About the Author

Kai CA Kai
Name: Jason Kai
Age: 23
Location: Mississauga, Ontario

More From this Author


Building a Team
External Involvement
iDemise Adds Quake Live
iDemise Adds Counter Strike Ladies
Is Counter-Strike Source Dead?


Rest In Peace
First Thoughts on WoW
World of Technology
Quick Update!

Recession's Affect on eSports

The U.S. represents about 21% of global economy. An article was published in “The Boston Globe back in March 2008, when Martin Feldstein, an economist, declared that a deep recession has hit the U.S. and he believed it was the worst recession to hit since World War II. Box tickets sales have gone down, and sports leagues such as the NHL and NFL have already been hit. In the past few weeks, the Buffalo Sabres of the NHL was said to be on sale because the owner was losing money. Next year’s salary cap for the NHL is said to be around the same as it is this year. This is a sign that NHL teams are currently not making as much revenue as they have in the last couple of years. The NFL has also been hit by the recession. Many at NFL HQ have lost their jobs (10% of staff have been laid off) because of the recession, and it will be interesting to see the commercials at the Super Bowl to see which companies still have enough to pay to put commercials on during Super Bowl time. Also, many rookies in the NFL are overpaid. A perfect example of this was in 2007. Top draft pick JaMarcus Russell, picked by the Oakland Raiders signed a six-year contract worth up to $68 million dollars, with $31.5 million guaranteed. Teams in the NFL are overpaying rookies who have not proven themselves in the league. JaMarcus Russell, although not a bust yet, he has not been playing up to many people’s expectations.

How exactly is this going to affect e-sports? It just means that some teams may fall apart, or maybe less international events from North American teams because of travel expenses. In a article published by GotFrag on December 18th, the Finish team that joined GamePlay as part of their Counter Strike division did not have their contracts extended (the article can be found here: http://www.gotfrag.com/cs/story/43592/?cpage=1). The teams manager Shayan “Shayan” Taleb said “It’s going to hit eSports a lot harder. Companies are going to cut investments considerably, Gameplay.tv was just one to start with.”

So what exactly does this mean for eSports? It means that prize pots are going to be reduced, and it also means that sponsorships are going to be harder to get, and chances are, some of the lower tier teams with current sponsorships will probably be losing them sooner or later. You can expect smaller prize pots because companies can no longer afford to invest heavily into gaming hoping to sell their products to consumers. Even if they have booths are LANs, most of the time they are trying to sell their products to the same 150-200 gamers at every single LAN. Of course there are always the spectators, but not everyone can take time out of their day to visit a LAN event or afford to travel far to watch their favourite teams play. As for sponsorships, companies can no longer afford to invest in teams that aren’t high calibre and don’t draw interest from fans. It doesn’t allow companies to get their products out to gamers who can’t attend LANs to visit booths set up for the companies.

But what exactly does the recession mean for teams like EG.usa or Frag Dominant? Well like I stated earlier, it could mean less international events from these North American teams because most of the travel expenses and the chance of not placing high enough to earn enough from the prize pot for future events. And since these events might get a reduced prize pot, it might not even be worth flying overseas to play in the tournament. While along the lines of a tournament, what will happen to tournaments? Are we going to see as many tournaments as the pre-CGS days? The answer I think is probably not. As much fun tournaments are, can the people who host these tournaments still afford to? Reduced prize pots would mean a reduced number of players which would lead to less money. This means that tournaments will most likely be hosted in a smaller place, but it still cost money to rent out places for a day or two. If not enough people show up, they could end up losing more money than they earn. Especially since everything has to be organized before most of the information is released to the public (e.g. renting out a hockey arena for Lanapalooza in Ontario, Canada), but then again I don’t know much about organizing LANs so this is more of an assumption.

One interesting thing that I am looking forward to is how Complexity is going to be run with the recession happening and with Jason Lake jobless. During the pre-CGS days, coL players were paid by Mr. Lake out of his pocket (or so it says on the book Game Boys, by Michael Kane). Also, 3D was another top team pre-CGS, and had sponsorships from NVIDIA and Intel and 3D’s players were paid for by these sponsorships. Many teams cannot afford to pay their players, and sponsorships will probably not invest that much money like they did pre-CGS.

Now some of you might be wondering, why am I mentioning pre-CGS so much? The answer is simple. If the CGS was still around, companies will most likely be more willing to invest in gaming since it is being shown to not only gamers, but to the general viewer via DirecTV (in the U.S.). The players on teams would still be payed for by the CGS, and many people would not be jobless right now.
Well four days into 2009, it will be interesting to see what will happen. One event that I am looking forward to is the CPL event happening in the US sometime this year (as stated here: http://www.thecpl.com/pr2.php). Will be interesting how the CPL plans on running things under new management, and if it will survive.

Best of luck to teams out there for the 09 year,
- Kai

*First attempt at writing an blog article.
**Comments and suggestions are welcomed.

Comments: Add a Comment

quote#1 US genis09 04/01/2009 - 13:52:38
Nice Read. I thought about this same topic a few days ago and wondered how it would play into e-sports.

quote#2 US laserr 04/01/2009 - 17:03:21
good read.

quote#3 US pablo 05/01/2009 - 12:58:08
nice post, you're really taking advantage of this blog feature :D

quote#4 PL MuRRaY 05/01/2009 - 13:33:02
nice stuff bro! I saw this firsthand during this year's MLG season, a number of team's lost some sponsorships due to the fact that sponsors had lost too much money and couldn't risk anything. the worst part is that these teams were fantastic.

quote#5 US Krunk 05/01/2009 - 22:35:12
Interesting :D good blog hope to see more

Remember Me?