SBJ/April 17-23, 2017/Facilities

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  • Esports venue firm targets ‘sweet spot’ of casual gamers

    Childhood friends Paul Ward (left) and Tyler Endres founded Esports Arena with the idea of building a revenue base off casual, social gamers.
    Photo by: ESPORTS ARENA
    Esports may offer venue owners the tantalizing vision of thousands of gaming fans filling major arenas, but it’s not yet clear whether pro sports-sized crowds will materialize for anything other than the biggest tournaments.

    Orange County-based Esports Arena, though, is building a venue business that doesn’t depend on the industry’s most bullish projections. Founded by childhood friends Paul Ward and Tyler Endres, Esports Arena’s plan is to build a revenue base from the existing universe of casual, social gamers while also striking deals to host elite tournaments.

    “Most people will experience esports in either their bedrooms or a mega event at the Staples Center or KeyArena,” said Ward, the CEO. “We think the actual sweet spot is in between those two things, and that’s what our arenas reflect.”

    Their first location, in Santa Ana, Calif., is about 15,000 square feet of rented space, and holds just under 1,000 people. It opened in late 2015 after Ward and Endres cobbled together some investors and an Small Business Administration loan, found a developer-
    ESPORTS ARENA

    LAUNCHED: 2015
    HEADQUARTERS: Santa Ana, Calif.
    NUMBER OF EMPLOYEES: 28
    WHAT THEY DO: Develop and operate venues that host esports tournaments, video game community gatherings and casual gaming.

    KEY EXECUTIVES:
    Paul Ward, CEO
    Tyler Endres, chief operating officer

    KEY EVENTS:
    2GGaming’s 2GGC: Civil War tournament for Nintendo-published “Super Smash Bros.” on March 24-26
    Blizzard Entertainment’s “Hearthstone” Collegiate National Championship on April 22
    Viewing parties for FACEIT’s Esports Championship Series Season 3 of “Counter-Strike: Global Offensive” (April 14 through June)

    LOCATIONS:
    Esports Arena, Santa Ana, Calif.
    Jack London Square, Oakland (to open later this year)
    Luxor Las Vegas (scheduled to open early 2018)
    landlord willing to take a risk and navigated a complicated regulatory maze.

    Now armed with an investment from Chinese gaming joint venture Allied Esports, they’ve announced two more facilities coming in Oakland and inside the Luxor Las Vegas, with 10 to 15 planned across North America.

    The Santa Ana facility has hosted live tournaments in titles such as Nintendo’s “Super Smash Bros.” and Blizzard Entertainment’s “Heroes of the Storm,” but that’s just one of several ways it makes money and fills seats. Seven days a week, the arena is open to casual gamers who pay $10 a month for membership (or $20 for a single month) who then have access to the high-end equipment and connections built into the facility. Ward and Endres want to re-create the social experience of gaming, first seen in the earliest generations of arcades in the 1980s.

    Also, Esports Arena promotes itself as a gathering place for the esports fan world, whether or not there’s live action. On April 7, it struck a deal with the Esports Championship Series to host viewing parties for this spring’s “Counter-Strike: Global Offensive” tournament. No matches will happen at the venue, but the ECS’s YouTube casts will stream on its video boards and there’s talk of meet-and-greet events with the pros. The facility is customizable for publishers or tournament organizers’ specific needs and includes video production equipment.

    Knowing the crucial difference between gaming and esports is at the heart of the concept. According to the Dutch research shop Newzoo, there will be 2.3 billion gamers worldwide by December, but 191 million esports enthusiasts and 194 million occasional viewers. Those latter groups are commercially desirable for many reasons but aren’t as large as the hype might lead you to believe. Endres and Ward’s goal is to benefit from the upside growth of esports through events and renting to tournament organizers, while also monetizing gamers who might not ever be converted into hard-core fans of the elite action.

    Esports Arena hosted last month’s 2GGC: Civil War tournament.
    Photo by: P&T IMAGES
    Topgolf comes to mind, Endres agreed, as an example to emulate. By thinking creatively about how to offer a golf experience, the Dallas-based chain of driving ranges has grown rapidly despite the sport’s challenges in participation rates and TV viewership.

    “They’ve done a very successful job with their business model,” said Endres, who is COO. “They really, really have. I’ve brought people who have never even swung a golf club and had a great time being
    Esports Arena has announced two new venues opening soon.
    Photo by: ESPORTS ARENA
    there. That’s our goal in the gaming world.”

    Shortly after Esports Arena opened, a feature on the local news led to the investment that’s now fueling its expansion. World Poker Tour CEO Adam Pliska happened to see the segment and thought Ourgame International Holdings, the Chinese firm that recently acquired the WPT, might be interested. Ourgame is part of Allied Esports, which had just opened a remarkably similar arena in Beijing.

    By August 2016, Allied invested in Esports Arena and announced plans for the Oakland location to get started on the national expansion. Allied is now billing the planned Vegas location as the center of its worldwide network of esports.

    The network is key to its hopes, said Allied Esports International CEO Jud Hannigan. Competitors have opened other small-scale arenas, including Millennial Esports’ arena at the Neonopolis shopping mall in downtown Las Vegas. But if Allied can establish a system of branded arenas, Hannigan said, it can sell exclusive hosting deals with leagues that need a wide footprint, or sell national sponsorships.

    “We wish [competitors] well, no hard feelings,” Hannigan said. “I think success is shared in this industry, especially as it’s such a young industry. But one of the strengths we have is the network. We’ve got a [mobile production/competition venue] truck in Europe, with an event studio based in Hamburg. We’ve got these other arenas and more coming on top of that. So that’s all tied into one experience we can deliver.”

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