July 6, 2022

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The Sports Fanatics

The Most Valuable Esports Companies 2022

Table of Contents

The top ten are now worth an average of $353 million, up 46% from 2020, but most are rapidly diversifying their businesses as they face down the industry’s challenges.


When FaZe Clan, the esports and entertainment company with a rock-star image and a cavalcade of celebrity partners, revealed in October that it planned to go public through a SPAC merger, the announcement came with a bold claim: that FaZe was already worth $650 million and would reach $1 billion with the money it raised in the deal.

That stratospheric valuation—comparable to MLB’s Miami Marlins or the NHL’s Detroit Red Wings—blew past the $305 million that Forbes had estimated FaZe Clan was worth just ten months earlier. It was also a signal that the esports industry had resumed its ascent after a couple of years in which team values had largely flatlined. Indeed, in Forbes’ new ranking of the most valuable esports companies, the top ten are worth an average of $353 million, up 46% from the last edition of the list, in December 2020.

Once again, TSM, owned by Andy Dinh, leads the way, rising 32% to $540 million. The No. 2 company, 100 Thieves, which counts Drake, music mogul Scooter Braun and billionaire Dan Gilbert among its owners, has soared 142%, to $460 million.

Those numbers don’t tell the whole story, however. The fanfare around the sky-high valuation assigned to FaZe in the fall masked some fundamental concerns about its business—issues that became more acute when, in an amended SEC filing last week, it revised its forecasts downward. Skeptics point to the company’s $36.9 million net loss for 2021, among other things, and Forbes now values FaZe at $400 million, No. 4 in the ranking.

The eye-watering valuations for the rest of the top ten similarly belie the reality of the industry right now: Esports is a tough business, and in some ways getting tougher, and the rise in these companies’ valuations is largely being driven not by their esports teams but by their other divisions.

“Monetization remains the principal challenge for literally every esports team,” says Bobby Sharma, a private equity investor and the managing partner at advisory firm Electronic Sports Group. “At this stage, most are trying to find their way around the maze, with some stuck on a hamster wheel. If there’s one thing clear, it’s that nobody has found their way out.”


THE TOP TEN

The ten most valuable esports companies are worth a combined $3.5 billion, up 46% from the last edition of this list, in December 2020. TSM is once again No. 1, but no team has appreciated more than No. 2, 100 Thieves.


Esports clearly has massive potential. A report last month by gaming data firm Newzoo found that the global esports audience was on track to reach 532 million this year, including 261 million “esports enthusiasts” who watch esports content more than once a month. As one point of comparison, this year’s Super Bowl drew an average of 112 million viewers, according to NBCUniversal.

Still, that kind of aggregation doesn’t reflect the opportunity in any one esport—a fan of League of Legends doesn’t necessarily care about Call of Duty, the same way an NFL fan doesn’t necessarily watch the NBA. Teams not only have to pick the right games to compete in but also have to hope those titles stay relevant. For instance, Overwatch’s viewership numbers are plummeting, just a few years after companies shelled out $20 million for the initial franchise slots in the Overwatch League; esports insiders believe they would sell for a fraction of that price now.

Teams face a number of other challenges from all directions. Media rights revenue hasn’t caught up with those viewership numbers, in no small part because of a lack of competition, with Twitch and YouTube still the only platforms all that interested in esports content. On top of that, talent is getting considerably more expensive, with players of the up-and-coming game Valorant able to demand as much as $30,000 a month, according to industry insiders.

Teams are also constrained in how they can make their money because they don’t own the intellectual property of the games they compete in—they can’t, for example, sell a special gun in Call of Duty without the consent of the game’s publisher, Activision Blizzard. That’s a key difference with traditional sports, where no one owns the idea of, say, baseball. And while team sponsorships can be lucrative, other revenue streams often have low margins. A single tournament can yield hundreds of thousands of dollars in prize money, but almost all of it goes to the players. Most of the ad revenue from a streamer’s videos is returned to the streamer.

“There’s a broad-based agreement that esports as a stand-alone doesn’t work as a business,” one team executive says bluntly.

That recognition has sent teams scrambling to expand into broader gaming culture and beyond, treating esports more like a customer acquisition funnel as they seek to justify their lofty valuations and continue to scale. Organizations like FaZe Clan and NRG are focusing on content, with original shows in addition to their armies of streamers, while 100 Thieves is building a lifestyle company around its apparel. TSM and Gen.G have launched training apps while companies like ReKTGlobal and LOUD run successful marketing agencies.

Looking ahead, companies see a huge opportunity to monetize their fan bases through emerging technologies like blockchain, NFTs and the metaverse. The first step is signing partnerships with cryptocurrency platforms like FTX and Crypto.com, as TSM and Fnatic have done, but the real payoffs could come later. Using NFTs to sell the in-game digital items known as “skins” would allow teams to collect a fee if the item was resold, the way that Dapper Labs collects a percentage of any trade of its NBA Top Shot NFTs on the secondary market. There are also ideas emerging around so-called play-to-earn games, which reward users with NFTs or cryptocoins.

In an even more distant future, the establishment of a metaverse linking multiple popular games together could steal some power from publishers, allowing teams to sell items or avatars that could transfer from game to game and mitigating the IP issues they are currently navigating.

But while money is pouring into the metaverse—Fortnite publisher Epic Games announced last month that it had raised $1 billion in funding to support its metaverse initiative—those days are a long ways off, and game makers are in no rush to cede control. The worry now is that esports companies might be swept up into a metaverse bubble.

One other development that could help or hurt teams is Microsoft’s pending acquisition of Activision, one of gaming’s biggest publishers. The deal could pump new resources into Activision’s esports leagues—or esports could become an afterthought in Microsoft’s massive budget.

In the meantime, though, new sponsors have found their way to teams as the pandemic has supercharged online viewership numbers, with esports’ young male audience long considered a desirable but hard-to-reach demographic among advertisers. And unlike, say, Major League Soccer—which has sold teams at similarly high multiples—esports has a colossal audience; the industry just has to find a way to monetize all those eyeballs.

“I think we’re going to see a variety of successful models emerge, bespoke to specific team assets and strengths,” says Electronic Sports Group’s Sharma. “But fundamentally I believe some will become great and sustainable businesses.”


Here are the ten most valuable esports companies.


[#1]

TSM // $540 million

Change From 2020: 32%

2021 Estimated Revenue: $56 million

Premier Games: League of Legends, Valorant

Other Games: Apex Legends, Battlegrounds Mobile India, chess, Dota 2, Fortnite, Free Fire, League of Legends: Wild Rift, Magic: The Gathering, Rainbow Six Siege, Super Smash Bros. Ultimate, Teamfight Tactics

Principal Owner: Andy Dinh

Business Focus: Tech

TSM has the richest sponsorship deal in esports, a ten-year, $210 million naming rights agreement with crypto exchange FTX, but its real selling point is its tech businesses: Blitz, an app that trains users in popular video games, and Dyno, which offers a moderation bot for Discord servers. Some around the industry express wariness about the Los Angeles-based company’s leadership, however, with CEO Andy Dinh accused late last year of bullying. “Upon learning of allegations against Mr. Dinh, TSM immediately hired an independent investigator to begin a thorough internal investigation,” the team said in a statement this week, echoing an earlier announcement in January. “Andy recused himself from any oversight of the scope, nature and conclusions of the investigation. Those results are pending. Until finalized, we can’t comment on specifics.”


[#2]

100 Thieves // $460 million

Change From 2020: 142%

2021 Estimated Revenue: $38 million

Premier Games: Call of Duty: Vanguard, League of Legends, Valorant

Other Games: Apex Legends

Principal Owners: Matthew Haag, Drake, Scooter Braun, Dan Gilbert, Rachell Hofstetter, Jack Dunlop

Business Focus: Lifestyle

No team in Forbes’ ranking has appreciated more than 100 Thieves, which was fifth on the 2020 list at $190 million. The Los Angeles-based company, which is developing a lifestyle brand at the intersection of apparel, entertainment and esports, in December announced a $60 million funding round at a $460 million valuation. That was two months after the company made its first acquisition, buying gaming keyboard brand Higround.


[#3]

Team Liquid // $440 million

Change From 2020: 42%

2021 Estimated Revenue: $38 million

Premier Games: Counter-Strike: Global Offensive, League of Legends, Valorant

Other Games: Age of Empires, Apex Legends, Dota 2, Fortnite, Free Fire, Hearthstone, PUBG, Quake, Rainbow Six Siege, Rocket League, Starcraft 2, Super Smash Bros. Melee and Ultimate, Teamfight Tactics, World of Warcraft

Principal Owners: aXiomatic Gaming, Victor Goossens, Steve Arhancet

Business Focus: Esports

Team Liquid’s parent, aXiomatic Gaming, is fresh off raising $35 million in a round announced this week that values Liquid at $415 million. If it were negotiating terms now, it would likely fetch an even higher price. The company, which has offices in both Los Angeles and the Netherlands and is considered especially brand-safe for advertisers, is diversifying in several directions at once. The company launched the community initiative Liquid+ last year and has a video content production arm in 1UP Studios and an influencer management agency in Liquid Media while still maintaining ownership of the wiki network Liquipedia.


[#4]

FaZe Clan // $400 million

Change From 2020: 31%

2021 Revenue: $52.9 million

Premier Games: Call of Duty: Vanguard, Counter-Strike: Global Offensive, Valorant

Other Games: FIFA Online 4, Fortnite, Halo Infinite, PUBG, PUBG Mobile, Rainbow Six Siege, Rocket League, Super Smash Bros. Ultimate

Principal Owners: Lee Trink, Michael Stang Treschow, Yousef Abdelfattah, Richard Bengston, Thomas Oliveira, Nordan Shat

Business Focus: Media

FaZe Clan has broken into mainstream culture in a way no other esports organization has been able to, creating tremendous brand value as it looks to become a full-fledged media company with original content like the contest series Road To FaZe1, the horror movie Crimson and a comic book crossover with Batman. It may also look to launch consumer products around its famous personalities. But its bottom line is still ugly, the SPAC climate has grown more perilous, and the company’s recently disclosed agreement with partner Snoop Dogg suggests it might be lowering its own valuation. Defenders of the Los Angeles-based FaZe offer a reminder that Amazon hemorrhaged money for years before turning a profit, and even its skeptics recognize that a rising tide lifts all boats. “I’ll be rooting for them,” says one rival team executive.


[#5]

Cloud9 // $380 million

Change From 2020: 9%

2021 Estimated Revenue: $35 million

Premier Games: Counter-Strike: Global Offensive, League of Legends, Overwatch, Valorant

Other Games: chess, Fortnite, Halo Infinite, Hearthstone, League of Legends: Wild Rift, PUBG Mobile, Rainbow Six Siege, Super Smash Bros. Melee, Teamfight Tactics, World of Warcraft

Principal Owners: Jack and Paullie Etienne

Business Focus: Esports

Cloud9 topped the first two editions of the Forbes ranking, in 2018 and 2019, and has historically been the dominant pure-play esports brand. The announcement last month that the company, based in Santa Monica, California, is returning to competition in Counter-Strike: Global Offensive may reinforce that image, but even C9 is creating new lines of business with Training Grounds, a coaching app, and with Stratus, a subscription service for super-fans.


[#6]

G2 Esports // $340 million

Change From 2020: 94%

2021 Estimated Revenue: $31 million

Premier Games: Counter-Strike: Global Offensive, League of Legends, Valorant

Other Games: Apex Legends, Fortnite, Halo Infinite, Rainbow Six Siege, Rocket League, sim racing

Principal Owners: Carlos Rodriguez, Jens Hilgers

Business Focus: Media

G2 Esports, the highest-ranked company outside of Los Angeles County, with its headquarters in Berlin, is branching out from esports with video content around its teams and a record label, G2 Music. The company is also looking to expand globally with a particular eye on the U.S., with plans for a flagship in New York. Since the start of 2021, G2 has announced apparel deals with Adidas, Ralph Lauren and New Era.


[#7]

Fnatic // $260 million

Change From 2020: not ranked

2021 Estimated Revenue: $26 million

Premier Games: Counter-Strike: Global Offensive, League of Legends, Valorant

Other Games: Dota 2, FIFA, Halo Infinite, Rainbow Six Siege

Principal Owners: Sam and Anne Mathews, Patrik Sättermon

Business Focus: Esports, Web3

Fnatic has traditionally shown a commitment to the biggest esports games, entering Valorant and Halo Infinite since the last Forbes list. The London-based company is now building up its products businesses, starting with gaming hardware, including keyboards and mice. The next frontier is on the digital side. Fnatic launched an NFT-based membership program for fans in March; despite some backlash around it, the company signed up 200,000 members for the free version, beating its target of 50,000. Fnatic has also started to gain traction in Japan.


[#8]

Gen.G // $250 million

Change From 2020: 35%

2021 Estimated Revenue: $17 million

Premier Games: League of Legends, Overwatch, Valorant

Other Games: NBA 2K, PUBG

Principal Owners: Kevin Chou, Battery Ventures, Canaan Partners, NEA, Will Smith

Business Focus: EdTech, Web3

Gen.G looks set to enter a period of rapid growth; the company says it signed more sponsorships in terms of total deal value in the first quarter of 2022 than in all of 2021, putting it on pace to grow revenue 100% year over year. One particularly notable partnership is with cryptocurrency exchange Bithumb as Gen.G ties itself to Web3 technologies. The other focus for the company, which has offices in Santa Monica, California, Seoul and Shanghai, is its coaching platform, which launched last year and has already enrolled thousands of students in Asia, Gen.G says.


[#9]

NRG // $240 million

Change From 2020: 55%

2021 Estimated Revenue: $28 million

Premier Games: Overwatch, Valorant

Other Games: Apex Legends, Call of Duty: Warzone, Fortnite, Rocket League

Principal Owners: Andy Miller, Mark Mastrov

Business Focus: Media

NRG has a successful content business, including a brand in Full Squad Gaming that targets “social gamers” as opposed to esports enthusiasts and a studio in Los Angeles, where the company is based. The organization has had an occasionally bumpy experience with esports’ franchise model but limits its risk exposure by fielding a manageable number of teams.


[#10]

T1 // $220 million

Change From 2020: 47%

2021 Estimated Revenue: $17 million

Premier Games: League of Legends, Overwatch, Valorant

Other Games: Dota 2, League of Legends: Wild Rift, Super Smash Bros. Ultimate

Principal Owners: Comcast Spectacor, SK Square

Business Focus: Esports

“The way that teams in North America succeed is different from the way that teams succeed in Asia,” says Jason Chung, the executive director of esports at the University of New Haven. “If you want to succeed in Asia, you have to be the best—it’s all about competition.” That certainly helps explain the success of Seoul-based T1. But it, too, is diversifying, looking to bolster its entertainment business and the esports academy it launched last year.


Methodology

To compile this ranking of the ten most valuable companies fielding esports teams, Forbes spoke to more than 40 company executives, esports industry professionals, investors, bankers and analysts. FaZe Clan’s revenue figure was taken from its S-4 filing with the SEC as it seeks to go public; all other revenue figures represent an estimate for 2021, including both core esports and other divisions of each company. The valuations were rooted in actual 2021 performance, with multiples applied to each revenue stream individually and adjusted somewhat to reflect future projections. Capital raises and asset sales were taken into account, but were not always considered determinative of a team’s value, for various reasons.

Each game listed alongside a company indicates the company fields a competitive esports team in that title, apart from content streamers. Forbes listed five titles separately as “premier games,” following the industry consensus that these games are the most important in the current competitive esports landscape: Call of Duty: Vanguard (for the Call of Duty League), Counter-Strike: Global Offensive, League of Legends (for the League Championship Series and its overseas counterparts), Overwatch (for the Overwatch League) and Valorant. All other titles are listed alphabetically.

While many companies are expanding beyond esports, Forbes chose not to consider for this ranking Luminosity Gaming parent Enthusiast Gaming, which derives just 3% of its revenue from esports, according to its filings as a public company. On the last edition of this list, in 2020, Enthusiast ranked No. 7 at $180 million. Other companies that field esports teams but derive a small fraction of their revenue from esports—such as Shopify, with its Shopify Rebellion division—were similarly excluded.

FaZe Clan is trying to go public through a SPAC merger; the other nine companies in this year’s ranking remain privately owned.