How to Start an Esports Business » The 5 Essential Steps
Maybe the massive growth of the esports industry is inspiring you to start your own esports business or team. Or your passion for gaming has triggered an idea you believe will make money.
From becoming a professional player, launching an esports team or an esports tournament through selling gaming gear, training esports players, streaming or offering support services, esports opportunities are currently endless.
Becoming an esports entrepreneur or building an esports business won’t be easy, despite the opportunities. It will take a viable idea, hard work and passion, and some careful planning.
But, it’s certainly possible. Just like when the internet started to gain momentum, when mobile applications took off and when the first bitcoin were sold. There is huge potential for success in an industry at a stage of fast growth.
Here we’ll take a brief look at where you should start your esports business journey, then for you it’s on to more research, planning, business-building, and perhaps seeking industry mentors and investors!
1. Market Research
Ideas can come easily, especially if you have a passion for the esports industry, some knowledge, maybe you’ve already been a competitive player.
Turning an idea into a successful money-making business starts with research. You have to ensure your idea can transform into profit creation. The esports industry is set to grow from a value of over $1 billion in 2019 to $3 billion by 2022. But what about the esports niche your business will operate in. Professor of marketing, Aaron Keller, as per Entrepreneur, says:
“It’s a big red flag when someone outlines the size of the market-multibillion dollars-but doesn’t clearly articulate a plan for how the idea will meet an unmet need in the marketplace.”
Start your research by:
- Analysing your customers and their expectations
- Speaking to potential customers to confirm interest
- Comparing similar products or services in other industries
- Identifying and studying your competitors
- Producing a SWOT analysis
- Looking for potential supporters or collaborators
2. Now decide what type of esports business you want to launch
Okay, so your research is done. Although you may have started with deciding what type of esports business to launch, after doing your research you can double-down on that idea. Or, if your research showed that your initial concept might now work, you may now have a better one. After researching is the time to make the final decision on the purpose of your esports enterprise.
Your esports business could be:
- An esports team
- A marketing service focused on gaming
- Streaming your play and creating Twitch content
- An esports association or club for players
- An ecommerce website selling gamer merchandise
- Esports journalism – reporting on gamers and pro players
- A technology consultancy or service provider
- A completely new idea
3. Budget, create a P&L, forecast your revenue – add it to your business plan
You began to look at your potential esports market while doing your research. Once you have conducted thorough research and decided there is definitely a niche for your esports business you need to make accurate financial projections.
Don’t overestimate numbers though, optimism won’t help at this stage, if you expect greater profits than your market can deliver your business will fail.
Your research and now your financial planning are the bones for your business plan. You need to create a budget, plan out your profit and loss (P&L) account, make accurate forecasts, track your cash flow, draft a balance sheet and much more. Do your research well once again here and take advice if you need it.
Look for entrepreneurial and small business groups near to you and attend their meetups and sessions, you’ll learn lots and they will surely be interested in hearing more about your esports business idea.
We’re creating a basic outline here; you’ll also find lots of information across the web and you may even find local groups and support for young entrepreneurs.
When you put together all your financial data, you’ll be able to see what cash your business will need to succeed, and what it could make. Using this detailed month by month planning you can decide if your esports business is feasible, if it will pay your wages and turn a profit. If the figures don’t work your business won’t.
However, if your financial planning is accurate and not overly optimistic you may find you have the basis for a profitable esports business.
Just look at teams like Cloud9, worth over $400 million, or streamers like Ninja who makes $500,000 per month playing Fortnite and create video content. There are numerous esports businesses making a tonne of money in the nascent industry. Entrepreneurs like Seoul Dynasty owner like Kevin Chou and commentators such as Sean “Day9” Plott are also profiting. And, companies like the parent of Adidas sports are offering start-up accelerator funding to aspiring esports businesses with a viable concept company.
4. Pick your specialism, focus in on your niche, or concentrate on one esports game
Depending on your esports business idea and the market you have identified it may be an excellent plan at this point to refine your focus further.
If you are creating a team, becoming a journalist, building a website, or honing your skills to become a professional player then you will need to focus at first on one esports game. If you are building a marketing or social media company you might want to start with a region, a game or just part of the industry.
Specializing allows entrepreneurs to build their reputation and skills in a certain niche, enabling them to expand from a strong base later. It can also be overwhelming to try and cover too much ground from the beginning. Start small and specialize and scale up as soon as you are able.
5. Collaborate and network
Now the real push starts, you are working hard, building your business, developing your skills, product, expertise, client base or service. No business is an island, however. It’s time to build industry contacts, collaborators, supporters and links, and even co-offerings with complimentary businesses.
For example, if you are building an esports team you’ll want to be networking with potential players, contact event organisers, watching the every move of publishers and seeking out potential sponsors. If you are creating your own lines of gaming merchandise, or have built new esports technology then streamers who review your product will gain you fantastic coverage. If you’d like to become a journalist or are building a game focused website or club you’ll want to be in contact with all the key players in your niche.
So that’s a few tips if you are a budding entrepreneur looking to start your own company. We will continue updating this page with more tips and useful information, so keep an eye on our “How to Start an Esports Business” guide.
If you need further inspiration before pursuing your esports business idea, consider esports net worth and how audience growth is driving investment. Or how blockchain and cryptocurrencies and even gambling is adding even more opportunity to the esports industry.