According to research firm Statista, the global esports industry could be worth more than $1 billion by 2021. It’s well on its way: PwC’s “Global Entertainment & Media Outlook 2020–2024” report notes that esports “will achieve growth at a level unseen in almost any other media and entertainment category.”
A session at CRE.Converge Virtual 2020 explored this rapidly expanding segment of the entertainment industry and potential investment opportunities for commercial real estate developers.
What is Esports?
Esports is broadly defined as competitive multiplayer video games played by professionals in front of spectators. Much like other professional sports, there are regular-season and tournament games that are broadcast on multiple channels with professional commentators. According to Jud Hannigan, the CEO of Allied Sports, an esports entertainment company, it has a huge and devoted following.
“There are up to 3 billion gamers in the world, and there are about 400 million tuning in to watch esports every month,” he said. “The engagement levels with it are just through the roof. Our Friday night customers come back every Friday night. That’s part of the stickiness.”
Demographically, Hannigan said esports appeals to a population that’s about 80% male, between the ages of 13 to 35, with fairly robust spending power.
According to a 2018 article in Development magazine, esports arenas can be repurposed from a broad range of existing commercial buildings. Notable examples include the 30,000-square-foot HyperX Esports Arena Las Vegas, which had been a nightclub at the Luxor Hotel & Casino, and the Esports Stadium Arlington in Arlington, Texas, a 100,000-square-foot venue that was formerly an underused part of the Arlington Convention Center.
According to Jonathon Oudthone, president of Esports Stadium Arlington, the Texas facility is designed to be flexible.
“We approached Arlington with the concept of building an esports facility that was also multipurpose,” he said.
Oudthone said the space required about $10 million in renovations and was completed in eight months. It opened in November 2018. Upgrades included increased electrical capacity, a broadcast studio and expansive internet bandwidth. Today, it hosts concerts, awards shows and other events in addition to high-level esports competitions that can run for multiple days.
“We were different than other venues in the area,” Oudthone said. “We weren’t just a space, we were technology as well. We set the technological ceiling high. Esports raises the bar for a venue.”
According to Brian Mirakian, brand activation director and senior principal at Populous, the company that designed Esports Stadium Arlington, that technological prowess came in handy at the height of the COVID-19 pandemic.
“It really became an opportune place when the lockdown occurred,” he said. “It became a soundstage, so virtual content could live there. A facility that allows you that room to grow is really essential. We’ve learned these lessons over time.”
Esports venues could play a crucial role in the changing retail landscape. For example, Hannigan said Allied Sports has brought on developers Simon and Brookfield as strategic investors to help the company build out permanent spaces in malls, which have struggled in the face of competition from e-commerce. Allied also mobilized a fleet of esports vehicles, the HyperX Esports Trucks, to visit mall properties for in-person events.
“One of the things we liked about Vegas is being near a lot of heavy foot traffic,” he said. “Because of that, we identified malls as a place to be. It’s part of the evolution from retail to retail-plus-experiential. We’re really excited about that offering.”
Mirakian said esports should generate “tremendous activity” in 2021.
“What we’re seeing is different facility types are coming online,” he said “We’ll see more purpose-built facilities.”
They won’t all be large buildings, either — and they won’t just be in large markets.
“Something to watch is things that are more community-based,” Mirakian said. “They don’t all have to be large-scale venues for professional teams. They can be for the masses. They can go into places that are 5,000 to 15,000 square feet. They can be used for educational or coworking space when there’s no gaming going on.”
According to these experts, now might be the perfect time to get in the game.
Trey Barrineau is the Managing Editor, Publications for NAIOP. In this role, he supervises day-to-day operations of Development magazine.