Jeremy Wang, best known on the internet as a streamer and owner of esports team Disguised Toast, shared some incisive thoughts on why “the esports industry is one of the worst things in you can come in”. And it’s not because his team sucks, even if it is: it’s because despite all the millions of dollars that have been poured into it, there’s no money to be made.
Disguised Toast announced in January that it had spent $500,000 to found a Valorant pro team called DSG. It didn’t go well: in May, the team was on an 0-7 streak and Disguised Toast had serious doubts. Despite this experience, he bought a professional League of Legends team in May, intending to compete in the North American Challengers League. But that venture also got off to an inauspicious start, as Riot unexpectedly eviscerated NACL and LCS pros threatened with strike action.
https://t.co/IwiDxw0iDA pic.twitter.com/3HfWquuvkKMay 31, 2023
This potential walkout occurred when LCS teams were allowed by Riot to drop their second-tier challenger league rosters: nearly every organization in the LCS did so as a cost-saving measure, which put dozens of unemployed players and coaches. It was a bad time for the LCS, but it also came just weeks after Activision acknowledged in an SEC filing that the Overwatch League and Call of Duty League are facing challenges “that have a negative impact on operations and, potentially, the longevity of leagues under the current business model,” and that these challenges may ultimately prove intractable.
Collectively, the seemingly sudden problems in two of the biggest esports leagues in operation have highlighted serious sustainability issues for professional esports in general. Activision and Riot were quick to express their commitment to the long-term future of their professional leagues, as you’d expect, but Disguised Toast presented a much more direct and bleaker take on the situation.
“Last week my accountant texted me and said, ‘Toast, we need to talk,'” the streamer said in his latest video. “He told me I’m actually on track to spend a million dollars this year, double what I expected. He sent me this spreadsheet with all these red numbers, and I noted in the income section that it was blocked. I asked him, ‘Why did you block it?’ He said “Well, it’s not blocked, there’s nothing there. You don’t make any money.”
“If you look at any esports organization in North America, they’re all either broke or going bankrupt. And I mean all of them. Some organizations will try to put on a front and say, ‘Hey, we’re still good, we look good, everything’s cool here.’ Believe me when I say everyone loses a lot of money. A lot of people are being laid off, no organization is safe right now.”
We have to trust Wang on this front: we don’t have access to anyone’s books and, as he said, no esports organization admits to being dangerously in the red. Even FaZe Clan, which is currently at risk of being delisted from the Nasdaq because its stock price crashed to less than $1 a share, is more publicly focused on the profiles of the creators it partners with than its viability. long term in esports.
But significant long-term problems appear to be brewing. Major sponsorships have largely dried up, Disguised Toast said, as esports’ inability to penetrate the mainstream has made the expense unattractive; he spoke of approaching an energy drink company already active in esports about a sponsorship, only to be told the company would pull out of the space altogether as soon as its contractual obligations were met.
“Brands are scared of esports because they’ve invested millions and millions in it, and they’ve never seen a meaningful return,” Disguised Toast said.
Toast’s plan in disguise for now is to take the altruistic approach: he’ll experiment with Patreon and there will be backer benefits, but generally speaking the land will, if you really like the team, support the team. “If there are thousands of viewers willing to spend five bucks a month on millionaire streamers just for a little badge in their chat,” he said, “maybe there are fans who are willing to throw away five bucks a month to advance a team, a team they love, a team they support.”
Alongside the less-than-sunny analysis of esports activity, Disguised Toast also provided an update on the DSG Valorant squad, which disbanded after an 0-11 run in its 11 last matches. “We did so badly that we were kicked out of the Challenger League and we will have to requalify next year,” he said. “Obviously drastic changes are going to be made. It’s going to be a bit spicy.”
This marks the end of our Valorant season as we are retired from the Challengers next year. Sorry to all fans and thank you all for supporting DSG throughout this time.June 5, 2023