Esports, a growing industry with millions of fans worldwide, has often been compared to traditional professional sports like football or basketball. While some argue that esports share the same status and infrastructure as traditional sports, the reality is far more complex. Attempting to bridge the two industries has revealed significant gaps in financial models, community priorities, and long-term sustainability.

The rise of esports investments

In the late 2010s, the potential for esports to emulate traditional sports attracted attention from celebrities, sports figures, and investment firms. Rick Fox, a three-time NBA champion, founded the esports organization Echo Fox and leveraged his platform to validate the competitive gaming arena. Fox wasn’t alone. High-profile athletes like Shaquille O’Neal and companies such as the New York Yankees invested in esports teams, signaling a growing belief in the industry’s profitability.

One of the notable players in this movement was Vision Esports, a fund and management company that aimed to draw direct parallels between the two industries. Vision became the largest shareholder in organizations like Twin Galaxies, Vision Entertainment, and Echo Fox, raising $38 million from investors with ties to professional sports. According to then-managing general partner Stratton Sclavos, Vision believed in the mantra: “Esports are pro sports,” citing similarities in ecosystems and market potential.

Financial optimism—and reality

Despite initial enthusiasm, the assumption that esports could achieve the same financial success as traditional sports turned out to be flawed. Much of sports revenue comes not just from ticket sales or sponsorships, but from lucrative media rights deals. For example, regional sports networks (RSNs) like New York’s Yes Network, which broadcasts Yankees games, played a critical role in funding teams. In 2010, RSNs generated an average of $137.8 million annually, with major markets earning far more. Teams like the Arizona Diamondbacks secured billion-dollar broadcasting contracts because cable subscribers paid for RSNs—even if only a small percentage of viewers tuned in.

Esports, however, lack this infrastructure. In promising partnerships with sports networks, organizations like Echo Fox hoped to create new revenue streams by producing esports content. Echo Fox’s collaboration with the Yes Network aimed to broadcast games like League of Legends alongside traditional talk shows and crossover content featuring both Yankees players and esports professionals. But these plans never materialized due to internal issues.

Echo Fox and internal strife

Echo Fox was once considered one of the most exciting names in competitive gaming, fielding teams across popular titles like League of Legends, Counter-Strike, and Street Fighter. Yet, its ambitions were derailed by internal conflicts. Rick Fox exited the organization after co-owner Amit Raizada allegedly used a racial slur in an email. Lawsuits followed, and by 2019, Echo Fox had disbanded entirely.

The demise of Echo Fox wasn’t just an isolated incident—it highlighted broader issues in the esports world. Investors were often drawn to esports for its perceived profitability, not out of a commitment to its grassroots communities. These investors expected rapid financial returns, but the lack of a sustainable revenue model left many disillusioned. This cycle has played out repeatedly as organizations like Overwatch League teams have folded or scaled back.

Why traditional sports’ model doesn’t fit esports

There’s a persistent misconception that esports’ growing popularity will automatically create financial parity with professional sports leagues. The NFL, for instance, generates 80% of its revenue from media rights alone—tens of billions of dollars split among its teams. Esports, however, operates within a fundamentally different business structure.

Unlike traditional sports, where media networks fund teams and leagues through broad cable subscriptions, esports relies largely on streaming platforms like Twitch or YouTube. These platforms do not generate anywhere near the revenue that cable deals once provided. Additionally, esports’ global audience, while massive, is fragmented across various games and communities, making it difficult to build the unified revenue models seen in traditional leagues.

The cultural disconnect

Esports has also struggled with cultural acceptance by traditional sports frameworks. While athletes like Rick Fox approached esports with respect, many investors and organizations treated esports as a marketing tool—a means to access younger, tech-savvy audiences. This commodification alienated grassroots fans who had built esports from the ground up. Communities in the fighting game community (FGC), for instance, resisted the corporate label of “esports” altogether, fearing it would erase their grassroots culture.

As TL Taylor, author of Raising the Stakes, once noted, corporate involvement often overlooks deeper issues within esports communities, leading to unsustainable growth that prioritizes profits over long-term health. The resulting conflicts have created a precarious environment for esports, with some fearing the industry is heading toward a bubble.

Lessons from failed partnerships

Although ventures like Echo Fox’s collaboration with the Yes Network promised to elevate esports into the broader cultural mainstream, they ultimately underscored why esports and traditional sports remain distinct. Sports leagues like Major League Baseball relied on systems that forced non-fans to subsidize their multimillion-dollar deals via basic cable fees. As cord-cutting gained traction, these models began to collapse.

Esports, by contrast, never had the benefit of such guaranteed revenue streams. Despite filling arenas and attracting global audiences, the industry has yet to create financial systems that rival the media rights structures of traditional sports. Instead, esports must find sustainable paths that prioritize its unique strengths, such as its digital-first audience and direct-to-consumer engagement.

The way forward

Esports should lean into what sets it apart. Unlike traditional sports, which grew in an era of limited entertainment options, esports has thrived in the digital age, offering interactive and immersive experiences. The industry will likely evolve by exploring diversified models, including:

• Strengthened partnerships with streaming platforms to capitalize on viewer engagement.
• Merchandise and content focused on the fan experience.
• Direct partnerships with brands that align with gaming culture.

While the idea of “esports are pro sports” is enticing, it oversimplifies two industries that, though similar in some ways, are built on fundamentally different foundations. To thrive, esports must chart its own path—one that prioritizes long-term growth over short-term profits.