The First International started a new era in esports history: the time of big tournaments, quick growth of the audience and development of the stage, and serious investments.
Ten years have passed since then, esports is no longer a domain for enthusiasts, it has become a business, and now numerous teams, tournament operators and organizations have appeared and disappeared as not all of them managed to remain and prosper in the industry.
To answer the question of why some of them succeeded and others did not, we should take a look at how the main esports disciplines were developing throughout the years.
If Dota 2 is one of the most important disciplines in the post-Soviet area, the situation is the opposite in the rest of the world: League of Legends is keeping its lead. Dota 2 has not reached its audience as it was launched several years later and was a bit hostile to newbies for various reasons.
The International opened a new era – it shaped the image of the Dota stage. It is characterized by a big quantity of tournaments with good prize pools, however, they look bleak in comparison with TI, which is a pillar indeed. Dota 2 has lots of grabs, but it is beneficial for esportsmen mainly, organizations just get a small percent from them (usually 10-20%), additionally, this source of income is unstable which doesn’t allow them to make confident plans. Additionally, for a long time Valve has been building their system around players, not organizations – it definitely scared potential investors away.
As a result – Dota-2 cannot keep up with LoL due to attraction of organizations and other investors. Many big multigaming organizations ignored Dota and they are still doing it – the discipline has too little money as Valve does almost nothing but The International.
Even successful organizations that put roots down Dota a long time ago (such as NaVi, Evil Geniuses, or Fnatic) complained that it is impossible to make stable money with it, and it’s nice if you can recoup your expenses in bad years. The main way to do it is to promote teams and players and to attract sponsors but they are ready to invest much less than in LoL.
Yet, there were major investments: the most hyped case with $100 million that was invested by USM Holding when they bought several esports companies and created ESforce Holding. Its fate is demonstrative: the holding managed to become the biggest player in the post-Soviet area but suffered losses again and again, and in 2020 it was worth $30 million – it was not the best investment.
But even ESforce has a chance to become more expensive than before as Dota 2 got on the right track. The Dota Pro Circuit system was implemented, and by 2020 the discipline had obtained a kind of regional leagues that function as qualifiers for major tournaments, so Dota 2 started to use a system similar to LoL; Valve prefers organizations – for example, slots in leagues are appointed to them, so it is possible to change even all players during the transfer window. Invitations used to be appointed to players, and this change definitely appeals to organizations.
Dota 2 still has a lot of problems, and the audience of the game is gradually reducing (even though the number of viewers keeps on growing), but now this kind of investment looks much more promising than a couple of years ago – the discipline seems to have entered its right track.
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Counter-Strike: Global Offensive – the leader among shooters
CS is one of the oldest and most popular disciplines, so Global Offensive, which was released in 2012, was met successfully. Even though the game belongs to Valve, like Dota 2, they took different paths. It happened due to the absence of an analog of TI in Counter-Strike: most prominent representatives of the stage said that it should be organized, or maybe the second discipline should be included in TI itself, but the developers rejected these ideas.
As a result, the structure of the CS stage is absolutely different – there are major investments (the biggest tournaments) but they are not as prominent as Dota 2 events, the schedule is very busy, important events are held all the time. Teams have no chance to relax for half a year like in Dota 2, you need to always be set and ready.
The grabs are high but even all CS tournaments cannot compete with TI, so these organizations pay higher salaries than in Dota 2. Therefore, it is more expensive to build an efficient team in CS, and it is balanced with the popularity of the discipline in the whole world in comparison with Dota: here the income from sponsors, selling the rights and merchandise is higher.
As a result, the professional CS stage is more stable and “profound”: there are more professional teams and tournaments at all levels. The organizations like the predictability of the income in the discipline, so the majority of the most important organizations have their own teams. Reasonable investments in the discipline and there are promising perspectives: CS is developing together with the whole market, and even Valorant, which was considered a serious threat, was unable to harm its status.
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Riot as an Example for Everybody
The development of League of Legends could be considered as a role model for other disciplines – huge revenues from Riot were used for future development of its popularity and building infrastructure. The developers created a wide ecosystem around leagues that are based on franchises – a slot in leagues costs some money but those who invest in it can be sure that reasonable management of a team will be profitable and it will definitely recoup all expenses.
As a result, LoL has lots of multi-gaming organizations, huge interest is taken to leagues by clubs from traditional kinds of sports – football ones in particular. Riot keeps on developing – they release other games and similar products that work on the popularity of the League of Legends universe and attract new gamers and viewers. Recently the Arcane series has become a real hit.
This approach appeals to investors more in comparison with the one used by Valve that doesn’t waste resources on their games. Another example is the release of Valorant. Riot supported the game with investments in streamers and thanks to it a bigger audience saw the game. Riot also helped the organizations that wished to get rosters in the discipline. It resulted in a successful debut, Valorant managed to quickly cement its position among important esports disciplines. This attention to the game is pleasant for investors and increases their chance for long-term success – it means that their chances to get profit increase.
In fact, the mentioned facts do not relate to our region: League of Legends is not very famous here, and Riot’s attempt to change it was not successful. After that the company decided not to waste too many resources on the region, so the investors are more interested in Dota or CS but not LoL and other games by Riot.
Failure after Failure – Blizzard
Blizzard is one of the companies that stood at the origins of esports, it accounts for the biggest number of games that turned into esports disciplines. Alas, Blizzard cannot develop and support them again and again. Warcraft III, two parts of Starcraft, Hearthstone, Heroes of the Storm, Overwatch – all of them were popular, but they failed as disciplines. There was a period when the company was trying to develop World of Warcraft as a kind of esports, but this attempt was not successful.
Strategies don’t count – nobody beyond Korea can make them popular in esports, failures of HotS and Overwatch in particular made a bad impression on many investors and even resulted in huge losses. Blizzard had all chances to build up the ecosystem – much better than Riot had but the company did not devote their time to esports, and when they took a look there, their approach was wrong – the situation even got worse.
The brightest example is Overwatch, a very successful game that Blizzard wanted to use to conquer esports. A franchise league was created, and a serious organization invested in it. Overwatch was supposed to become a great foundation thanks to its popularity – but it turned out that watching the game was not as interesting as playing it.
Then the game itself had problems: its development stopped, and the audience started to decline, then views followed the same tendency. Seasons are held, investors look at other prosperous disciplines jealously. Overwatch 2 shimmers in the near distance, but, if the company’s approach does not change, it is unlikely to improve the case a lot.
Other Disciplines and Prospects of the Market
There are lots of games that have their own audience and created professional stages: Rainbow Six, Fortnite, the Call of Duty series, and others. They also attract investors and the companies in charge of them are also worthy of examination.
Mobile games are also important – this kind of esports is developing by leaps and bounds. It has been exotic recently, but in 2021 it is impossible to surprise anyone with a tournament on a mobile game. Additionally, lots of major organizations are still giving an eye to them – there are premises that mobile esports got into the forefront of the growth of the whole market.
By the way, speaking of it: Juniper Research estimates the whole volume of the sports market in 2021 at $2,1 billion and predicts its growth up to $3,5 billion by 2025. The audience is growing quickly: NewZoo estimates the yearly growth of the audience by 10-17%. The potential of continuation of the growth is enormous, good investments may be fruitful.
And here is the fruit: Team SoloMid is estimated at $410 million by Forbes, Cloud9 – $350 million, and Team Liquid – $310 million. At the very beginning, the founders of these organizations could hardly imagine that they could cost this money. Team SoloMid appeared from the site with guides on League of Legends, Team Liquid emerged as a StarCraft clan. They covered a long way, but on the other hand, it could be only the beginning.
