Ahead of ESI Events’ flagship conference ESI Lisbon (September 23rd-25th), Esports Insider takes a look at the topics behind some of the event’s biggest panels. This article looks into one of esports most challenging periods to date, Esports Winter, and how stakeholders can learn from these harsh chills.
The esports industry, once a darling of rapid growth and seemingly endless investment, has found itself in what many have dubbed the Esports Winter. This term refers to a period where the industry, previously characterised by explosive expansion and soaring investments, has faced a sudden slowdown: financial challenges, reduced sponsorship deals, and a more cautious approach from investors have led to slow growth, thus forcing companies to rethink their strategies.
However, the Esports Winter term itself has sparked debate within the industry, as some view this period as a necessary time of stabilisation while others see it as a more troubling stagnation marked by significant shifts in strategy for many companies.
Regardless of how one might interpret it, Esports Winter’s harsh reality check marked a shift from the unbridled expansion and investment fervour of the late 2010s and triggered a necessary reevaluation of business models across various esports sectors.
In short, this period has forced esports organisations to adapt and evolve.
The impact of the Esports Winter has been profound, leading to widespread layoffs across the industry. Publishers, media outlets, gaming studios, and esports organisations have all felt the shift, with many forced to downsize or restructure. The contraction in the industry has seen thousands of jobs lost, affecting not only smaller teams but also major stakeholders who had to make tough decisions to survive in a more challenging economic environment.
To overcome the Esports Winter, several key players in the ecosystem have been actively working to position themselves for future success.
At ESI Lisbon specifically, the likes of Danny Tang (Co-Founder and CFO at VSPO), Anna Rozwandowicz (Co-Founder and CEO of The Story Mob), Alban Dechelotte (CEO of G2 Esports) Ray Ng, (Head of Esports Ecosystem at MOONTON Games) and Joachim Harg (CFO of HEROIC) will converse in a panel discussing lessons from Esports Winter. However, this is not just an opportunity to reflect on what has happened, but a platform to actively shape what comes next.
As the industry is still navigating through this period of transformation, esports leaders have been at the forefront, adapting strategies and exploring new avenues for growth. Their collective experiences provide a unique perspective on the ongoing conversations about the future of esports.
Last month, in exclusive interviews with Esports Insider, leaders from prominent organisations shared how they are navigating these turbulent times with various strategies, from restructuring operations to diversifying revenue streams.
In the article, Steve Arhancet, Co-CEO of Team Liquid, underscored the importance of focusing on “healthy revenues,” particularly through sponsorships and partnerships. For Team Liquid, these predictable and recurring revenue streams accounted for 45% of their income in 2023, allowing the organisation to break even with $60m (~£46m)in top-line revenue. This conservative approach has enabled Team Liquid to plan its business strategy with greater certainty, mitigating the risks associated with volatile market conditions.
Nicolas Maurer, CEO of Team Vitality, emphasised the importance of balancing revenue growth with cost management. By participating in leagues to enhance revenue potential while keeping costs in check, Team Vitality has maintained financial stability. Maurer also highlights that avoiding reliance on venture capital has allowed the team to build a more sustainable business over the long term, protecting it from the pressures that come with short-term investment expectations.
Meanwhile, G2 Esports, SK Gaming, and 100 Thieves have adopted a more aggressive strategy, choosing to invest heavily in expansion despite the challenging market conditions. G2 Esports, for instance, nearly reached profitability in 2023 but chose to accelerate growth by investing in new titles like Dota 2 and VALORANT. G2’s CEO, Alban Dechelotte — who will be present at ESI Lisbon — stated that G2 would be profitable “again” in 2024.
As the industry emerges from this challenging period, key questions remain: How can esports organisations achieve sustainable growth? What role will partnerships and sponsorships play in the future? How can the industry foster a healthier ecosystem for teams and players?
Join Esports Insider at ESI Lisbon to dive into the complex discussions around the industry’s challenging times on September 25th at 11:30 AM. By examining the causes and effects of the Esports Winter, opportunities for growth can be identified to build a stronger, more resilient esports ecosystem.
