The Esports Crash We Needed: A Reality Check for India and the World

Over the last decade, esports has been championed as the next big thing, a billion-dollar industry poised to rival traditional sports and entertainment. From the oil-rich nations of the Middle East pouring sovereign wealth into teams, tournaments, and infrastructure, to India’s fast-growing youth demographic fueling rapid engagement, the esports hype cycle seemed unstoppable.

But as global investors begin to scrutinize the cracks beneath the glittering surface, a correction is underway. The once unstoppable esports investment thesis is beginning to unravel and India’s experience offers a crucial case study.

The Global Cracks Beneath the Surface

Globally, the fundamentals of the esports economy have always been shaky:

 

• Revenue-to-valuation multiples remain wildly inflated.
• Most esports organizations operate at a loss.
• Viewer growth has plateaued, with engagement no longer on the rise.
• Influencer and player salaries have ballooned beyond sustainable limits.

 

Sovereign-backed funding, particularly from the Middle East, sought to diversify away from oil. Yet the model faces deep structural issues, cultural mismatches with global entertainment norms, low monetization per user, and geopolitical concerns about events hosted in authoritarian regimes.

As sovereign wealth begins to recede, projected by some to start as early as 2026—only the leanest and most structurally sound assets are expected to survive.

India: A Booming Market, Now in Recovery Mode

India’s esports journey mirrors this global arc, albeit with unique twists.

Fueled initially by mobile gaming phenomena like PUBG Mobile and Free Fire, India saw a meteoric rise in esports viewership and player participation between 2019 and 2021. Bootcamps flourished, Tier 1 BGMI players commanded salaries of ₹1–2 lakh per month, and major brands started circling.

But that momentum was abruptly halted by government-imposed bans on both titles, effectively collapsing the core of the ecosystem overnight.

Valorant stepped in as a PC savior for a while, delivering strong CCV (concurrent viewership) numbers, especially when Indian teams like Global Esports participated in marquee events. However, Riot’s pivot to a franchise-based model led to the shutdown of third-party tournaments, once again stifling grassroots momentum. The same cycle repeated with BGMI, which despite its re-launch, remains in a state of flux.

The Illusion of Profitability

Despite the buzz, very few esports organizations in India are profitable and none of them owe it to esports directly. Instead, profitability stems from content creation, brand collaborations, and community engagement.

Organizations like S8UL and GodLike are often cited as success stories, but their revenue engines are powered by YouTube content, creator-led IPs, and influencer partnerships, not esports titles or prize pools.

Esports in India is often subsidized by content, not the other way around.

 

 

The Slow Rebuild and Real Brand Involvement

In recent months, signs of a slow rebuild are emerging. The return of BGMI has reignited interest, and some brands are cautiously investing again.

iQOO has sponsored multiple Tier 1 teams like Soul, Revenant, 8Bit, Reckoning, Team Tamilas, and Orangutan. Realme has come onboard with GodLike, and OnePlus has also entered the scene with key partnerships.

But the message for investors is clear: esports is not a quick-return investment. Anyone expecting immediate ROI will be disappointed. Patience, long-term vision, and a diversified content strategy are the only ways to survive and thrive in this space.

Government's Role: A Grassroots Push

Unlike the Middle East, where top-down investment dictated the growth path, India’s government is only now beginning to engage with esports mainly at the grassroots level.

Initiatives like Khelo India and WAVES Esports have brought legitimacy and structure, but there's a long road ahead in terms of infrastructure, regulation, and mainstream acceptance.

A Leaner, More Disciplined Future

As the global esports bubble deflates, what remains will be a more honest industry, driven less by inflated hopes and more by market forces.

For India, this correction is not a crisis but a reset. A leaner ecosystem, where content, brand value, player development, and community building go hand in hand with competitive success is emerging.

The next cycle of esports won’t be built on hype or sovereign spending. It will be more disciplined, more grounded, and most importantly, more real.