Why do E- Sports Teams sign Streamers?

In recent years there has been a huge shift in the way E-Sports teams are run. Streaming video games (and other things *coughs*) on platforms such as Twitch have become highly lucrative and E-Sports organisations have started to take full advantage. Before we come to why E-Sports teams sign streamers, we have to look at how these teams earn their revenue.

Revenue is usually generated from-

1. Sponsorships-

Sponsorships are the major source of money for the E-Sports industry as a whole. Sponsorships brought in $456.7 million in 2019. They assist in increasing brand awareness around the company's products, just like any other sponsorship.

Product placements, direct sponsorship of teams or events, and the right to use IP in marketing are all manifestations of this. In many cases, the virtual element of E-Sports gives extra possibilities. Consider the branding on a player's shirt and the skins of the player's avatar. Samsung, for example, collaborated with Fortnite to create a unique Samsung Galaxy Fortnite skin that was previously only available to players who pre-ordered the Samsung Galaxy Note 9.

2. Merchandise-

Merchandise sales, like in traditional sports, are another important source of income. 100 Thieves, for example, promotes itself as a "new lifestyle company and E-Sports organisation built at the intersection of competitive gaming, entertainment, and apparel." This is an example of an E-Sports company taking a unique approach to business and focusing on its advantages. To expand, 100 Thieves recently raised $35 million. Another example of this was when in 2019 Team Liquid partnered with Marvel and came out with superhero branded merchandise and jerseys.

Unlike traditional sports, “merchandise” can be both tangible and digital, as previously mentioned. In-game purchases linked to E-Sports organisations are a unique revenue stream that has the potential to grow significantly in the future.

3. Prize Money-

Prize money should be an obvious source of major revenue for teams. This is not completely true. While the main objective of a team is to win as much as they can, prize money is not a major source of revenue. The team still needs to perform well as better results lead to more recognition, leading to more sponsors. A team performing well is always valuable to a sponsor.

This is one of the reasons that Cloud9’s Counter-Strike: Global Offensive roster, dubbed ‘the colossus’, ended in failure. The team invested heavily on a new roster and set unrealistic standards, mostly to lure in more sponsors. However as with any game, no team starts performing well instantly, it takes time. The team had a positive start but as expected the results started tapering. In the end, Cloud9 decided that the roster was just not bringing enough money in to justify the expense and the roster was dropped after just 6 months.

4. League Revenue-

Many top leagues have revenue sharing agreements, similar to traditional sports, in which the league's incomes are allocated to individual teams.

Now we can get to why E-Sports teams sign streamers. The simple answer is, MORE SPONSORS!

Credit: Dot Esports Most watched Twitch channels in 2020.

Streamers have big audiences that make them the prime target for new sponsors. Sponsors love big audiences, so it's a perfect match. While organisations can usually just buy a roster for a new game and increase their popularity, it’s very expensive compared to signing a content creator. These streamers will be tied down to a contract like any of their actual players.

TSM Myth's 2 million+ Twitter followers, for example, can help Team Solomid garner backing from corporations like Geico and Grubhub. It would be considerably more difficult to persuade businesses to sponsor E-Sports teams with modest fan bases. This visibility is beneficial to the organization's sponsors, as well as promoting merchandise sale.

Tournaments hosted by streamers, in which viewers can watch content from the perspective of numerous participants, are becoming increasingly popular. This allows the organisers to reach out to people from all around the world and dramatically expand the event's reach. The G2 Valorant European Brawl, for example, was held for the second time after its original popularity.

Credit: Business of Apps

Another reason for organisations to sign streamers is to try and monetize audiences from different games. Let’s say that an organisation is known for a specific game but it wants to expand and try and capture audiences from different games. Instead of purchasing a roster to compete in that game they can just sign a popular streamer from that game and have access to monetize a large subset of people.

For example, when Cloud9 signed Christoph ‘Cris’ Gowitzke, an ex Heroes of the Storm professional and now a popular streamer, they gained access to a whole new audience that they never could have had if they did not field a roster for the game.

So, what do streamers get out of signing with an organisation? Well… money, and in most cases, a lot of it. Once a streamer has signed a contract, there is no longer the problem of financial insecurity, something that has plagued content creators since the advent of online entertainment. Youtubers struggle with this a lot as their income is based on the ad revenue they make off of their videos; ad revenue increases with more views and decreases with lower views. This makes their income very volatile and thus, they tend to explore other avenues, like streaming on Twitch, to try and achieve some resemblance of financial security.

Smaller streamers could also get a huge boost in viewership, even if they do not make as much money as some of the big streamers in their organisation. The boost in viewership is invaluable to smaller streamers as this new attention could have a major impact on their entire career.

While streamers are not going to win organisations any major competitions, they do provide a solid backbone of revenue for the organisations which allow them to expand their operations. This goes both ways as streamers also profit off of this exchange. This is just the beginning of a trend that is here to stay for a long time in an industry that is constantly changing and adapting.