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The esports landscape, once a fertile ground for innovation and explosive growth, is now witnessing the closure of many clubs that helped lay its foundations. Teams like Luminosity Gaming, EUnited, and OG's Dota 2 squad have all faced shutdowns or significant downsizing in recent years. A combination of financial pressures, shifting audience trends, and industry volatility has forced many of these institutions to shut their doors.
"Esports clubs face an uphill battle in securing sustainable revenue streams," says Jason Lake, CEO of Complexity Gaming. "The financial model relies heavily on sponsorships, but many sponsors have pivoted toward broader influencers and streamers." As the market becomes more saturated, it is increasingly difficult for smaller clubs to secure the deals that keep them afloat. Without consistent backing, operational costs—like paying player salaries, travel, and equipment—can spiral out of control.
Salaries are a major factor in a club's financial burden. Top-tier players can command salaries ranging from $50,000 to $300,000 per year, with elite players in popular games like League of Legends or Counter-Strike: Global Offensive earning even more through endorsements and prize money. Staff costs further add to this financial pressure, with team managers, coaches, and analysts earning anywhere between $30,000 and $80,000 annually. For a club with a roster of multiple players and support staff, payroll alone can stretch into the hundreds of thousands annually.
On top of salaries, clubs must also cover the high costs of travel and equipment. Traveling to international tournaments often involves flying players and staff across the world, booking accommodations, and providing stipends, which can quickly amount to $10,000 or more per event. Furthermore, the cost of gaming equipment—like high-end PCs, monitors, and peripherals—can easily exceed $10,000 per player, with constant upgrades required to remain competitive in an ever-evolving tech landscape.
The COVID-19 pandemic initially seemed to boost esports viewership as millions turned to online entertainment during lockdowns. Viewership numbers skyrocketed in 2020, with platforms like Twitch seeing a 70% increase in hours watched during the pandemic's peak. "COVID created a unique moment for esports," says esports analyst Rod Breslau. "With traditional sports on hold, many people gravitated toward online gaming and streaming, giving esports a massive temporary boost." However, this surge was short-lived. As traditional sports returned and pandemic restrictions lifted, many casual viewers moved back to more familiar forms of entertainment. Esports clubs that had scaled up to meet pandemic demand found themselves with inflated costs and declining viewership afterward.
Market volatility further complicates the issue. "One of the most challenging aspects is the cyclical nature of game popularity," notes John Robinson, President of 100 Thieves. "If you build a club around a single game and that game falls out of favor, you risk losing your entire audience." The rise and fall of games, from Overwatch to Fortnite, has sent ripple effects throughout the ecosystem, leaving clubs scrambling to adapt or dissolve entirely.
The rise of content creation also plays a pivotal role. "Many players are realizing they can make more money and build a more secure career streaming than grinding in tournaments," explains Breslau. Platforms like Twitch and YouTube offer revenue models with fewer risks compared to the feast-or-famine nature of competitive gaming, leading many top talents to abandon club affiliations in favor of solo ventures.
Financial pressures exist despite the esports industry's overall growth. According to Newzoo, the global esports market generated $957 million in 2019, followed by $1.1 billion in 2020. By 2022, that number climbed to $1.38 billion, representing a 44% increase from 2019. However, this revenue growth hasn't necessarily translated to profitability for smaller clubs, who struggle to claim a piece of the growing pie.
These forces, from COVID-induced market shifts to the lure of individual content creation, have combined to form a perfect storm, where esports clubs are fighting for relevance in a rapidly evolving digital age. Their closures reflect both the fragility and fierce competitiveness of an industry still finding its footing.
Most talk a big game — others change it. In an unprecedented partnership, CXM teamed up with the beverage giant, Mountain Dew, to sponsor a series of collegiate gaming tournaments. But this was not just about promoting their brands. They had a larger, more significant objective - supporting Black College students.
