of these companies

[00:40] I would say are trying to figure out how

[00:43] many companies can we center around

[00:45] Esports being the marketing engine for

[00:48] um so you have TSM who has several

[00:50] companies underneath them and they

[00:52] actually make a decent chunk of change

[00:54] despite and even then how many layoffs

[00:56] they have had right I believe it's the

[00:57] blitz app that that they own which is

[01:00] one of their one of their biggest uh

[01:01] forms of Revenue you look at Team Liquid

[01:03] with liquipedia and and other things so

[01:06] there aren't a lot of ways for Esports

[01:08] teams to actually make money uh to begin

[01:11] with right outside of their sponsors

[01:13] whether it be peripherals and drinks and

[01:15] all that so a lot of them are trying to

[01:17] make these side companies where their

[01:18] Esports team then becomes the marketing

[01:20] arm for fores said project uh so as it

[01:24] sounds it's pretty freaking difficult

[01:26] unless you have a DieHard audience right

[01:28] to to break even especially because

[01:31] these player salaries are so exorbitant

[01:33] even even still to this day it's

[01:36] unfathomable how expensive it is to get

[01:38] into an esport like Counter Strike like

[01:42] unless you have a big gambling sponsor

[01:45] you can't really be in Counterstrike

[01:47] right now and the same could be said for

[01:48] a lot of Esports that don't offer enough

[01:51] Revenue to suffice for paying for top

[01:53] for top people long story short it is

[01:55] incredibly difficult I think everyone is

[01:57] still trying to figure it out and we a

[02:00] few mantle pieces right now in Esports

[02:01] that are doing a good job but it's not

[02:04] going to be good enough so everyone's

[02:06] everyone's chasing each other and why do

[02:08] you think it is so hard like why can't

[02:10] it be more how traditional companies who

[02:13] rely on Impressions make money with just

[02:15] traditional sponsorships and things like

[02:17] that why do you think they have to go

[02:18] the route of creating their own kind of

[02:22] companies so that they can use the the

[02:24] Esports team as a marketing arm where

[02:27] other traditional companies who rely on

[02:29] Impressions don't have to go that route

[02:30] yeah and I just want to stress this is

[02:32] my opinion all right I'm I'm a dumb guy

[02:34] so I'm not a CEO over there I I've met a

[02:37] lot of these guys they are freaking

[02:39] smart people and I am sure that they

[02:41] will figure this out over the next 10

[02:42] years and the market will continue to

[02:44] change um uh but like it's not like

[02:48] traditional Sports you don't have tv/

[02:50] streaming rights to really back in the

[02:52] entire process so you look at the Dallas

[02:54] Cowboys or any NFL team how much they're

[02:57] making off of media rights is

[03:00] insane no Esports team has that ability

[03:03] so it's

[03:04] like I I don't I remember looking it up

[03:06] a while back but how many billions in

[03:08] media rights these Sports comp these

[03:10] sports teams get Esports doesn't have

[03:13] those kind of numbers to back itself so

[03:14] we're left to find these other these

[03:17] other avenues which are very difficult

[03:20] and it's it's just so I'm sure other

[03:22] people are going to have thoughts on

[03:23] this but it's so difficult to attach to

[03:25] an Esports team when you're constantly

[03:27] changing rosters and you have multiple

[03:29] osters if you're a fan of the Dallas

[03:32] Cowboys they can lock down a quarterback

[03:34] and they can have you as a fan for life

[03:36] if you are an Esports organization that

[03:38] means you need to keep your scump

[03:41] Forever you need to keep NAD shot

[03:44] forever you need to keep double lift oh

[03:46] wait he wants to go somewhere else okay

[03:48] so do his fans so it's so much harder

[03:51] for an Esports team who is spread out

[03:53] across multiple Sports compared to a big

[03:57] big conglomerate who gets media rights

[03:59] so I think the big defining factor for

[04:01] me is those media rights and I'm sure

[04:03] there's a lot more intricate details

[04:04] there but yeah I mean Esports teams had

[04:07] to figure out so many things that are

[04:08] just new yeah and I don't know a lot

[04:10] about the business side of it like I

[04:12] mean I have a business background um

[04:14] myself but like in terms of like how

[04:16] Esports makes money and things like that

[04:18] I haven't looked into it a ton but it

[04:20] just seems like the opportunity should

[04:23] be there like you know like you said

[04:24] like Fox pays the NFL x amount of

[04:27] dollars and that money is distributed

[04:28] through you know to all the teams teams

[04:29] based on all the deals that they've made

[04:31] is is is Esports not making those kind

[04:33] of deals with YouTube or twitch or

[04:35] anything like that for like the rights

[04:36] to stream those or is that just not how

[04:38] it works right now well they were but it

[04:40] was going to the freaking Publishers or

[04:41] devs so like Activision is making a deal

[04:43] with YouTube and they're taking that

[04:45] money and maybe that sprinkles across

[04:47] the teams right but I don't think it's a

[04:48] substantial amount also I mean we're

[04:50] Gamers we don't like paying for things

[04:52] twitch has been free for a decade plus

[04:54] yeah YouTube as well we can just watch

[04:57] an ad and then watch the entire season

[04:59] so so um yeah I don't know where this

[05:03] goes I mean at the end of the day when I

[05:05] talk to owners occasionally or see them

[05:07] at events I'm always reassured because

[05:10] hey these guys have a million followers

[05:12] on Twitter and 200k on Instagram and

[05:16] when they play a match of whatever game

[05:18] whether it's Call of Duty Counter Strike

[05:20] League of Legends there's a quarter

[05:21] million people watching and so somebody

[05:24] out there when the time comes they will

[05:26] find a way to be like there is value in

[05:28] that because most TV shows you keep on

[05:30] scrolling by they don't have a quar

[05:32] million viewers no so I think a lot of

[05:35] this is grass's greener mentality of

[05:37] these teams are trying to figure things

[05:39] out but they're also trying to survive

[05:41] long enough where the industry finds it

[05:43] out for them and we will see however

[05:46] many couple dozen orgs are still left

[05:49] and how this industry shifts with them

[05:51] yeah and I think I'm in agreement with

[05:52] you like there there's the viewers I

[05:54] mean they're getting more viewers than a

[05:56] lot of TV shows that are still going on

[05:58] so there has to be a path to financial

[06:01] stability and Esports and they're just

[06:03] so young that they're just obviously

[06:04] still trying to figure it out yeah all

[06:06] right Jake when you're not working I

[06:09] think you talked a little about working

[06:10] out it's a big part of what you do when

[06:12] you're not working but you know what

[06:13] what do you do when you're not working

[06:15] yeah I mean I I definitely uh not only

[06:18] do I really enjoy working out I'm very

[06:20] uh OCD about it uh it's become a a main

[06:23] stay of like mental health yeah uh for

[06:26] sure so if anyone doesn't work out I

[06:28] mean I've been like we've said a JV

[06:30] athlete my entire life but it's been a

[06:32] really big like way for me to escape to

[06:35] have my own time and like I think

[06:37] physical fitness is a is a big thing for

[06:39] me of like even if things aren't going

[06:40] well at work I can look forward to a

[06:42] workout so being in shape has always

[06:44] been a pretty big thing for me mentally

[06:48] and so I've been doing it ever since I

[06:50] moved out on my own it's been a kind of

[06:52] a reoccurring thing so I'll probably I

[06:55] work out probably four or five times a

[06:56] week it's not too hard I I definitely

[06:58] have my free time to myself

[07:00] and then in other free time I'm gaming

[07:02] dude I'm watching I'm watching streams

[07:04] like I told you earlier I'm watching

[07:06] every interview like I I'll watch

[07:08] interviews twice I I just love hearing

[07:11] everyone's perspectives and almost

[07:13] getting to know how people think through

[07:15] interviews and I'll even watching your

[07:17] stuff I'll take inspiration of like that

[07:19] was a freaking good question and that

[07:21] was a great answer so I'm always trying

[07:23] to take things in and um I guess when

[07:25] it's when it's work I've always looked

[07:27] at that of like if I'm playing a video

[07:29] game but I watching a stream I'm working

[07:30] a little bit because I'm listening I'm

[07:32] waiting for a clip or I'm I'm learning

[07:34] about people so again long story short

[07:37] working out playing video games hanging

[07:40] with my

[07:41] girlfriend binging TV shows there a

[07:44] couple couple drinks here and there man

[07:45] thank you guys so much for watching this

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