Streamer and esports team owner Jeremy Wang, widely known as Disguised Toast, recently shared his candid thoughts on the challenges facing the esports industry in North America. According to Wang, getting involved in esports is one of the worst decisions due to the financial losses that organizations face despite massive investments.
Wang made headlines earlier this year when he founded a Valorant pro team called DSG, investing $500,000. However, the team’s performance quickly plummeted, and by May, they found themselves on an 0-7 losing streak. Undeterred, Disguised Toast purchased a League of Legends pro team with aspirations to compete in the North American Challengers League. Unfortunately, Riot’s unexpected decision to dissolve the NACL, coupled with LCS pro players threatening to go on strike, put a damper on the venture.
These incidents, along with Activision’s acknowledgement of challenges faced by the Overwatch League and Call of Duty League, shed light on the sustainability issues plaguing professional esports. Although both Riot and Activision expressed their commitment to the future of their leagues, Disguised Toast took a bleaker perspective on the situation.
In a recent video, Wang recounted a conversation with his accountant, who informed him that he was on track to spend a million dollars that year, twice the expected amount. The revenue section of the spreadsheet showed empty cells, indicating a lack of profitability. Disguised Toast emphasized that virtually all esports organizations in North America are either bankrupt or rapidly heading in that direction. Many are resorting to layoffs and downsizing.
While these financial struggles are not publicly acknowledged by most esports organizations, Disguised Toast’s claims shed light on the harsh reality. Even well-known organizations like FaZe Clan, currently facing delisting from the Nasdaq, prioritize the public image of their partnered creators over long-term viability in esports.
Disguised Toast also pointed out that major sponsorships have dried up due to esports’ failure to attract mainstream audiences effectively. He shared an example of approaching an energy drink company already involved in esports, only to be informed that they were planning to exit the space once their existing obligations were fulfilled.
Brands are wary of investing in esports due to the lack of significant returns on their previous investments. Disguised Toast’s immediate plan involves experimenting with Patreon and encouraging fans to support their favorite teams. He believes that if viewers are willing to spend money on streamers, there might be fans willing to contribute a small amount each month to sustain a team they support.
As Disguised Toast provides this less-than-optimistic analysis of the esports industry, he also revealed that his DSG Valorant team disbanded after a string of losses, being ousted from the Challenger League. Drastic changes are expected, and the future remains uncertain.
More bad news for esports…
The esports industry is facing significant hurdles, with FaZe Clan serving as a prime example. FaZe Clan’s financial struggles, controversies, and dwindling brand partnerships illustrate the current hardships within the industry. While FaZe Clan’s edgy image once attracted a loyal following, it has now become a liability when trying to secure partnerships with major brands focused on brand safety.
Internal mismanagement and excessive spending have further contributed to FaZe Clan’s decline. These issues reflect the larger challenges that the esports industry is grappling with, emphasizing the need for organizations to adapt, prioritize sustainable growth, and maintain positive brand reputations. The esports industry as a whole must navigate these obstacles to ensure its long-term success.