Oh where to start here…
For one, you’re mis-identifying the true product here.
The True Product is the Tournament.
When it comes to a Tournament, your primary revenue generators are the following:
Admission tickets
Advertising revenue
Sponsorships
Your expenses to present the Tournament as a product for people to consume are the following:
Location - According to Google, it is $30,000 to rent out the Anaheim Convention Center for Friday-Sunday.
I couldn’t find anything else about if that covers setup costs, security, or anything else. But let’s assume that it covers at least making sure the building works and is secure.
Set up - How many computers do you need? How many will be competing at once? Let’s go with 30 computers, and 10 spares incase of something going boom. These need to be top of the line systems that will not have any problem running these games competitively. They also all need to be built the same, stress tested, and set up the same. That’s a minimum of $40,000 for the tournament computers.
You have to record it. That means you need systems set up to record the people running these dungeons. You could run it off the competing computers, but that may not be a good idea, as it could affect performance. So you need computers set up to run simultaneously to capture that data, likely using some form of custom WoW client that can ghost the players and see what they see. You need enough of those to record a point of view of every active competition. So… probably 5 more high-end computers. Another $5,000 dollars.
All told for just the computer setup you’re looking at a cost, between personnel and time, of $50 - 60,000 dollars.
That stream needs to be broadcast, so you have to set up the stream system, relaying that data, you need a control center and specialists who are trained in that field.
I’ll be honest, I have no idea what goes in to that or how much it costs, but I’ll guarantee it isn’t cheap.
You also need to have hired stage-hands, stage security, people who also take down stats and coordinate the teams. PR people who know how to put on a show, communications equipment, someone in charge to coordinate all of that.
This is not simply 10 people showing up in Mom’s basement, recording some dungeons, and putting it on Youtube.
It’s a full-scale production, and I’ll wager the cost is near the $200,000+ area to do it.
All of that eats into the projected revenue stream from the ticket sales, advertisement revenue and sponsorships.
The higher quality your production, the more your overhead, the less money from revenue you have for the Prize pool. The less of a Prize pool you can offer, the lower quality of the talent, the smaller your audience draw is, the less the advertisers and sponsors pay you.
The toys are something they can through together pretty quickly with pre-existing assets, that have a low overhead cost with what will be a decent demand from players, and will help to both cover their overhead costs and directly benefit the players in the tournament by directly increasing the prize pool. Meaning more fan and audience engagement, more advertisement and sponsor revenue, higher draw and more motivation to succeed even bigger next year.