We dismantled three financial reports, and found the essence behind the e-sports club’s glamour. > “Sports Industry Ecosystem” (ID: ECO-SPORTS) .
Author: North Force
Editor: Han Rongdi
With huge attention and traffic, e-sports has become one of the fastest growing industries in the world.
So, as a key link in this huge industry, how does the e-sports club “live”?
Is it a good business to run an e-sports club?
We all know that in the territory of the world sports industry, top sports clubs often have amazing market value and huge market influence. The transfer fees and contracts of hundreds of millions of people are staggering, and the higher copyrights are behind them. , Sponsorship and ticket income.
Similarly, the discussions on e-sports clubs have never stopped, but unlike sports, e-sports clubs are often not very transparent in this respect, and we often have no way of knowing their true operating conditions. Know.
Recently, thanks to the listing of three home appliance companies, Astralis Group, Enthusiast Gaming, and Simplicity Esport and Gaming, the financial results of the three e-sports teams can be displayed in front of the public, which also fills this gap, allowing us to Put the e-sports club under the financial microscope and observe closely.
Dissecting three e-sports financial reports, what are the findings?
Although there are differences in the business scope, the clubs involved in the projects and events, and in terms of business model and business philosophy, these three home appliance companies are very different, but their financial reports give the same information point- —Loss.
It has only been five years since e-sports began to be favored by big capital. In 2015, realizing that e-sports will be the next outlet, investors from all walks of life began to flood in. Five years later, the e-sports industry has become a large market with billions of dollars annually.
Now, the appearance of these three financial reports seems to indicate that although the e-sports industry is shining, but running an e-sports club may not have what you thinkThen make money.
As the only listed company in the world that consists of pure e-sports clubs, Astralis Group’s revenue in fiscal year 2019 reached US $ 7 million, and its net loss reached US $ 5 million. The financial report shows that the company’s main business income comes from the three parts of the event bonus, sponsorship and merchandise tickets.
The top five on the list are all A team players
Different from the new favorite A team, the second Luminosity Gaming that released its financial report is more in line with the image of a noble nobleman. Last May, LG was acquired by Enthusiast Gaming and merged into the eSports team business. In the nearly 7-month period from the acquisition in May to the end of the year, LG’s revenue reached 1.2 million, with a net loss of 730,000.
In addition to this year ’s data, the financial report also shows LG ’s financial data for the past three years. In the three years from 2016 to 2018, LG’s revenue was 3.3 million, 2.6 million, and 380; net profit was 180,000, negative 20,000, and 840,000.
LG ’s revenue and profits will have such big ups and downs in three years, which has a lot to do with the general environment and trends of the e-sports industry and the club ’s performance.
In 2018 when the club achieved profitability, 60% of LG ’s revenue came from live game broadcasts, which was only 10% in 2017. And their “game live streaming revenue” exploded by 50% within a year for two main reasons. First of all, there is a sudden rise of the game “Fortress Night” in 2018. Secondly, there was a teenager named Ninja in LG’s lineup. “Fortress Night” + Ninja, you know the rest of the story.
As one of the hottest anchors of “Fortress Night”, Ninja brought in tens of millions of dollars in revenue in 2018 < / p>
However, this kind of “Tian Shi + Ren He” is not available every year. Similar to sports clubs For e-sports clubs, the core element of maintaining business income is still two words-achievements.
In another profitable year, in 2016, LG’s “Brazil Gang” played an unmatched performance in “CS: GO” and almost won the championships of all competitions throughout the year. Such achievements not only brought them huge bonus income, but also attracted the attention of the brand. That year, their sponsorship income reached 850,000, the highest in the past three years. Later, this lineup was bought out by another company, and the huge $ 1 million buyout fee went into LG’s account.
We can find through analysis that in the two years that LG has achieved profitability, either the club has the hottest anchor in the world, or the team has played a top performance in a certain event. In 2017, when both were missing, LG was at a loss. And even in 2018 and 2016, with various favorable conditions, LG’s profit is only 180,000 and 840,000.
No matter what the industry is, if there are nobles, there will be “communities”. Simplicity Esport fits this image. Their revenues in the first three months of 2020, 2019 and 2018 were 380,000, 370,000 and 0, respectively; their net losses reached 210,000, 3.5 million and 09,000.
They said in the financial report, “At present, the company’s cash flow cannot support our daily operations. The management is trying to solve this problem through financing.”
This situation is a common problem for small and medium-sized clubs, and the answer to the problem seems to be difficult to find for a while. This also explains the instability of the e-sports club to a certain extent.
Although the results of any competitive event are one of the most core parts, for e-sports, the results account for a greater proportion of its commercialization. As an e-sports club that has just started, Simplicity does not have the outstanding record and global popularity of Team A and LG, leading to their consecutive losses for three years.
But is it enough to have a grade? Obviously not. Team A also played a dominant performance on the field last year, but the entire team was still unable to achieve profitability.
The three clubs are affiliated with top-level, second-gradient, and ordinary clubs. All three types of clubs have suffered losses, enough to represent a certain industry commonality. This just shows that the e-sports club has not done well enough in commercialization. There is no stable way to make money, and earnings fluctuate greatly.
“If you want to make money by investing in e-sports clubs, it is currently unrealistic.” Yasuo has the same view.
Investor enthusiasm is still rising, why?
Although various financial data are proving that “e-sports clubs are not a good business at present,” this has failed to stop investors’ “enthusiasm” for e-sports clubs. Why is this?
FaZe Clan recently received a Series A round of financing of US $ 40 million. In the Forbes “E-sports Club Value List” released last year, FaZe Clan ranked fourth with a value of $ 240 million.
So, why can the e-sports club, a business that is not profitable and has no clear and mature business model, be so favored by investors?
The answer is very simple. A huge number of e-sports users have put a glittering coat on the e-sports industry.
With huge attention and traffic, e-sports has become one of the fastest growing industries in the world.
However, an industry that explodes rapidly in the short term is often accompanied by a market bubble. The founder of Complexity Gaming once said, “When you see some e-sports clubs get a valuation of up to 300 million US dollars based on only 25 million US dollars of income, you will be surprised if investors are thinking. ‘S profit is still far from supporting its valuation. Traditional business knowledge tells me that there is a bubble here. “
