NewZoo analyst Jurre Pannekeet, who sees the revenues for 14 esports teams, says the majority of teams are operating at a loss, but declined to say how much on average, citing nondisclosure agreements. When pressed whether that majority was closer to 51 percent or 90 percent of teams operating at a loss, he said: "If you looked into it, it's probably closer to 89 percent than 50 percent."
"We're not comparing the right things to each other," he said. "In our industry, the reporting numbers generally come from publishers themselves or from teams or organizations who are self-interested. Those incentives may cause issues." Last year, he said, one analytics organization was reporting that the Houston Rockets' mid-season invitational viewership numbers were 126 million at their peak, which was 6.5 times higher than what they actually were. "We had to immediately go out there and refute that. That's 6.5 times higher than what we actually saw. The number we saw at peak. We were proud of it. We went up 22 percent every year."
On the other hand, as better standards begin to roll out, there will always be loopholes for desperate actors. Last month,
Magic: The Gathering put on its biggest esports event yet to debut its brand new pro league: a $1 million tournament at Boston's PAX East convention.
At first, viewership on Twitch hovered at around 20,000—a pretty typical amount of viewers for a pro Magic tournament on a weekday. Suddenly, in the afternoon, something miraculous happened: viewership quadrupled to a remarkable 88,000.
According to a source with knowledge of publisher Wizards of the Coast's sponsorship strategy, that huge jump in viewership wasn't a surprise. "Wizards has been pitching the Mythic Championship to potential sponsors for the future and was very confident they would get close to 100,000 viewers," the source, who asked to remain anonymous for fear of professional repercussions, told
Kotaku. "We thought it was weird given the historical viewership of the game."
Last year, the
Overwatch League grand finals sold out New York's Barclays Center, a 19,000-seat venue. It was a good sign for the culminating event of Blizzard's international, multi-million-dollar esports league's first season. I attended the show myself, and I did notice that the seats were mostly occupied by enthusiastic fans. Online, however, something else was happening. A
cross the internet, the Overwatch League grand finals' livestream was embedded across the internet on Reddit, IMDB, Gamepedia, and other sites. A source familiar with Curse's sales operations told
Kotaku that the company was behind it. "We had never done a tournament that size," he told me. "We did some
Gwent tournaments,
Madden,
Fortnite," he said over the phone.
"When we turned that on, we saw the livestream go from 100,000 to 300,000." He noted that it was one of the most heavily promoted events in esports, even airing on ESPN, which could account for the substantial interest.
Two sources confirmed that Curse charged $15,000 an hour to embed streams across their network of sites. In the past, that number was $10,000 per esports tournament.
According to data
published by esports reporter Rod Breslau, hours into broadcasting, the
Tekken event's Twitch viewership spiked from 6,000 to over 50,000 within the course of thirty minutes. Red Bull did not respond to
Kotaku's request for comment.
"
Esports may be a bubble, but it's correcting itself toward influencers," said one longtime esports professional, who spoke anonymously for fear of career repercussions, and who now works in the influencer industry. Fans prefer to follow their favorite pro player rather than a whole esports team, another deviation from the traditional team sports model. And successful streamers can make a lot more money from fans and sponsorships on Twitch than they can grinding away for an esports team.