When we talk about business strategy, the term "moat" refers to a sustainable competitive advantage, a protective barrier that keeps competitors at bay, much like a castle shielded by a deep, wide moat. Warren Buffett popularized this concept as the key to long-term success. Yet, in the rapidly evolving world of esports, many organizations resemble castles built overnight on shaky foundations. Despite explosive growth, massive viewership, and moments that capture our imagination, esports organizations often lack the durable advantages that traditional sports teams enjoy.
In this post, I’ll explore why esports organizations, despite all the hype or lack thereof, struggle to build lasting moats. I’ll examine the inherent challenges of the industry, from low barriers to entry and volatile player rosters to fragmented revenue streams and reliance on third-party IP. To illustrate these points, I’ll spotlight Los Ratones, a team founded by popular League of Legends streamer and former pro Marc "Caedrel" Lamont, which exemplifies both the opportunities and vulnerabilities of esports today.
The Moat Concept: What It Means in Business
In traditional business, a moat is the set of assets, capabilities, or market conditions that gives a company an enduring edge. Think of traditional sports teams like the New York Yankees or FC Barcelona. They benefit from decades of local ties, massive stadium investments, and deep fan loyalty, factors that create significant barriers to entry for new competitors.
Esports organizations, however, are built on models that can be recreated in weeks or even days rather than years. While passionate fans, flashy sponsorships, and high-profile streams might suggest a secure position, these organizations often operate as digital startups. They thrive on the low-cost (relatively hah!), digital-native nature of esports, but this same accessibility makes their competitive advantage remarkably transient.
Low Barriers to Entry and Rapid Replication
One of the biggest reasons esports organizations struggle to build a lasting moat is the minimal barrier to entry. In traditional sports, building a team requires securing a stadium, investing in training facilities, and developing local talent through youth academies. In esports, all you need is a decent internet connection, a few social media accounts, and a roster of players. New teams can emerge almost overnight with little more than a clever idea and some buzz.
This low barrier allows creator-led organizations, like Los Ratones, to rise quickly and achieve success, as seen with their recent victories. However, it also means that any competitive edge is vulnerable to replication, as new entrants can mimic successful models with minimal investment, eroding the uniqueness of established teams.
Volatile Rosters and Transient Talent
Esports success often hinges on individual talent. Star players can elevate a team, but their sudden departure, whether to another team or retirement, can leave an organization scrambling. Traditional sports teams mitigate this with established scouting systems and a strong club identity that sustains performance over time. Esports teams, however, are more exposed to roster volatility.
Some organizations, like Los Ratones, mitigate this by tying their identity to a central figure rather than solely relying on players - which is a major threat to the organization in itself. Still, the broader industry’s dependence on transient talent underscores the difficulty of building a lasting moat, as roster changes can disrupt even the most promising teams.
Fragmented Revenue Streams and Uncertain Financial Models
Stable revenue is the cornerstone of a durable moat. Traditional sports teams enjoy long-term broadcasting deals, ticket sales, merchandising, and sponsorships, predictable income streams that provide financial security. Esports organizations, however, rely almost exclusively on sponsor deals and occasional handouts from publishers like Riot Games (e.g., in the LEC) or Valorant’s VCT. Streaming revenue isn’t a direct income source for teams, players and creators like Caedrel drive that individually, and merchandising, while notable for teams like 100 Thieves or G2 Esports, rarely generates enough to be sustainable. Esport fans refuse to pay to watch Esports and publisher Revenue shares are not enough to make up for the lack of broadcasting deals.
This financial instability leaves esports organizations vulnerable. Sponsorships can dry up quickly, and publisher support can shift with little notice. Even when teams build a loyal fanbase, that loyalty often attaches to personalities like their best player or Caedrel rather than the organization itself, making revenue streams fragmented and unpredictable, far from the steady foundation needed for a lasting moat.
Lack of Proprietary Assets and Dependence on Game Publishers
A durable moat often rests on proprietary assets, unique technology, intellectual property, or an enduring brand. Esports organizations rarely own such assets. They depend on game publishers like Riot Games, Blizzard, or Valve, who control the IP and competitive ecosystem. A sudden shift in the gaming landscape, not just in-game mechanics, but broader decisions like gamers preferences, publisher priorities or league structures, can derail an organization overnight. This reliance leaves even the strongest teams at the mercy of external forces, undermining their ability to secure a lasting advantage.
The Open-Source Nature of Esports Innovation
Esports thrives on rapid innovation, with new ideas spreading quickly in a digital landscape. This openness fuels creativity but erodes competitive edges. Teams like Los Ratones leverage innovative approaches, such as public scrim streams, to stand out. While this isn’t “easily” copied due to the unique status of their founder, the rise of creator-led orgs, like Karmine Corp tied to Kameto, shows how the concept can be adapted. If a figure like Mr. Beast, with a vastly larger following, enters the space (e.g., by buying an LCS team as he’s hinted), fans could shift allegiance, diluting what makes these teams distinctive.
Los Ratones: A Case Study in Overnight Success
Founded by Marc "Caedrel" Lamont, a League of Legends icon with a history as a pro player, caster, and streamer, Los Ratones launched in November 2024 as both a competitive and entertainment-focused team. Leveraging his status as one of the biggest League of Legends streamers and his decade-long industry experience, Caedrel assembled a roster featuring notable names like Tim "Nemesis" Lipovšek, Simon "Thebausffs" Hofverberg, Veljko "Velja" Čamdžić, Juš "Crownie" Marušič, and one of the most popular players in the West, Martin "Rekkles" Larsson. On their first attempt, they dominated the NLC Winter 2025 and, just days ago, clinched the EMEA Masters Winter 2025 title.
What sets Los Ratones apart is its reliance on Caedrel’s personal brand and dedicated fanbase rather than heavy financial investment. With minimal outlay, Caedrel used his streaming success and industry connections to build a team that resonates with fans. Public scrim streams draw tens of thousands of viewers, offering transparency and extra content. The team’s rapid rise, driven by these factors, culminated in their first-try victories in the NLC and EMEA Masters, showcasing how quickly success can be achieved. Yet, as creator-led orgs multiply, this model’s uniqueness could wane, challenging its long-term edge.
My Personal Take and the Road Ahead
Having worked in esports for far too long and witnessed the inner workings of many tier 1 organizations, I’ve seen firsthand the passion and excitement that define this space. Yet, the business side remains a house of cards. Unlike traditional sports teams, with their deep-rooted moats of stadiums, generational loyalty, and stable revenue, esports orgs are stuck in a cycle of fleeting success. Los Ratones, fueled by Caedrel’s vision and fanbase, proves how fast a team can rise, but it also exposes how easily that formula can be copied as creator-led orgs multiply.
For years, esports has tried to mirror traditional sports, chasing the same playbook of sponsorships, jerseys, and star players. It’s a trap. These orgs aren’t the same, and pretending otherwise has left them undifferentiated, a sea of logos blending into one another. Fans don’t latch onto teams the way they do a hometown club; they follow personalities, moments, or sheer entertainment value. If every org looks and feels identical, why should fans care which one they root for? The industry’s obsession with replication has stifled its potential, turning a vibrant, digital frontier into a monotonous echo of the past.
To survive, esports must think beyond this borrowed framework. It’s not about building a moat like the Yankees or FC Barcelona; it’s about carving a unique identity that stands out in a crowded field. Diversified revenue, sure, but also bold moves: exclusive experiences, niche branding that screams personality, or interactive platforms that turn passive viewers into active stakeholders. Take Los Ratones—its public scrim streams aren’t just innovative, they’re a statement of intent, a way to connect that traditional sports can’t touch. More orgs need that kind of edge, something competitors can’t just swipe with a bigger budget or a louder Twitch channel.
The clock’s ticking. Without differentiation, esports risks becoming (or already is!) a revolving door of interchangeable teams, where today’s sensation is tomorrow’s footnote. Leaning into that, blending digital-native ingenuity with lessons from outside the sports playbook, is the only way orgs can build something lasting. Otherwise, they’ll stay thrilling but fragile, a spectacle with no staying power.