Do you want to start an eSports organization? If YES, here is a detailed guide on how to start an eSports organization with no money and no experience.
It is no longer news that those who love playing video games are now making mega bucks and becoming international celebrities. This was made possible by the help of eSport organizations. Interestingly, this line of business is open to all and sundry as long as you are conversant with the video games industry.
It is worth mentioning that starting your own eSport organization is not an easy task. It requires a complete project team and a solid capital base. So, if you are serious about starting your own eSport organization business, all you need do is to read this article and you will be well equipped.
You can start your eSport organization business from a small town in the United States and if you are consistent and creative, it won’t be too long before your brand becomes nationally recognized and you start competing at international eSport competitions with top teams in the world.
Steps to Starting an eSports Organization
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Work Out a Reasonable Pricing for your Services & Products
- 18. Develop Iron-clad Competitive Strategies to Help You Win
- 19. Brainstorm Possible Ways to Retain Clients & Customers
- 20. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
Esports which can also be referred to as electronic sports, e-sports, or eSports is a type of competition sports using video games. Esports often takes the form of organized, multiplayer video game competitions, particularly between professional players, individually or as teams. This line of business is grouped under the video games industry.
The most common video game genres associated with esports are multiplayer online battle arena (MOBA), first-person shooter (FPS), fighting, digital collectible card games, battle royale games, and real-time strategy (RTS). Popular esports games include League of Legends, Dota 2, Counter-Strike, Overwatch, Super Smash Bros., StarCraft, among many others.
Tournaments such as the League of Legends World Championship, Dota 2’s The International, the fighting games-specific Evolution Championship Series (EVO), and the Intel Extreme Masters provide live broadcasts of the competition and prize money to competitors.
According to a report published by IBISWorld, the Video Games industry has experienced strong returns to spending on industry products during the latter half of the five-year period to 2018.
While the emergence of low-cost games for mobile devices has slowed demand for other games and may continue to temper growth opportunities in the foreseeable future, industry revenue has picked up amid stronger sales in games, downloadable content (DLC), consoles and their corresponding products.
Over the five years to 2018, industry revenue increased at an annualized rate of 7.2 percent. In 2018, revenue is expected to total $43.7 billion. This growth was assisted by growing consumer incomes and the releases of the revised Xbox One and PlayStation 4, as well as the Nintendo Switch, throughout the five-year period.
Recent statistics shows that eSports Viewership is Growing. Between 2016 and 2017, there was a 19.3 percent increase year over year. In 2017, there were 192 million casual viewers and 143 million enthusiasts, making the total audience 335 million and that there will be 250 million eSports enthusiasts, making the total audience 557 million.
The video games Industry is indeed a very large industry and pretty much thriving in all parts of the world especially in developed countries such as United States of America, Italy, United Kingdom, Hong Kong, Japan, China, Australia and Italy et al.
Statistics has it that in the united states of America alone, there are about 144,152 licensed and registered eSport teams responsible for employing about 230,914 employees and the industry rakes in a whooping sum of $44 billion annually with an annual growth rate projected at 7.2 percent between 2013 and 2018.
It is important to state that Cloud9 is the most valuable professional esports company, worth $310 million, in part because of its success across a wide variety of games.
They have a lion share of the market in this industry. The International tournament awards US$10 million to the winners, however teams that do not have the same amount of success often do not have financial stability and frequently break up after failing to win.
In 2015 it was estimated by SuperData Research that the global esports industry generated revenue of around US$748.8 million that year. Asia is the leading esports market with over $321 million in revenue, North America is around $224 million, and Europe has $172 million and the rest of the world for about $29 million. Global esports revenue is estimated to reach $1.9 billion by 2018.
The video games industry has a relatively moderate level of capital intensity. It is a known fact that the start-up capital costs for a standard eSport organization and video games facility are high, as an aspiring entrepreneur who wants to start this business is required to lease a big facility in a good location.
The fact that facilities can be rented and all other equipment require only a one-time investment makes it a good business to start. You will also rely on your employees to help you supervise the team, guests, operate facilities and maintain equipment. On the average, a standard eSport organization has 12 employees excluding team players – professional gamers.
Some of the factors that encourage entrepreneurs to start their own eSport organization business could be that the business is profitable and it is open to fair competition amongst players in the industry. As a matter of fact, most eSport teams start making profits within few months of establishment as long as they have professional gamers in their team.
Starting an eSport organization business in the United States of America can be demanding, it requires enough cash to acquire a standard facility in a central area large enough to accommodate gaming gadgets and parking and also cash required to equip the facility to meet the standard expected by potential users. You will also need enough cash to organize eSports competitions and to pay prize money to winners.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who patronize the services of eSport organizations cut across groups and individuals hence the demographic composition for an eSport organization is all encompassing. Demographically, Major League Gaming has reported viewership that is approximately 85 percent male and 15 percent female, with a majority of viewers between the ages of 18 and 34.
Despite this, several female personalities within esports are hopeful about the increasing presence of female gamers. So, if you are thinking of starting an eSport organization then you should make your target demographics all encompassing.
3. Decide Which Niche to Concentrate On
There is no niche area in when it comes to an eSport organization. It is common to find eSport organizations provide facility for eSports gaming activities, selling food, alcoholic and nonalcoholic beverages, selling video game supplies in pro shops et al.
The Level of Competition in the Industry
The competition that exist in eSport organizations goes beyond competitions amongst eSport organizations, but also with every player in the alternate games, sports and leisure industry who also organize eSports gaming competitions. So, it will be right to say the competition in the eSport organizations industry is tough.
The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your business properly, you will always make headway in the industry. Just ensure that you provide an efficient eSport organization for your clients and you know how to reach out to your target market.
4. Know Your Major Competitors in the Industry
In every industry, there are always brands that perform better or are better regarded by the customers and general public than others.
Some of these brands have been in the industry for a long time, while others are best known for how they conduct their businesses and the results they have achieved over the years. These are some of the leading eSport organizations/teams in the United States of America and in the globe;
- Evil Geniuses
- LGD Gaming
- Invictus Gaming
- SK Telecom T1
- KT Rolster
If you are looking towards successfully launching a business and maximizing profits, then you need to ensure that you get your economic and cost analysis right and try as much as possible to adopt best practices in the industry you choose to build a business in.
ESport organizations have been in existence for a while and as a matter of fact, you will come across several eSport organizations when you do a research.
So, if you are mapping out your economic and cost analysis, you should carry out thorough market survey and costing of the amount needed to build a standard multipurpose eSport organization, secure the required gaming tools and equipment and also the cost to successfully run the business.
Over and above, if you are considering starting a eSport organization, then your concern should not be limited to the cost of registering the business, securing the required license, leasing and equipping the facility, purchasing the needed eSport gaming – tools, but also on branding and on how to build a robust clientele base.
The truth is that if you are able to build a robust clientele base and far reaching business network especially as it relates to sponsorships, you are sure going to maximize profits in the business.
5. Decide Whether to Buy a Franchise or Start from Scratch
If you are looking towards starting an eSport organization, you would have to start from the very scratch because you can hardly get the franchise of an eSport organization to buy except you want to buy over an existing eSport organization that is put up for sale.
Besides starting an eSport organization from the scratch is straightforward when compared to other businesses that have to do with games and competitions. Please note that most of successful eSport organizations around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.
6. Know the Possible Threats and Challenges You Will Face
If you decide to start your own eSport organization today, one of the major challenges you are likely going to face is the presence of well – established eSport organization and other players in the alternate leisure, gaming and sports industry that also offer same services as you do. The only way to avoid this challenge is to create your own market.
Another major threat that may affect eSport organization business is unfavorable government policies. For example, despite its large video game market, esports in Japan is relatively underdeveloped, and this has been attributed largely to its broad anti-gambling laws which prohibit paid professional gaming tournaments.
Bad press can also affect eSport organization business – The legitimacy of esports as a sports competition remains in question; however, esports has been featured alongside traditional sports in multinational events, and the International Olympic Committee has explored incorporating them into future Olympic events.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When considering starting an eSport organization, the legal entity you choose will go a long way to determine how big the business can grow.
You choose a general partnership, limited liability company, or even a sole proprietorship for your eSport organization. Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale eSport organization especially if you are just starting out with a moderate startup capital.
But if your intention is to grow the business and organize eSport competitions for pro gamers from all across your state and throughout the United States of America, then choosing sole proprietorship is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your eSport organization; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
If you take your time to study the various legal entities in the for your eSport organization, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your organization so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.
8. Choose a Catchy Business Name
As it relates choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. If you are considering starting your own eSport organization, here are some catchy names that you can choose from;
- Carson Banks® eSport Organization
- Cloud Zero™ eSport Organization
- Mario Speed© eSport Organization
- Trippy Point® eSport Organization
- Lod Log© eSport Organization, Inc.
- Boston Tag Team® eSport Organization, Inc.
- Cool Gang™ eSport Organization
- Green Floor© eSport Organization
- Light Weave® eSport Organization
- All Starlets® eSport Organization
9. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your eSport organization.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own eSport organization in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Risk insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own eSport organization, usually you may not have any need to file for intellectual property protection/trademark because the nature of the business makes it possible for you to run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
11. Get the Necessary Professional Certification
Please note that you don’t need any special professional certifications to be able to run an eSport organization in the United States. But if you come across any related professional certification that will give you an edge in this line of business, then you should by all means go ahead and obtained such.
12. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own eSport organization in the United States of America;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID/Tax Identification Number
- Business Plan
- Non – disclosure Agreement
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Contract Document
- Franchise or Trademark License (optional)
13. Raise the Needed Startup Capital
Starting an eSport organization can be capital intensive even if you choose to start on a small scale. If you choose to start the business on a large scale, then you need to go for fund to finance the business because it is expensive to start a standard large – scale eSport organization.
When it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business. Here are some of the options you can explore when sourcing for startup capital for your eSport organization;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for Loan from your Bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
14. Choose a Suitable Location for your Business
Even though you can afford to start an eSport organization from any part of the United States of America, when it comes to choosing a location for your eSport organization, the rule of thumb is that, you should be guided by the access to the required license in the location. Of course, if you are able to start your eSport organization in the right location for such business, you won’t struggle to make headway with the business.
If you make the mistake of starting your eSport organization in an area where you will find it difficult to secure the required license, and accessing those who know how to play the video games listed in your competitions, you will struggle to grow the business because you will spend more in promoting the business.
Before choosing a location for your eSport organization, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out. These are some of the key factors that you should consider before choosing a location for your eSport organization;
- The demography of the location
- The demand for the gaming services and related leisure in the location
- The purchasing power of the residence of the location
- Accessibility of the location
- The numbers of eSport organizations and related services in the location
- The local laws and regulations in the community / state
- Traffic, parking and security
15. Hire Employees for your Technical and Manpower Needs
On the average, there are no special technology/equipment needed to run this type of business except for different types of video games, inventory-management software and other relevant software applications. So also, you will need computers/laptops, internet facility, telephone and office furniture and these can be gotten as fairly used.
As regard leasing or outright purchase of a location, the choice is dependent on your financial standings, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent / lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on.
When it comes to hiring employees for a standard eSport organization, you should make plans to hire a competent Chief Executive Officer/Manager (you can occupy this role), Admin and Human Resources Manager, Professional eSport Instructors and Trainers, Sales and Marketing Officer, Accounting Clerk, and Front Desk Officer. On the average, you will need a minimum of 5 to 12 key staff members to run a medium – scale but standard eSport organization.
The Services Delivery Process of the Business
The core services of eSport organizations is to organize eSport competitions, attract sponsorship and attract top – flight eSports teams to participate in the competitions. Esports competitions are also frequently played in tournaments, where potential players and teams vie to be placed through qualification matches before entering the tournament.
From there, the tournament formats can vary from single or double elimination, sometimes hybridized with group stage. Esports tournaments are almost always physical events which occur in front of a live audience, with referees or officials to monitor for cheating.
As an eSports organization, you would need to source for mouth watering sponsorship deals to be able to attract highly competitive teams. For well established games, total prize money can amount to millions of U.S. dollars a year.
As of 10 September 2016, Dota 2 has awarded approximately US$86 million in prize money within 632 registered tournaments, with 23 players winning over $1 million. League of Legends awarded approximately $30 million within 1749 registered tournaments, but in addition to the prize money, Riot Games provides salaries for players within their League of Legends Championship Series.
Often, game developers provide prize money for tournament competition directly, but sponsorship may also come from third parties, typically companies selling computer hardware, energy drinks, or computer software. Generally, hosting a large esports event is not profitable as a stand-alone venture.
It is important to state that an eSport organization may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility.
16. Write a Marketing Plan Packed with ideas & Strategies
Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a eSport organization, then you must employ strategies that will help you attract sponsorship deals or else you will likely struggle with the business because there are well – known brands determining the market direction for the eSports/video games industry.
Here are some of the platforms you will utilize to market your eSport organization;
- Introduce your eSport organization by sending introductory letters alongside your brochure to organized private sector, households, companies, schools and other key stake holders within the location where your eSport organization.
- Advertise your eSport organization in relevant sports magazines, newspapers, TV station, and radio stations
- List your eSport organization on yellow pages ads (local directories)
- Attend relevant international and local expos, seminars, and business fairs et al
- Create different packages for different category of partners that want to sponsor your competitions in order to work with their budgets
- Leverage on the internet to promote your eSport organization
- Join local chambers of commerce around you with the main aim of networking and marketing your eSport organization; you are likely going to get referrals from such networks.
- Engage the services of marketing executives and business developers to carry out direct marketing
17. Work Out a Reasonable Pricing for your Services & Products
One key factor that will help you operate your eSport organization is to purchase your products (video game equipment, tools and supplies) directly from the manufacturers.
Another strategy that will help you offer your services at the right price is to ensure that you cut operational cost to the barest minimum and channel your efforts towards marketing and promoting your brand name in order to attract mouth watering sponsorship deals.
18. Develop Iron-clad Competitive Strategies to Help You Win
The capacity to organize top flight eSport competitions, your business process and of course your pricing model et al are part of what you need to stay competitive in the industry.
Another possible competitive strategy for winning your competitors in this particular industry is to build a robust clientele base and business network that will help you attract high paying sponsorship deals. Over and above, ensure that your organization is well positioned, key members of your team are highly qualified and your eSport organization can favorably compete with some of the best in the industry.
19. Brainstorm Possible Ways to Retain Clients & Customers
When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customer retention and perhaps to attract new customers is to produce results and satisfy your customers always.
If you can continue to successfully organize eSports competitions, attracts top flight eSports teams and your customer service delivery is top notch, then you won’t struggle to maintain loyal customers. Ensure that your prize money is highly competitive and you have regular high viewership for your competitions, if you want to retain your sponsors.
20. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be. One of the secrets of large corporations is that they are willing to spend fortunes to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.
If your intention of starting an eSport organization is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is a dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your eSport organization;
- Place adverts on both print (newspapers and sport magazines) and electronic media platforms
- Sponsor relevant community based events/programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your eSport organization
- Distribute your fliers and handbills in target areas
- Advertise your eSport organization in your official website and employ strategies that will help you pull traffic to the site.
- Position our Flexi Banners at strategic positions in the location where your eSport organization is located.
- Ensure that all your staff members wear your branded shirts and all your vehicles are well branded with your company logo et al.