Is It Over for eSports

From 2016-2018 investors couldn’t get enough of eSports investment opportunities.

Franchises sold for tens of millions, arenas filled with cheering fans, and viewership records were set.

The sky was the limit

Covid hit and many in the industry felt it was headed

It didn’t

It collapsed!

North America’s professional League of Legends scene, the LCS, was once the poster child of esports growth. But recent years have painted a starkly different picture: financial turmoil for teams, slipping viewership, lost sponsors, and an “esports winter” of layoffs and contraction.

How did we go from a 2018 Boom?

To a 2025 Winter

The story lies in big dreams, costly mistakes, and a league that has seemingly lost its way.

Did Riot Games fumble the golden goose, or was a sustainable eSports league always impossible?

The Rise

South Korea gave birth to eSports with its Starcraft Scene including its flashy player intro videos.

While games like Counter Strike and Call of Duty along with IEM captured some global audiences. The North America market largely didn’t exist. Riot Games set about changing this.

At my first Worlds in LA in 2016, it felt like they had created something special. The experience was built for fans with commemorative gear, an interactive floor display mimicking the game, and rabid fans. That world’s seem to jump start the growth of the league.

In 2016–2017, LCS match streams regularly pulled in hundreds of thousands of concurrent viewers, and total watch hours hit all-time highs. 2017 marked the peak: fans consumed 61.4 million hours of LCS content that year​. Marquee matchups like TSM vs. Cloud9 couldn’t be missed, and the split finals packed arenas coast to coast.

At the time the LCS featured a promotion system commonly found in European sport leagues. The bottom teams faced relegation to a “challenger” league which came with significantly less viewers and funds. That risk apparently worried investors, and Riot thought they had a solution, franchising.

When Riot Games franchised the LCS in 2018, teams paid a $10 million buy-in fee for a permanent slot, betting on a bright future. Investors from traditional sports and celebrities poured money into teams hoping to ride the eSports wave.

The Covid “Boom

In the early months of COVID (2020), a narrative took hold that esports would surge as traditional sports shut down. For a short while, it looked true: with everyone stuck at home, online viewership “skyrocketed” – Twitch hours watched jumped ~70% during the pandemic’s peak​. Sponsors who couldn’t activate at canceled live events shifted some attention to esports.

eSports content event aired on ESPN when leagues like the NBA went on hiatus. Many esports executives believed this was esports’ moment to permanently capture a larger audience. “80% of esports executives [in mid-2020] said the industry will benefit and experience growth after COVID”, according to one survey​.

In 2020, TSM made headlines signing SwordArt to a record $6 million contract over two years, the largest in LCS history​. TSM’s owner Andy “Reginald” Dinh shrugged off the cost, calling it “a really small investment ten years from now” as he chased a World Championship.​

One key financial proponent of both TSM and the LCS, was FTX. Both the league and TSM made a bet that crypto was going to stay and FTX was going to finance the league’s transformation into a North American powerhouse.

Teams and leagues scaled up expecting sustained growth. But the reality was more complex. “COVID created a unique moment for esports… giving a massive temporary boost,” analyst Rod Breslau explained – emphasis on temporary​. As soon as traditional sports and live entertainment returned in 2021, casual viewers largely flocked back to their pre-pandemic habits​.

Esports did gain some new fans, but not nearly enough to justify the outsized growth forecasts. Most organizations over-extended during the pandemic (hiring extra staff, expanding into more games, paying bigger salaries) only to hit a financial brick wall by 2022 when the expected revenue didn’t materialize.

“Esports clubs that had scaled up to meet pandemic demand found themselves with inflated costs and declining viewership afterward,” notes Breslau​. The pandemic did harm some revenue streams as well: live event ticket sales and merchandising opportunities at arenas vanished in 2020.

The LCS had planned roadshow events in different cities, which were canceled, meaning less local market engagement. While online viewership was up, that doesn’t fully compensate for the loss of in-person revenue (though admittedly, ticket sales were a smaller portion of esports revenue compared to sports).

In short, COVID-19 was a double-edged sword: it proved esports could continue virtually and even spike in popularity when people had no alternative – but it also demonstrated that much of that interest was fleeting. It “fooled” some investors into thinking the growth curve would remain steep​, leading to over-investment that has since been corrected.

The Collapse

By late 2021, Riot’s Head of Esports John Needham admitted their entire League esports division “hasn’t been profitable” even after a decade​, and stressed “if I can’t make eSports a great business for teams and our sponsors, then we’re not going to last long”​.

Discussing this situation with an investor in a successful Asian eSports team, he told me “TSM spent more money on individual players, than we spent operating our entire org”. It was possible to do that when the money was cheap, but once the funds dried, teams were going to be in for a rude awakening.

Riot Games began siphoning fans away from the LCS when it introduced Valorant esports (VCT), which quickly attracted many FPS-focused fans in 2021. By 2022, the VCT Champions finals rivaled LCS finals viewership, and Valorant’s Americas league had started to encroach on the LCS’s audience​.

What most disrupted the LCS and its most successful team, TSM, was the collapse of FTX. A report from Coindesk in late 2022, flagged issues with FTX and it’s trading arm Alameda Research which ultimately led to the collapse of both FTX and its trading arm. The LCS and TSM had signed major contracts with FTX expecting them to fuel future growth. When the funds dried up, there was no clear back up.

By 2023, the financial strain hit a breaking point for several storied franchises. In April of that year, Counter Logic Gaming (CLG), one of the oldest NA esports teams, shut down most operations amid parent company budget cuts, with its LCS slot sold off to NRG Esports​. TSM, the region’s most decorated team, announced it would leave the LCS entirely after years of investment.

In Spring 2023 Riot made a controversial decision to move LCS broadcasts to weekdays (Thursday/Friday afternoons) instead of the traditional weekend slot. This was widely seen as a move to give Valorant’s Americas league the prime weekend times and to force dedicated fans to tune in at less convenient hours. The community reacted with outrage – many working or school-bound fans simply couldn’t watch live on weekday midday​. Even though Riot later reverted LCS to weekends, the damage was done. The Spring 2023 split opened with ~178,000 peak viewers, down significantly from 2022’s opener​, and the league continued to shed viewers through the year.

The scheduling mishap exemplified a sense that LCS was no longer Riot’s priority in NA, potentially accelerating audience erosion. Engagement beyond raw viewership had also stagnated. Social media buzz around the LCS is down, and community figures lamented a lack of storyline hype. Teams and the LCS both share blame for the downfall of the league, but what about fans?

Sponsorship and Monetization Challenges

For years, the “monetization” of all those eSports viewers has lagged far behind traditional sports. Millions might watch a free Twitch stream, but turning those views into revenue is another matter. Esports fans are notoriously cost-averse – they’re used to free content, free streams, and have little reason to spend money supporting a team compared to, say, an NFL fan buying game tickets or a jersey.

As one industry analysis bluntly noted, the esports fanbase has been “reluctant to spend more on an activity that is essentially free to watch”, leaving teams “woefully unprofitable” despite sizable audiences​. This fundamental issue underpins many of the LCS’s recent struggles.

The Sponsor-Driven Model

Because direct consumer revenue (tickets, merchandise, media subscriptions) is relatively low in eSports, teams and leagues have relied heavily on sponsors to foot the bill.

 In the LCS’s heyday, this meant big-name sponsors on the broadcast – State Farm, Bud Light, Mastercard, Honda, Red Bull, and others – and on team jerseys. For example, Cloud9’s partnership with AT&T or Team Liquid’s deals with Alienware showcased how marque brands were eager to reach young gaming audiences.

However, this sponsorship-centric model has proven fragile. Dave Harris, an esports investor, noted that many brands slashed esports spending; initially due to pandemic-era supply chain issues (e.g. PC hardware makers had less product to sell), and later due to broader economic shifts and doubts about esports ROI​. We’ve seen some sponsors pivot to other channels, such as working with individual streamers or influencers rather than teams – a point Complexity Gaming CEO Jason Lake highlights: “the financial model relies heavily on sponsorships, but many sponsors have pivoted toward broader influencers and streamers”​.

 In other words, a company might decide it’s more effective to sponsor a popular Twitch personality with a loyal following than a pro team whose fans care more about the game than the brand on the jersey. The LCS itself hasn’t been immune to sponsor pullback. The league’s official beer partner Bud Light had a prominent presence in 2020–2021 (even sponsoring a post-game show) but was notably absent by 2023. State Farm, which for years presented the Analyst Desk, reduced its engagement.

Across the board, teams found that sponsor dollars alone couldn’t cover expenses when viewership expectations weren’t met. And unlike traditional sports, media rights deals for esports are minimal – LCS games are mostly streamed for free on Twitch and YouTube, meaning no billion-dollar TV contracts. Riot Games does monetize via in-game items (team-branded skins, event passes, etc.), but until recently teams only saw a limited cut of that.

By early 2024, the league’s average concurrent viewership was hovering in the mere five digits (often 70k–100k range), a far cry from its heyday​. To put this in perspective, North America’s flagship League of Legends league now ranks behind at least three other regional leagues in viewership – including Europe’s LEC and even some emerging leagues​. While the LEC, League of Legend’s Premier European League, increased its audience by 33% from 2017 to 2022, the LCS fell sharply in the same period​.

The Result

Team exodus underscores how unsustainable the economics have become for some owners. Teams have scrambled to slash costs or shut down entirely.

CLG (2023)

Owned by Madison Square Garden Sports, CLG folded its esports operations after “widespread layoffs” and sold its LCS slot to NRG​. An iconic brand simply couldn’t afford to continue.

Evil Geniuses (2023)

Coming off an LCS championship in 2022, EG still faced well-known “economic difficulties” and internal turmoil, eventually opting to withdraw from LCS franchising​.

Golden Guardians (2023)

Despite the team’s best-ever season (finishing one game shy of Worlds qualification), the Warriors-owned org also bowed out of LCS, a surprise sign that even improved competitive performance couldn’t justify continued losses​.

Shockingly, only 4 of the original 10 franchised teams from 2018 remain in the league.​

Could it have been prevented?

The decline of the LCS isn’t due to a single factor, but a confluence of operational missteps, shifting player bases, and harsh economics.

Overhyped Growth and the VC Bubble

Esports in the late 2010s was often portrayed as the “next big thing” – a potential rival to traditional sports in viewership and cultural impact. Stories of esports finals drawing more viewers than the Super Bowl were breathlessly shared.

This hype led to a bubble where massive investments flooded in. By 2022, at least 10 esports orgs were valued above $200M in private funding​. But the hockey-stick growth those venture capitalists expected never truly came.

By 2023, that bubble began to burst. “The esports boom years were over. The gold rush had ended,” one industry piece declared, noting “what followed was not an easy pill to swallow”​. With interest rates rising and easy money drying up, investors pressed pause. Some even pulled out entirely, forcing teams to either find a path to profitability or face consolidation​.

North America, home to many of these VC-backed franchises, was hit particularly hard. The timeline is telling: many NA orgs got major funding around 2016–2018, and by 2022 (a typical 5-7 year investment cycle) their backers expected returns.

When those didn’t arrive, teams had to slash costs or sell. This is exactly what we saw with CLG (sold), 100 Thieves (layoffs), TSM (seeking new revenue abroad), etc. In essence, esports over-expanded on an unrealistic timeline. Traditional sports leagues took decades to develop deep revenue streams; the LCS tried to get there in just a few years.

Team Strategies: Imports and Identity Issues

Some problems are of the LCS teams’ own making. During the boom, many NA teams pursued short-term performance at all costs – often importing star players from overseas with hefty salaries – rather than cultivating local talent and fan affinity.

This led to rosters that shuffled constantly and sometimes lacked a narrative that fans could invest in. An imported Korean veteran might boost a team’s chance to win a title in the near term, but if he’s gone a year later and doesn’t engage with the NA fanbase, how much long-term value was generated? Critics argue that LCS orgs failed to develop a sustainable ecosystem of homegrown stars, instead entering bidding wars for established players.

The result was escalating payrolls without commensurate growth in fan loyalty or viewership. Moreover, North America’s international underperformance in LoL has disheartened some fans. Every year, LCS teams have fallen short against European, Chinese, and Korean teams on the world stage. A segment of NA viewers has grown cynical, some even tuning out or preferring to watch those superior foreign leagues (which are easily accessible online).

It’s a vicious cycle: to try to catch up competitively, teams import more talent, which eats resources and can stunt local talent development – and when that still doesn’t produce a World Champion, fans grow more apathetic. Meanwhile, Europe’s LEC built up new stars and storylines, keeping their audience engaged and growing​. There are also cases of mismanagement and controversy that tarnished team reputations.

A notable incident involved Evil Geniuses allegedly mishandling a young player’s mental health situation in 2022, which became a scandal in the community. TSM’s owner was fined for abusive behavior toward players and staff. These sorts of incidents, while not unique to NA, may have chipped away at trust and goodwill. At minimum, they’re symptoms of esports orgs still maturing in their professional management – growing pains that sometimes turned away fans or sponsors.

Riot’s Role and Shifting Focus

Riot Games both empowers and constrains the LCS. On one hand, Riot’s commitment provides stability (the game isn’t going anywhere, and Riot subsidizes league operations to a degree). On the other, Riot controls the competitive ecosystem with a tight grip. Teams have limited ways to monetize within Riot’s rules, and the league’s direction is at Riot’s mercy.

Some in the scene feel that Riot did not market or innovate around the LCS enough in recent years, allowing it to grow stale compared to the flashier LEC or the popular Valorant circuit .That said, Riot is now reacting to the crisis with reforms. In late 2023, acknowledging teams’ financial struggles, Riot unveiled a new franchise business model for 2024. The focus is shifting “from sponsorship revenue sharing toward sharing proceeds from in-game digital purchases”​.

Essentially, Riot is creating a Global Revenue Pool (GRP) from things like esports-themed skins, team-branded items, event passes, etc., and will share 50% of that pool equally with teams, plus bonuses for competitive success and even for building fan engagement​. Along with this, Riot will pay teams a fixed annual stipend and continue sharing part of media/sponsorship revenue (after Riot covers its costs)​.

This is a significant shift to give teams more predictable income and reduce reliance on chasing sponsor deals. Riot’s Needham said the goal is a “path to long-term sustainability” with teams and the league more aligned, rather than “competing for the same limited sponsorship money”​. Riot also publicly acknowledged the burden teams took on: Needham referenced the “~$10M franchise buy-in fee” teams paid and how the ecosystem had been shouldering a heavy load during the downturn​.

In essence, Riot seems to be admitting that the old model – where teams paid big up-front fees and mostly had to fend for themselves financially – isn’t working anymore, especially in NA. The new model borrows from Valorant’s partnership system, where teams have thrived on revenue from co-developed in-game content (Valorant teams earned $33M from in-game item sales in 2023 under Riot’s revenue share programs)​.

If similar numbers can be achieved in League of Legends, it could be a lifeline for LCS teams. Still, these changes come as a reactive measure after several teams have already bowed out, raising the question of whether Riot acted too late to prevent the decline.

Broader Economic and Cultural Factors

Lastly, one cannot ignore the macroeconomic context. The tail end of 2022 into 2023 brought high inflation and a possible recession, leading companies to tighten marketing budgets and investors to seek safer bets. eSports, which had been a high-risk, high-reward venture, suddenly looked like a bubble investment. The phrase “esports winter” gained traction to describe the wave of belt-tightening: “cutbacks, closures and consolidation hit the industry… Major publishers and companies announced layoffs, as did businesses in other sectors”​. Even Riot Games and other game publishers executed layoffs affecting esports staff​.

This industry-wide chill amplified the LCS’s issues – it’s hard to grow when everyone is in survival mode. Culturally, as Gen Z audiences mature, it appears their attention is split among many forms of entertainment (TikTok, streaming shows, other games). Esports doesn’t command the novelty it once did. Some have argued that esports engagement was always smaller than it was hyped to be – for example, the average fan watches a lot less esports per year than the average traditional sports fan watches sports. The Ankler’s analysis noted “engagement in esports [is] extremely low, and monetizing this consumer is nearly impossible”, which is a brutal take but borne out by the revenue numbers​.

The comparison to traditional sports reveals stark differences: NFL or NBA fans will spend thousands on season tickets, cable packages, and merchandise over years – few eSports fans generate anywhere near that value. As traditional sports have embraced streaming and gaming-adjacent content themselves, eSports has to compete for even the core gamer’s time. 

LTA: Savior or Disaster?

The LTA emerged from a major reorganization of North and Latin American League of Legends eSports. Originally, the North American League Championship Series (LCS) served as the region’s premier competition, while Brazil’s CBLOL and Latin America’s LLA catered to their respective markets. However, amid financial instability, declining viewership, and unsustainable business models—including costly sponsorship deals and inflated team expenditures—Riot Games initiated a consolidation plan. In June 2024, Riot announced that these three leagues would merge into a unified, pan-American league known as the League of Legends Championship of The Americas (LTA). This dramatic restructuring was designed not only to streamline operations and reduce costs but also to create a stronger competitive ecosystem spanning both North America and Latin America.

Many of the historic LCS teams: Cloud9, Team Liquid, and FlyQuest continue under the LTA banner, now representing the North Conference. However, the reorganization also meant that some organizations faced significant changes.

For instance, 100 Thieves, a once-dominant brand in North American League of Legends, chose to sell their franchised slot back to Riot Games. As a result, for the inaugural LTA season, they participate as a “provisional guest team.” This status means that while they cannot be relegated, their long-term presence is not guaranteed and is subject to the results of promotion and relegation playoffs.

The rebranding from the well-known LCS to the LTA has been met with mixed reactions. Many long-time fans feel nostalgic for the LCS brand, which carried over a decade of history and emotional attachment. Some critics argue that abandoning the LCS identity—despite its well-documented issues—risks alienating the loyal core fanbase that identified strongly with the original league. On platforms like Reddit and various esports forums, users have debated whether a compromise (such as a name like “LCA” for League Championship of the Americas) might have better preserved the legacy while still uniting the regions.

Early reports from the inaugural splits indicate that viewership numbers in both LTA North and South have been underwhelming compared to their predecessors. For example, some data points noted that LTA North’s peak viewership dropped significantly—setting new lows compared to historical LCS figures. Factors contributing to this include scheduling conflicts with major sporting events (like the Super Bowl), confusion over the new brand identity, and concerns about the revamped competitive formats. Furthermore, community engagement on social platforms has been less vigorous, suggesting that the new league has yet to fully capture the excitement of the former LCS era. 

Not Isolated Incident

It’s worth noting that other high-profile North American eSports ventures have struggled or collapsed, which contextualizes LCS’s challenges as part of a larger correction.

Activision Blizzard’s Overwatch League, launched in 2018 with city-based franchises ($20M+ buy-ins) and lofty viewership goals, saw declining numbers and franchise turmoil; by late 2023 Activision Blizzard allowed teams to vote to shut down the league in exchange for a severance payout, effectively admitting defeat.

The Call of Duty League faces similar headwinds, with a recent report calling its future “bleak”​. Meanwhile, FaZe Clan, one of the most recognizable esports orgs, went public via SPAC at a ~$1 billion valuation only to see its stock plummet over 95%, leaving it with a market cap of just ~$14M in 2023​. These examples highlight that the issues are not just LCS-specific; the entire NA esports industry is recalibrating after years of over-exuberance.

What’s next?

The rise and fall (or at least faltering) of North American League of Legends esports is a cautionary tale of new industry growing pains. The LCS rode a wave of enthusiasm that, in hindsight, was built on inflated expectations and a fragile economic model. As the tide went out, hard realities emerged: many teams were essentially marketing vehicles burning cash, rather than sustainable sports franchises​.

From a fan perspective there a couple of ways to improve the experience.

Local Watch Parties

One of the limiting factors that I've always found with the LCS and eSports in general, is how few in-person interactions and activations there are outside of major marquee events. The fact that there's never a C9 bar or a local Team Liquid watch party reveals how challenging it was for these teams to build identity.

Relying on them to somehow model the European professional sports scene where a club would sponsor teams across multiple sports in hopes it works out, was misguided considering the spending patterns of eSports fans.

Sports Betting

Sports betting is not without its issues. But one thing it does, is drive eyeballs. During the summer when League of Legends hits its stride, and fans only have baseball to watch, League of Legends could find a major opportunity.

General Professionalism

At some point, LCS and their producers decided that cosplay and being silly was the future. But the viewership numbers seemingly reflect that that's simply not true. The content delivered now is flashy, but comes off as bland. Compared the global LCK broadcast, Korea's main league, they treat their league with more seriousness, while still finding ways to mix in light-hearted segments.

LCK Finals

LTA Finals

Start Over

Riot and teams both, and even fans, need to view this as a complete restart and rebrand. As much as possible, try to treat anything as being on the table, and try to find some new model that works both from a business and watching perspective

Riot will need to show need to show sponsors and investors a clearer path to ROI, likely through the new in-game monetization and by tapping into fans’ willingness to support their favorite teams in meaningful ways (membership programs, merch drops, live experiences, etc.).

As one executive noted, “there’s been a slow shift towards a lower cost base in esports, which requires a shift in expectations from stakeholders across the board”​. The days of blank-check spending are over, but a leaner, smarter eSports scene could emerge from the rubble.

The American League of Legends scene may never hit the crazy peaks of its hype era again, but with prudent management it could settle into a sustainable groove. The coming seasons will reveal whether League of Legends level up its game outside the rift and reclaim some of its former glory in a changed landscape.