Here is my idea which I feel is quite radical, so keep the pitch forks at bay please, just trying to offer an alternative viewpoint.
First of all, I feel in order for any industry to be sustainable, it will have to function as a true free market system which works by letting supply / demand naturally balance itself out, and where players/casters/sponsors are driven naturally by incentives. Like all industries, there needs to be competition/rewards, this improves the overall quality of viewer/player and the industry itself. At the moment all the major events are regulated with very specific criteria that limits the competition / market, with rules in place such as complicated qualification rounds, geographical distances and obligations to their sponsors. The alternative I'm suggesting is the sponsorship dollars get spread across through natural supply / demand instead in the form of a large international site with a free market system.
IMO this could work with a massive website where people can sign up and play and win money in tournaments. This would provide a living for both the players and the casters, and provide an even better option for viewers which in turn attract sponsors - basically aiming to become a sustainable industry in itself. ATM playhem is closest to this model.
So on this site there are MANY various tournaments held DAILY with various prizes and as the entrance fees go up so do the prizes. The tournament entrance fees range from $0.01 for the lower levels to $50 entrance fees for the big leagues where you see $1,500 first prizes for say, 32 player tournaments. All the money goes to the players after minusing transaction costs.
Smurfing: Naturally lower league players won't want to waste time earning less when they can be earning more at their skill level at a higher league. So although they can play in the $0.01 cent games it doesn't make sense.. they end up winning $0.5 or something when they could be winning $5 with the skill level they have. So the tournaments will end up evening itself out naturally..
Casters: Everyone can stream, just like the playhem tournaments. People will naturally decide themselves who are the best and then watch them. Website is able to track viewers and over time these casters earn better priority and can stream the big events. Casters who are good are supported and get money from donations / adverts. This way it weeds out the bad casters and overall viewing quality is improved.
Players: The many daily tournaments provide a proper daily income for players and encourages skilled players who wanna go pro to try harder. You win what you earn. The best players will earn alot, and invest more in playing. The good but not great players still have a chance by practicing hard in their respective league levels and can get encouraged to play more after winning the smaller prizes. Best of all those players who aren't good enough won't have to risk going pro or moving to another country, they will just stop playing because they can't make enough to support themselves.
Sponsors: They pay for the entrance fees of their players. They get certain exposure on the website deliberately such as in the match preview / brackets it has their team logo / and sponsors are shown on the team pages in the website. This has to be set up very carefully so sponsors have the incentive to support their players and get more exposure. Perhaps all streamers will be require to download an overlay that is scripted from the brackets that display the sponsors of both teams, player profile details and stats etc. Money is not wasted on fat salaries for non-performing players and naturally the players who win the most end up getting sponsored, giving the sponsors a return they can "measure".
Site: Doesn't take rake or make a commission. Pretty sure has to be this way or Blizzard will shut it down or want to be involved. They earn revenue from advertisements from gaming companies like Roccat, Razer, Steelseries etc and google ads. They will do okay because if it takes off ALOT of people will be visiting the site. And perhaps they have the money to pay the admins who run the site / tournaments so its self-sustaining.
Admins: Everything is automated as much as possible on the site. One admin per tournament for disputes. Players awarded karma points after disputes to discourage BM / cheating and to make the lives of admins easier.
Live Events: Not sure how this will be done. I honestly think live events are a huge waste of money for everyone involved, from the sponsors who pay the air tickets to the tournament organizers who have to hire a venue. Alot of sponsorship money is being lost there on expensive air tickets / venues which could be better used elsewhere. TSL3 for example was carried out online (except the finals) and it was fantastic and there isn't LAN anymore so game quality doesn't improve live, in fact it inconveniences players who must adjust to jetlag and a new playing envrionment. Sponsors are given adequate coverage online already, for every event there are so many more viewers online watching then those in attendance at the live event.
IMO if a site like this exists the eSports industry will be able to grow faster and further, it will be self-sustaining and able to support the livelihood for many players and casters. For recreational players there will be games to watch everyday, or tournaments that cost almost nothing $0.01-$0.25 to play in. Our player database is there already in terms of size, we need to get all of them playing on one site and yea playhem is closest to this I don't think they have any plans to start charging though I could be wrong.
Anyway those are my thoughts for a sustainable model, and it has to use a free market system.
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