Why the esports industry's publisher ownership model is on its way out

Game publishers are divesting from esports in 2024 due to a combination of factors. After a period of COVID-fueled growth in 2021 and 2022, the gaming industry is coming back to earth, resulting in a $10 billion decrease in global gaming revenues between 2022 and 2023. This has led to a need for gaming companies to tighten their operations. Additionally, esports was seen more as a marketing expenditure rather than a true revenue stream for publishers. By working with third parties, they can maintain an active esports scene to boost player engagement and in-game purchases without the heavy costs associated with staffing and producing leagues and events.

The benefits for game publishers to partner with third-party league operators include:

• Reduced Costs: They avoid the high expenses of staffing and producing leagues and events.
• Player Engagement: An active esports scene can boost player engagement.
• In-Game Purchases: It can also lead to increased in-game purchases.
• Flexibility: Publishers can scale their esports activities up and down without in-house hires, offering more flexibility.

ESL/FACEIT Group co-CEO Craig Levine compared this to the reasons companies work with PR firms or event agencies, highlighting the flexibility and success publishers find in these partnerships.

Blast has become profitable in the esports industry by signing a series of new partnerships with game publishers such as Ubisoft and Epic Games. These partnerships have allowed Blast to offer a full suite of services, including production, marketing content, social support, user acquisition, and more, which has enriched the company and made it profitable for the first time in 2023.

In the early days of esports, third-party companies such as Major League Gaming pioneered competitive gaming as a product. They structured the industry before game publishers got involved, which eventually led to the industry being supercharged to its current scale in the mid-2010s when publishers stepped in to capitalize on the growing hype.

Some longtime industry observers criticize publishers for their involvement in esports, suggesting that publishers entered the scene to capitalize on the hype and financial opportunities. Now that they've benefited, they are stepping back and allowing the esports industry to seek genuine profitability on its own. Esports consultant and journalist Rod "Slasher" Breslau expressed this sentiment by pointing out that it was a mistake for Riot Games not to make the LCS profitable, and now the responsibility falls back to third-party operators.