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5 Things to Know About Esports Franchises

When it comes to the video game industry, it's not all just fun and games anymore. There is a lot of money to be made in esports franchises.

Esports has rapidly grown from a niche hobby to a booming industry in recent years, and the rise of esports franchises have come as a result. Esports are organized gaming competitions that are played while fans watch. These competitions take place in arenas and are usually streamed live on services like Twitch. A variety of teams play for cash prizes, going head-to-head on popular games such as Fortnite, Rocket League, League of Legends, Valorant and Overwatch. 

So, where does the franchising aspect come in? By investing in an esports franchise, entrepreneurs can open a training arena, organize tournaments and provide a positive environment for players to join in the fun. 

If you are considering investing in an esports franchise, here are five things you should know.

The Esports Industry Is Growing

According to? Statista, the global esports market is expected to be worth $2.89 billion by 2025. Esports are also watched more than all other sports leagues except the NFL. Now, to cater to that demand, franchises like Valhallan, which sold dozens of locations in its first month of franchising, are popping up left and right. Last year, youth sports parent company Unleashed Brands acquired the XP League esports franchise, tapping into the industry’s popularity. 

Esports Franchises Can Be Profitable

The most successful esports franchises are able to generate recurring revenue through subscription-based services. Franchisees can also sell offline merchandise, such as team shirts, sweaters, stickers and jerseys, as well as make money with sponsorship deals, advertising, broadcasting deals and tournament ticket sales. 

Esports Franchises Don’t Need to Break the Bank

The nice part about esports, as opposed to physical sports, is that they can be enjoyed anywhere with a console and a screen. That means franchise ownership can be within reach for more people since esports concepts can thrive in a variety of spaces. Valhallan startup costs can be as low as $52,950 to $95,200 if operators open in a studio, for example, and only $111,450 to $201,400 if open in an arena. 

Esports Caters to a Young Crowd

Perhaps unsurprisingly, 55% of all esports fans are between the ages of 21 and 35, which means esports franchise owners will be targeting a younger fan base. One hundred seventy-five colleges and universities have joined the National Association of Collegiate Esports, which recognizes varsity esports programs and gives out scholarships. This also means esports franchise owners have the opportunity to positively impact children’s lives by teaching them skills like sportsmanship, teamwork and friendly competition.

Esports Franchises Face Unique Challenges

Esports franchises face a number of unique challenges that are different from those faced by traditional sports franchises. For example, the fast-paced nature of the industry means that game titles and formats can change rapidly, requiring franchisees to be adaptable and flexible. There is also little regulation, especially when it comes to gambling. 

In conclusion, esports franchises are a rapidly growing industry with significant potential for profitability, but entrepreneurs should do their research before diving into this emerging category.