Yesterday the sad news was published that the company behind ESWC, Games Services has now officially filed for bankruptcy. And as soon as that news popped up on some of the bigger European Esport websites you could read a lot of comments about the financial or "Esports Crisis" being held responsible for the things that happened in the past months, such as MYM closing its doors.

Of course, the financial crisis also has an impact on the Esports market, but this impact is not just negative, like most of the Esports news sites would like to tell you at the moment. In fact, the hard working Organizations will survive like they always did, gaining a bigger market share and giving sponsors the right to say it is a pleasure working with professionals and we really see we get something out of supporting the Esport industry and its community. These organizations and sponsors are currently the ones correcting the market.

In the same way the organizations making bad economic decisions and failures in overall management will get pushed out of the market and make space for the more professional and successful ones.

This is a usual thing in any market. But the first time it has really happened to Esport and people have stood up and taken notice of it. The truth is, there is no "Esports Crisis" and what is happening to Esports right now is not a bad thing.

To explain this in detail we have to go back to the time when CS Teams were happy with LAN support and as much alcohol they could drink for the weekend. Loyalty and the honour to play for one of the big teams of that time like SK, n!faculty, or mTw was enough for a generation of the finest players in Esports to just enjoy their hobby, meet new people , have fun and to earn some pocket money besides the jobs they were doing, school or studying.

With increasing prize money and more and more international Tournaments, players of course wanted a bigger share in what they achieve for their clan. Player salaries came into play and it became usual that players got a bigger share in prize money, if it was paid.

However, two key events in the past years made another serious impact on salaries and let the Esports Bubble grow bigger. With CPL and ESWC directly competing with each other, creating a bigger prize money pool than ever before, and finally with Esport Nation A/S giving venture capital to MYM to pay some of the biggest and most ridiculous salaries ever seen in Esports.

Why am I telling you these stories?

To see what happens right now with the Esports Industry you have to understand how organizations in Esport work from an economic point. Moreover, you need to know above key economic events for Esports in the past that most fans and the community did not even notice as that important, because they simply have no idea how much is paid by which organization and how salaries are influenced.
Esport companies work the same way as every other company, as soon as you pay more for your operational costs and teams than you get by sponsorships and advertisement you obviously made a bad decision businesswise.

Many of these bad business moves happened in a row of epic failing and ending up in teams closing, and Esport companies filing for bankruptcy. No "Mercy". The Esport Bubble is bursting and those companies and teams mentioned above are just being lucky it happens in the same year they can blame it on the current financial crisis.

Esport really has no crisis; it currently regenerates itself from the exploding salaries and prize money pools, from simply growing too fast over the past 3 years, and it is shrinking back to a healthy size again.

Sponsorships not being renewed for some teams are just another logical reaction as well. All those bad decisions these organizations made, be it ESWC counting on just one Partner (Nvidia) for years with no backup plan at all. Or MYM who tried to buy their way up the ladder and slipped on top made the Sponsors, in MYMs case the Investors realize they are losing a lot of money with getting nearly no return on their investments.

I am one of the people behind the scenes you will hardly ever notice, evaluating sponsorship budgets and consult some of the bigger players investing into the market, so what I can tell you for sure is that the Esport as we know it might change a bit, but there is no Apocalypse in sight.

Sponsorships are re-evaluated all the time. Good business concepts are rare in this industry and most organizations cannot deliver what they promise and just get through with it because most of the managers on the sponsors end are simply very new to Esports and have no clue which project has real value for their brand and what will work out for them.

Nonetheless, with the whole situation normalizing again I’m pretty sure we will see some new Partner and Sponsorship Deals coming up, because with dropping salaries teams can offer better conditions to their Partners. This is a winning situation on both ends.


What can the Community do?

It is simple; the reason why sponsors cancel their sponsorships is the rapidly declining product sales they see because of the financial / economic crisis. They start to make the same failure as the consumers itself. Cutting marketing budgets back to the essential and not investing any money in the customer group they want to market their product to anymore. The only thing that Esports really can help now is the Esport community itself, get back to the key values of Esport, passion and loyalty.

Invest the money you can invest, in the companies that take care about the hobby you love so much and the most important thing, let them know about it. Write them e-mails what they can improve in your opinion with the next product and if you have an idea for a new feature let them know.

Also, tell them that you just bought a new product because you appreciate what they do for gaming, do not be just another sold case, processor, mouse or sound card. They will never know you are a gamer and you support them because they make it possible for your favorite team to survive day by day.

You people and no one else make Esport possible, so it is also just in your hands to give Esports a voice. Teams and tournament organizers would be nothing without the community and they tend to forget about that some times. Nevertheless, especially in this tough times show loyalty and spend your money on good products made by companies investing in Esports and keep in mind to tell the company why you did it.

They will listen.