Online moving offline to grow

Online moving offline to grow

NEW YORK • It still surprises many people that professional video-game tournaments fill 50,000-seat arenas and that millions of fans watch from their bedrooms, aspiring to compete themselves one day.

What has not passed some entrepreneurs by, however, is that this is quietly fuelling a big market opportunity around the world. Amateur teams are springing up specialising in e-sports games such as League of Legends, CounterStrike and Dota 2, and they want places to meet and compete.

Vacancies in American city centres created by the shift to online shopping and magnified by the Covid-19 pandemic are perfectly placed to fill the gap, said several executives.

Simplicity Esports has about 40 gaming centres in 15 US states, which let amateurs meet and play together on high-end computers without worrying about cheats or slow network connections.

Its president, Roman Franklin, said that since January, he has seen a 40 to 70 per cent improvement in lease terms for potential new venues. At some locations, the company has secured flexible rents representing 10 per cent of the sites’ gross sales, with no minimum rent and additional costs.

Nasdaq-listed Allied Esports Entertainment Inc. is planning to build additional venues modelled on its flagship e-sports hub.

Built inside The Luxor in Las Vegas, the 9,146 sq m HyperX Esports Arena opened in 2018 and is kitted out with gaming PCs and consoles loaded with a variety of e-sports titles. It also hosts weekly tournaments and events.

After starting with arenas in China and mobile gaming centres mounted on 18-wheeler trucks, Allied Esports brought in real estate giants Brookfield and Simon Property Group Inc. as shareholders to further expand its bricks-and-mortar business.

After pausing work due to the pandemic, Allied Esports chief executive officer Jud Hannigan is waiting for the right moment to resume development of three sites.

“The industry is obviously going through a difficult patch here,” he said, but added that “we believe in malls successfully moving to be experience destinations, not just retail destinations”.

Amateur Fortnite or League of Legends fanatics inspired by high-profile gamers – such as 16-year-old Kyle “Bugha” Giersdorf, who won US$3 million (S$4.1 million) in last year’s Fortnite World Cup final – want to practise and compete in environments where no one can gain a technical advantage and it is harder to cheat.

“Playing from home is like playing basketball in your driveway – the hoop may not be 10 feet high and the driveway might be a bit sloped at the front,” said Zack Johnson, CEO of e-sports services company GGCircuit, which develops and sells cloud-based software used by about 1,000 e-sports centres around the world.

Industry executives say lockdowns delayed bricks-and-mortar expansion plans, but Johnson said more than half of the 20,000 screens that run on its equipment are now back online.

Venues were appearing across Europe before the pandemic too, led by a crop of young companies such as France’s Team Vitality and Meltdown, Sweden’s Space, and London-based Game Digital’s Belong network.

Kinguin runs a 6,560 sq ft bootcamp-hotel for professional teams in Warsaw. It is now going after the amateur market and opened an Esports Lounge in the port city of Gdansk in June.

Even traditional sports stars are no stranger to the potential: Guild Esports, part-owned by English football great David Beckham, last week announced plans for an initial public offering that will help fund a training academy and scouting network.

BLOOMBERG