Esports organizations are often stressful yet immensely rewarding enterprises. One of the best teams for DOTA 2 has officially shut its doors. Despite qualifying for one of 16 spots at DOTA 2’s largest event ever – and one of the highest-paid tournaments in all of eSports – Forward Gaming has announced its insolvency. With outstanding debts to players in the five figures, the company has finally pushed up daisies. It is indeed a sad time for the eSports world.
It is believed that the young owner of Forward GG (FwdGG) owes at least a remaining $40,000 to players. This sum consists of two parts: tournament winnings of $36,000 and a year’s salary to one player. The team is speculated to continue on with the competition under another sponsor.
The DOTA2 team has progressed all the way to The International 9 (TI9), secured one of 16 spots on the main stage, and will be competing for the $30 million (and growing) prize pool – one to rival Fortnite, which dwarfs the fortune raised by TI8, the 2018 competition held by DOTA 2 developer Valve.
The unfortunate truth about operating eSports businesses, specifically, gaming organizations, is that they are very expensive. Without proper means to market and monetize a gaming organization, the likelihood that a business can succeed is very slim. Despite making it all the way to TI9 participation, Forward Gaming has been removed from the equation due to a lack of funds.
eSports organizations have a few options by way of monetization, though the most common routes include content creation revenue share, merchandising agreements, tournament pool splits, and membership fees. Without having enough in any leg to sustain an organization, some of the most promising teams in the world have folded up and vanished.
Another very common though somewhat predatory means of monetization for gaming organizations is affiliate marketing “sponsorships.” In this type of monetization, players are assigned a code for each product that “sponsors” the organization they play for. The downside to this? Many of these sponsorships include minimum sale requirements and fail to pay out cash to their affiliates.
Forward Gaming was on the cusp of launching its e-commerce operation, which would have opened a fresh revenue stream for the business. It is currently unclear whether they were saving their waiting list to launch the store during or immediately following their TI9 appearance. We will update this post if more information is made available from the CEO.
Unfortunately, the Forward Gaming organization and their stellar DOTA 2 team were unable to cross the finish line together. eSports is a realm where many risk it all seeking the means to fulfill their dreams. One important facet of operations that eSports companies should take note of from this tragic event: Set funds back before you put your foot into the accelerator.
If things take off quicker than expected, try to be sure you have at least six months worth of event passes and one additional event of travel costs put back. Let players know if you run out of travel funds and they may be able to manage the remaining expenses themselves. Ensuring that competition and lodging fees are reserved helps put players’ minds at ease leading up to the event.