Is Esports Growing Too Fast to Become Profitable – Our Take

Esports is one of those industries that has been around for many years. It all started with a few big tournaments, but nowadays millions of people watch competitive gaming tournaments. You can also find professional players who have become international celebrities and loads of major brands eager to invest in the business.

On the surface, everything looks great, but a deeper dive shows that esports struggles to turn attention into sustainable profits. Yes, some of the most popular titles feature all kinds of events and have millions of fans, but esports organisations still face significant financial difficulties. They need to continually adapt their business strategies or become increasingly dependent on external investment.

This situation raises an important question – is the industry growing faster than its business model can actually support? It’s an interesting topic that the Nostrabet.com team and I want to dive deep into.

Esports is Very Popular

People who aren’t fully familiar with the esports industry don’t really know how big it is. Based on stats from Esports Charts, the industry generated close to 3.3 billion hours watched in 2025 alone, and this excludes mainland China. Adding it to the picture will probably increase the numbers by at least 25%. Compared to 2024, there is a 1.5% increase, and 2026 is shaping up to be an even better year.

In terms of popular games, you have a lot more than before. People watch titles like League of Legends, Dota 2, VALORANT, Counter-Strike 2, Mobile Legends: Bang Bang and Honor of Kings. The industry managed to create an environment where competitive gaming is a lot more than just watching people play.

Some of the most hardcore esports fans follow individual players and even purchase their merch. The major esports tournaments also offer a load of entertainment experiences that assemble established sporting events. It’s safe to say that people watching their favourite esports consider it as entertaining as someone following a major football competition.

Millions of Views Don’t Automatically Mean Millions in Revenue

We can clearly see that the demand for esports entertainment exists and the numbers back it up. Sadly, having millions of viewers doesn’t always translate into substantial income for teams and players.

If we look at traditional sports, we will see they’ve spent decades developing various revenue streams. Football clubs are one of the best examples because they generate cash in several ways. They usually get money through broadcasting agreements, sponsorships, merch, ticket sales and different partnerships.

A quick look at some esports organisations shows they also have access to these opportunities. However, the economics work very differently, and this is where problems begin.

Thanks to platforms like Kick, Twitch and YouTube, people can watch all major esports events completely free. Technically, football fans can also watch the games they like for free, but the TV broadcaster has to pay a large amount of money to be able to broadcast them. When it comes to esports, most event organisers prefer to maximise their reach through streams rather than require broadcasters to pay them.

What’s also worth pointing out is that not every viewer has the same commercial value. Yes, attracting more people overall is always good, but companies wishing to sponsor it have to determine whether viewers from several countries match their target markets.

We think esports organisations should probably focus more on the actual financial value of their audiences. This would allow companies to feel more confident about investing money in this business model.

Esports Organisations’ Quick Expansion

Those of you who’ve been following the esports industry know that the last couple of years have been crazy. Many esports organisations experienced rapid expansion, and this should have brought them substantial financial returns.

To be fair, some investors saw the opportunity in competitive gaming and decided to dive in. This allowed certain teams to sign expensive players, construct new training facilities and enter many competitions. Some of these investments were justified and helped, but others were based on expectations and didn’t work out.

We can conclude that growing an esports organization is not the same as growing a company. These organisations usually compete in every title, and each one has its specifics in terms of players, travel expenses and salaries. Some of these titles don’t have prize pools as high as others, and they can become a financial burden rather than a disadvantage.

There have been many cases where the industry prioritises market share and brand recognition before deciding if operators are financially sustainable. Dota 2 is one of the best examples here because some of the top Dota 2 teams have to pay huge salaries to their players. While it’s true that the game itself has some of the highest prize pools, only the top-tier tournaments offer that.

In other words, organisations that don’t have consistent results can end up spending tons of money on salaries and travel expenses without getting much in return. This business model is not sustainable in the long term, and it often causes organisations to drop their teams. This brings us to the next important point.

The Expensive Reality of Running an Esports Team

Casual esports fans often don’t realise how expensive it can be to run an esports team. People believe that signing talent, competing in tournaments, attracting sponsors, and collecting prize money are easy, but they’re not.

Professional organisations must cover all kinds of expenses, including:

• Player salaries
• Coaching staff
• Analysts
• Accomodation
• Travel
• Equipment
• Marketing
• Administrating expenses

All of these quickly add up, especially when an organization competes in multiple games. Some of the best players in the world often command substantial compensation, and this alone can be a problem. As mentioned, prize money is not necessarily a reliable source of income for these organisations, so they need to find other sources of funding.

Sentinels is one of the interesting examples when it comes to financial stats. The organisation reported securing $6.44M in net revenue in 2025, but it actually lost $4.28M. This shows that profitability can be very challenging.

Sadly, the financial burden is just too much for some organisations, and they have no other choice but to file for bankruptcy. ENCE is one example because the Board of Directors decided to cease operations after 13 years. The same happened with Evil Geniuses, one of the largest and most popular North American esports organisations.

Since everything is getting more expensive, we expect to see even more esports organisations going under. The travel costs alone for some teams are astronomically high because the tournaments take place all over the world.

Sponsorship Dependency Remains a Big Weakness

It’s no surprise that sponsorships have been one of the key sources of revenue for esports organisations for years. Back in the day, gaming hardware manufacturers were among the main sponsors of both teams, individuals, and tournaments. Nowadays, organisations also work with tech companies, consumer brands, and even betting websites.

Sports betting operators have become among the most important sponsors in the industry. You can find them across all major competitions, and some of them even created their own esports organisations. Although these types of sponsorships are controversial, considering the industry’s current situation, they are helpful.

There’s nothing wrong with having different kinds of sponsorships, but the problem arises when organisations become too dependent on them. Because of how current financials work, most organisations derive the majority of their income from these sponsorship deals. If some of the companies decide not to renew their contract, the organisation will face financial difficulties right away.

The truth is that sponsorship revenue depends entirely on the external marketing budget. Companies analyse what works for them and change their marketing strategies and budgets. Sadly, this makes long-term financial planning very difficult, especially when an organisation depends on income from a single major sponsor.

It’s also worth mentioning that some esports teams compete in categories or regions where certain sponsors face regulatory restrictions. This is often the case with betting sites during tournaments in certain parts of the world. In the latest The International, for example, the teams that had a betting sponsor in their name had to play under a different name.

Game Publishers Have More Control than Most People Realise

One of the major differences between traditional sports and esports is the role of video game publishers. Football, for example, is a sport that does not really belong to a company that dictates what happens. The same is true for basketball, tennis, ice hockey, or any other traditional sport.

For better or worse, this is not the case in esports, because the games people play belong to their respective publishers. There are a few big names, such as Valve and Riot Games, that influence the competitive environment in many ways. Beyond changing the games themselves, they also organise many of the biggest tournaments and set the rules.

Publishers control the number of tournaments, competitive formats, licensing agreements and the opportunities within the ecosystem. The relationship among publishers, tournament organisers, and professional teams is essential and can create many problems.

This is an issue that has been around for years, and it’s most likely not going to go away soon. Publishers will not surrender control, so there needs to be stronger cooperation between everyone.

In-Game Purchases – Could this be the Solution?

Those of you who play different games know that most of them offer a variety of in-game purchases. In most cases, these are cosmetic-related items that do not offer you any in-game advantage.

Game publishers have been offering these items for years, but we can see that many of them have changed their approach. Some started experimenting with digital products connected to professional competitions. As a result, people can find team-branded cosmetic items and weapon skins. Every purchase that you make supports the esports organisations.

Riot Games is probably one of the best examples here because it was among the first companies to do that. A quick look at the 2025 VALORANT Champions Tour revealed that Riot shared nearly $105.2M with VCT teams throughout the year. More than $86M from this amount came from esports-related digital goods.

Valve has also done something similar to Dota 2 for years. The Compendium was one of the most sought-after items that became available prior to The International. The company gave 30% of every purchase towards the prize pool, and this led to some of the largest rewards in esports’ history.

The overall concept is great because publishers generate revenue from fans instead of external companies. Sadly, this revenue generation and distribution may not generate profits for individual teams. Moreover, the money that fans generate is usually not as much as what organisations could get from big sponsors.

Not All Esports Organisations Are Not Profitable

Overall, we can conclude that most esports organisations have financial difficulties. However, this does not mean that all of them are struggling because the stats prove otherwise. An example from 2026 shows that T1 generated $64M in revenue in 2025 alone.

The organisation achieved that by focusing on merchandising and a direct relationship with its fans. With that said, T1 benefits heavily from high brand recognition and a long history of competing in major tournaments.

We firmly believe that the next stage for esports is for organisations to prioritise financial stability. They need to evaluate whether adding new titles would be financially wise, not just focus on their brand visibility.

Overall, we can conclude that the esports industry is in a difficult period, and it needs to make changes if it wants to grow. It’s up to the publishers, organisations, and tournament organisers to find a working solution in the long run.