The esports industry is one that is growing rapidly and as the number of professional gamers and audiences sizes both increase, more and more businesses are sitting up and taking notice.
This has particularly been the case throughout Covid19 as many professional sports competitions have faced cancellation or postponement, many leagues and organisations have taken to competing online, as an alternative way to keep fans entertained and engaged.
Despite esports competitions being held in many different countries and the vast majority of prize money is paid out in US Dollars despite teams being made up of players from all over the world. This means as more investment comes in, foreign exchange rates and international transactions are becoming a far more important aspect of the industry as a whole.
For many professional gamers, what started off as their hobby, has now escalated into a way they can make their income, bringing with it the complexities of payments, particularly in an industry reliant on international payments. Many professional teams and players leave any international transactions they may have to their bank, whether that be paying competition entry fees or exchanging prize money into different currencies.
As an example, a player wins a League of Legends tournament with a prize pot of $400,000. The winner however is based in the UK and does not have a US Dollar bank account. Currency//UK is able to give the winner a competitive exchange rate due to smaller overheads and won’t charge a fee for receiving funds in different currencies.
The situation becomes more complex when we look at prize money won by esports teams rather than individual gamers. One of the best things about online gaming is that players from nations all over the world mix together to form teams and create a global community. However, when a team wins an esports tournament, splitting the prize money between players living in different countries can be costly. In this scenario having an FX specialist by your side is even more important. For a team with four players, each based in a different country and needing to be paid in a different currency, the complexity and cost increases. If you are not using a currency specialist, it may be that you are overpaying on every foreign exchange you make. The more members in a winning gaming team the greater exposure to losing more of your winnings on paying bank charges and in exchange rates.
Having worked with major players in the esports industry for a number of years, we understand better than most that the global nature of the esports industry combined with the majority of tournaments paying out their prize money in US Dollars creates problems for gamers and teams. Having an FX expert that can hold your hand through the processes involved in foreign exchange and protect you from loss is invaluable.
A foreign exchange specialist can also assist you in devising a risk management strategy. Professional esports teams who have a number of players on their roster competing in tournaments all year round should really consider creating a hedging strategy to mitigate the risk of fluctuations in exchange rate. The last thing you want as a business is to be in a situation where circumstances out of your control leave you caught out financially resulting in players in your team to be underpaid or tournament entry fees to no longer be enough. The only way to be sure that your business is protected is to set up a forward contract to ensure that the exchange rate you want is the exchange rate you are getting, removing the worry of the FX market suddenly moving against you.
If you would like to find out more about how we can support your business with its foreign exchange requirements call us today on +44 (0 )20 7738 0777 or click here to open a business account with us.
Posted in Business Resources on Jun 5 2020