The Economics of Esports

How competitive video gaming makes money, why game publishers hold unusual power, and what makes esports careers so uncertain.

Esports are organised, competitive video game tournaments, often played by professional teams and watched live by large online audiences. What began as small gatherings of enthusiasts has grown into a global industry with professional players, coaches, arenas and broadcast deals. Its economics look a lot like traditional sport in some ways - and very different in others.

Where the money comes from

Esports earns money in several ways:

Sponsorship is usually the largest source, as brands selling computers, energy drinks, phones and many other products want to reach young, digitally engaged audiences.
Media rights and streaming, where platforms pay to broadcast events, and teams and players earn from their own streams.
In-game purchases tied to tournaments, such as special items or team-branded skins, part of whose revenue may be shared with teams.
Tickets and merchandise for live events.

Compared with major traditional sports, total esports revenue is still modest, and many teams have struggled to turn a profit.

The publisher holds the keys

The biggest difference from traditional sport is ownership of the game itself. No one owns cricket or football. But every esport is built on a video game owned by a game publisher - a company that controls the rules, decides which tournaments are allowed, and can change the game with an update. The publisher can even stop supporting a game altogether.

That gives publishers enormous power over leagues, teams and players. Some publishers run franchised leagues, where teams pay a fee for a permanent place, similar to American sports leagues. Others allow open tournaments run by independent organisers.

Prize pools and uncertain careers

A prize pool is the total money awarded at a tournament. Some are very large: The International, a tournament for the game Dota 2, reached a prize pool of roughly 40 million dollars in 2021, much of it raised from fans buying in-game items. But these headline prizes are shared among teams and concentrated at the top - another superstar market.

Splitting a big prize

Suppose a team wins 10 million dollars, the top prize in a major tournament. If the team organisation keeps 10 percent, 9 million dollars remain for five players - about 1 million 800 thousand dollars each. That is life-changing. But the team that finishes sixteenth might win only 100 thousand dollars, split five ways, about 18 thousand dollars each after the organisation's share. For most professional players, salaries and sponsorship matter more than prizes.

Esports in India

India has one of the world’s largest populations of mobile gamers, and mobile games have driven its esports scene. The market has also shown regulatory risk: the popular game Battlegrounds Mobile India was blocked by the government in 2022 and allowed back in 2023, which disrupted teams and tournaments for months. Esports careers are also short, as reaction speed can decline with age, and players face long training hours and health concerns such as eye strain and poor sleep.

Treating esports as a reliable career path

Stories of teenage millionaires are real but rare. Only a tiny share of players reach the professional level, careers can end in a few years, and a game's popularity can fade. Like any superstar market, esports rewards a small number at the very top.

Key takeaways

Esports earns mainly from sponsorship, plus media rights, in-game purchases and events.
Unlike traditional sports, each esport is owned by a game publisher with great power.
Large prize pools are concentrated at the top and shared among teams.
Careers are short and uncertain, and markets can shift with regulation.