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How the growth of esports is driving stadium development

As esports gains traction, stadiums and gaming lounges are cropping up across America.

April 03, 2019

The Blizzard Arena in Burbank

In the digital age, spectators still want to watch the big game in person. It’s just that nowadays, sometimes the game itself only exists in a digital world.

Esports – where professional video game players compete in front of millions of fans – is a booming industry, leading to the creation of stadiums for thousands of people to gather and cheer on their favorite players and leagues.

“Esports is growing like crazy,” says Don Loudermilk, who leads a sports stadium practice for JLL. “Smart developers are seeing that many spaces – from old television studios to retail spaces – can find new life.”

The esports industry is projected to hit a value of US$1.5 billion by 2020. As it grows, fans need somewhere to go.

“In some cases, there are large existing spaces that are under-utilized, including former retail spaces or warehouses that can be used to meet the growing demand for esports,” Loudermilk says.

Stadium development’s nascent stage

Five years ago, esports stadiums didn’t exist in the U.S., says Jennifer Dimaano, who researches retail at JLL. 

“It’s a global phenomenon, but it started in South Korea,” she says. “Until recently, most of the growth had come from Asia.”

Today, spectators fill seats across the U.S. to watch video gamers play. Large TV screens broadcast the action. There are commentators, food, drinks, and a loud, cheery vibe. 

In Los Angeles County, video game company Activision Blizzard transformed what was once “The Tonight Show” soundstage at Burbank Studios – where both Johnny Carson and Jay Leno once hosted the show – into a 450-seat, 60,000-square-foot esports arena. There, fans sit in stadium seats and watch six players from two leagues – including Activision’s home league, Overwatch -- face off against each other onstage. Each player’s character in the video game is shown to the audience on a screen behind them, while a giant, central screen broadcasts the video game in real time to cheering fans who wave batons in their team’s colors.

The venue gives Blizzard a permanent location to host tournaments and other events. It’s a cost-saving investment because they no longer have to rent out venues like football stadiums.

Other esports stadiums include the eSports Arena in Santa Ana, California and the Esports Stadium Arlington, in Texas, which is considered the largest dedicated esports facility in the country at 100,000-square-feet and 2,500 seats.

These arenas were primarily developed by leagues , in much of the same way that pro football and hockey leagues build their own stadiums.

Gen-Z hangout spaces

That growth is not only visible in the development of 100,000-square-foot arenas, but in the more intimate esports lounges – which are about 25,000-square-foot in size – where people sit at banks of computers and consoles to play video games like League of Legends and Overwatch.

These lounges intersect with the booming trend in leisure retail known as “competitive socializing,” where people increasingly gather to be engaged in activities like escape rooms -- dedicated rooms where players must solve a series of puzzles and riddles using clues, hints, and strategy -- miniature golf and board games, as opposed to simply meeting for a drink or dinner. 

Esports lounges are especially attractive to younger crowds, like Generation Z and millennials, says Philip Kaplan, CEO of San Francisco-based GameWorks, which builds gaming centers around the country.

“For a generation that grew up with electronics and video games, this is a great way to socialize,” Kaplan says.

GameWorks currently operates lounges in seven locations, including Denver, Las Vegas and Seattle. They are designed for casual or competitive play, with hundreds of games available and dozens of PCs and gaming consoles. 

“Our strategy is a combination of expanding in existing markets and looking at new ones,” Kaplan says.

 The GameWorks destinations are, on average, 25,000 square feet, and can include a room for events and a 120-seat restaurant and bar area. If space allows, other activities such as laser tag are also incorporated. 

Kaplan says he tends to seek out real estate that would draw the gen-z and millennial demographic. For this reason, in Seattle and San Francisco, the lounges are located in prime downtown locations.

“Real estate developers want to bring in this attractive demographic,” says Kaplan. “We are an experiential business. Food and beverage is part of our offering. Similar to what movie theaters and bowling alleys bring to a space, esports lounges will help strengthen and anchor in a retail environment.”

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