Competitive gaming has an enormous audience and a business model that has struggled to convert it, and the reasons are structural rather than a matter of insufficient growth.
The revenue sources
Sponsorship, which is the largest for most organisations.
Prize money, which is smaller than outsiders assume and is split with players.
Media rights, which have not developed as expected.
Merchandise and content, which is meaningful for the largest brands.
And publisher revenue sharing where leagues operate that way.
Why media rights disappointed
Traditional sports economics rest on selling exclusive broadcast rights.
Competitive gaming grew on free streaming platforms with open access, which built the audience and established the expectation that viewing is free.
Attempts to move behind exclusive arrangements have generally reduced viewership sharply, which reduces the value of the rights.
Which means the audience is real and difficult to monetise through the mechanism that funds conventional sports.
The publisher problem
The structural difference from traditional sport.
A game is owned by its publisher, who controls whether competition may occur, on what terms, and can change the game or end support entirely.
Which means organisations invest in ecosystems they do not control and cannot influence.
Several competitive scenes have ended because a publisher withdrew support, stranding the organisations invested in them.
Football has no equivalent — nobody can decide the sport will no longer be played.
The franchise model
Some publishers established closed leagues with permanent slots sold at substantial cost.
The reasoning was that guaranteed participation would justify investment, as it does in North American sport.
Outcomes have been mixed, with several leagues restructuring, slot values falling and organisations exiting.
The difficulty is that a franchise slot's value depends on the league's long-term prospects, which depend on the publisher, which is the same dependency in a different form.
Player costs
Salaries rose sharply during a period of investor funding, and revenue did not follow.
Which produced the standard outcome — costs committed against expected growth that did not arrive, followed by contraction.
Player careers are short, which is comparable to sport, without the pension and welfare structures that established sports developed over decades.
The funding period
Substantial venture investment flowed into the sector on growth projections.
Which funded losses for years and ended when funding conditions changed generally, not for reasons specific to the sector.
The subsequent contraction involved closures, mergers and organisations withdrawing from titles.
What is actually working
Organisations operating as content businesses rather than as competitive teams, where the roster supports an audience that is monetised through content.
Regional scenes with lower costs and local sponsorship.
And games where the publisher runs the competition as marketing rather than as a business, absorbing the cost for the benefit to the game.
Which suggests the sustainable model may be competition as promotion rather than competition as an independent industry, and that is a considerably smaller proposition than what was projected.
Player welfare
An area receiving increasing attention as the first generation of competitors ages out.
Careers are short, peaking in the early twenties in most titles, which leaves a long working life afterwards with narrow transferable credentials.
Repetitive strain injuries are common and have ended careers, and structured physiotherapy and workload management have become standard at larger organisations only recently.
Mental health support, contract fairness and minimum standards have been the focus of player associations where they exist, and their coverage is patchy.
Visa and travel
International competition requires travel, which requires visas, and classification of competitive players for immigration purposes varies enormously by country.
Some jurisdictions recognise them under athlete categories, others do not, which has prevented players from attending events they qualified for.
Betting and integrity
Match fixing has occurred and produced bans, and the structural risk is high given low salaries in lower tiers and substantial betting volume.
Integrity bodies exist and their authority varies by title and region, which is a consequence of the publisher-controlled structure.
Academy and pathways
Developing players rather than buying them, which is standard in traditional sport and underdeveloped here.
Which is partly because scouting is easier — ranked ladders provide public performance data on every player, so identification is cheap and development is the expensive part.
Age restrictions in several leagues prevent the youngest players competing, which creates a gap between when players peak in raw ability and when they may compete.
Regional variation
The economics differ substantially between regions, with sponsorship markets, audience size and cost bases all varying.
Some regions have sustained scenes on lower budgets that would be unviable elsewhere.
Which means the sector's difficulties are frequently described from one region's perspective and generalised inappropriately.
Venues and events
Live events generate revenue from tickets and sponsorship and rarely cover their costs directly.
Which means they function as marketing for the game and the organisations rather than as a business line, and publishers generally underwrite them accordingly.