Since the beginning of 2020, many reputable esports organizations have decided to drop the current CSGO lineup as well as the subject.
The current economic situation makes esports organizations more cautious in investing in competitive games, with CSGO being the game that has been hit hard by this impact. 100 Thieves completely closed the CSGO segment, Gen.G wanted to transfer the entire squad and had no intention of recruiting a new CSGO squad, and North stopped working altogether. The cause comes from many outstanding problems in the game.
The recent trend in esports is to create your own franchise. That is, game developers participate both in the professional arena and create unified tournaments. Teams can buy slots in the tournament and get a share of the profits. This system is inspired by traditional sports leagues such as NFL (American football) and NBA (American professional basketball). Overwatch, League of Legends, and Call of Duty all adopt this model, although the results are uneven. In theory, brands should provide better and more stable returns for an organization, since they cannot be relegated, and are also a shareholder of the league.
Valve repeatedly rejected the brand model for all of its titles. Valve supports open tournaments, with many participating tournament organizers organizing events around the world. Teams are invited to attend tournaments or participate in qualifiers in the hope of going deeper.
This system is great for viewers, as the top teams can meet at the finals every few weeks. But it doesn’t benefit the teams. They do not receive a share of the prize revenue and poor competition results will cost them the opportunity to participate in larger events.
ESL, Flashpoint and BLAST – the three biggest tournament organizers – have tried to resist this approach. They cooperate with many teams in their league. That ensures the team has a guaranteed spot in certain tournaments and gets a share of the profits. But this cooperative system is not enough to cover the cost of a CSGO roster.
Are the top CSGO players being overpaid?
In 2015, CSGO experienced its first major growth spurt. The player count grew exponentially, and the number of major followers skyrocketed. Between the last major in 2014, DreamHack Winter and the first major in 2015, ESL One: Katowice, the peak viewership at the finals doubled. Along with that, professional player salaries exploded, as teams tried to get top squads. This causes CSGO to reach a point where players make too much money.
Take for example Virtus.pro’s offer to extend the contract with their Polish CSGO roster. The members’ contracts expired at the end of 2016, and they are rumored to have received many offers from other organizations. In order to keep this Major-winning squad under his wing, Virtus.pro has agreed to a four-year extension. The Russian organization calls it the longest and most expensive deal in esports history.
Teams are willing to pay high wages because of the potential that this game brings. But with CSGO player numbers continuing to grow over the years, esports viewership hasn’t grown at the same rate, and Valve hasn’t helped organizations profit more from the tournament either. Players refuse to lower themselves while organizations still have to spend their money waiting for the next boom. By the time teams could no longer invest as much as before, many organizations had decided not to wait for the second boom.
Does CSGO attract enough sponsors?
The financial strength of esports is its ability to attract investors and external markets, often by sponsorship. Companies are attracted to young viewers who are extremely valuable. Coca-Cola signs major contracts with both Overwatch League and League of Legends brands. BMW partners with five of the most popular League teams, incorporating creative sponsorships. Many celebrities and athletes are direct investors in some of the largest esports organizations in the world.
But a lot of outside investors have one thing in common: They prefer a pre-polished and family-friendly product. Overwatch and League of Legends have strict rules about how players behave, both inside and outside of competition. The action in the game is more like cartoon, less realistic.
CSGO goes the other way. The team uses T – terror – as the main character and has a violent color. This makes CSGGO mainly attract game-related advertisers. Meanwhile, the larger franchises – not related to the game – are often not involved in CSGO.
Teams quit CSGO due to lack of financial ability to maintain long-term. They need to change the structure, both from the player side and the organization, but most importantly from Valve. If we don’t see these changes in the near future, there will certainly be many more teams willing to leave.
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