Technology Why Immortals Gaming Club is turning the esports merch game on its head with its zero-profit strategy

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September 14, 2021 by Alexander Lee

On September 9, Immortals Gaming Club announced the release of its latest merchandise line, Immortals Essentials. The line’s price is set to generate zero profits, a departure from other esports teams that use high-priced and premium merchandise. Immortals hopes that this price reduction will be combined with other initiatives to attract younger, less-hardcore gamers to its fan base.

Going the zero-profit route has allowed Immortals to bring the prices of its Essentials line as low as $17. 15 for hats and T-shirts, a reduction that the company believes will help younger esports fans more easily afford to rep the team. Jordan Sherman, Immortals’ chief commercial officer and president, stated that many of the people who follow Immortals have just started high school or college. Two things are clear: first, they will have a long life with us, hopefully. Second, maybe they don’t have the funds to buy a unit .”

of clothes HTML1. Merchandise is a key revenue stream for many esports organisations, and one of the best ways for teams to stand out from the rest. In 2021, total merchandise and ticket revenue in the esports industry is projected to exceed $66 million, a 13.8% increase year-over-year, according to Newzoo’s 2021 Gobal Esports & Live Streaming Market Report. Alex Romer (CEO of Immortals’ merchandising partner We Are Nations) said, “It’s what holds the traditional revenue streams together.”

The esports organization 100 Thieves, for example, essentially doubles as a streetwear company; its exclusive and time-limited merchandise “drops” often sell out within hours. This rarity commands premium prices: 100 Thieves hoodies currently go for $135 on the organization’s official store, with high-end collabs such as the recently announced 100 Thieves x Gucci backpack carrying an even higher $2,500 price tag. “There is a lot of exclusivity in the esports industry around merch — you can get exclusive drops. This kind of scarcity drives up the prices,” Caroline Beall, Immortals director of partnership operations, said. That’s a great strategy. People love that approach. I just think that on the opposite end of that spectrum, it’s obviously not accessible.”

This loss-leader strategy — that is, the sale of popular items at non-profitable prices to attract new customers — is a tried-and-true business move in other industries, such as fashion, technology and even the traditional gaming industry, where consoles are often considered loss-leaders. It is extremely rare in esports where many companies are still trying for a path towards probability. Sherman stated that Immortals’ merchandising company was and continues to be profitable. However, he also said that the company isn’t taking a loss on its zero profit experiment. “It’s just flat.”

A $17 T-shirt or hat might not seem like the determining factor behind an esports fan’s choice of team, but Romer’s time in the merchandising trenches of both esports and traditional sports has taught him that the average fan is relatively fickle, at least at the outset. Romer stated, “People laugh when I tell them that people pick teams based upon the first piece they buy.” He added that while a $17 T-shirt or hat might not seem like a deciding factor in choosing esports team, the fact that each of the Immortals business units is cash-flow positive means that Romer is able to make this gamble. Sherman stated that “We are making money in all of our teams so we have the opportunity right now to invest and grow.” Sherman said, “We’re making money in every single one of our teams, so we have this chance right now to actually invest and expand.” Though the zero-profit-pricing strategy will almost certainly decrease Immortals’ revenues in the short term — profit margins for its merchandise previously hovered between 25% and 40%, according to Sherman, who declined to provide specific dollar amounts — its front office is confident that the strategy will draw in younger and more casual fans to expand its fan base and help the team generate higher profits driven by more active revenue streams such as sponsorships and media rights in the long run. Beall stated that the brand strategy reflects our willingness to invest in players and find people worth growing and investing in.

Romer is a veteran in the esports and merchandising business. He has worked with many of the best-known esports organisations, as well as Immortals such Astralis, G2 or Complexity Gaming. Romer has never seen anything like the Immortals zero-profit strategy. Romer stated that it was unusual for an organization not to state, “You know what, we don’t want to take any profits; we want it the most cost-competitive that makes economic sense, without causing problems for the Immortals or the We Are Nations brands.”

We spent a lot time looking at all that. Overall, it’s very different. And if it hits its objective to pull fans in through merchandise, then it’s brilliant — it’s a masterstroke.”

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