Esports: A Fun Experiment or Fundamental Shift in Entertainment?

Stepping into the newly opened ESPORTS Arena Las Vegas at Luxor Hotel and Casino is a multi-dimensional experience unlike any other in the city. The 30,000-square-foot, multilevel arena is a party for the senses with a 50-foot LED video wall, console gaming stations, and virtual reality platforms. Every detail has been considered, from the custom-built gaming controller chandelier lighting, and the History of Gaming exhibit to a carefully considered menu from chef José Andrés. The weekend of April 21st at the Luxor ESPORTS Arena held one of its biggest events since opening a few weeks ago. According to Forbes magazine, this event broke all kinds of records; “680,000 concurrent viewers near its conclusion, breaking Ninja’s old Twitch record of 628,000 viewers when he played with Drake.” Click on the link below to read the Forbes article.

For the last several years, Las Vegas’ gambling floors have decreased in size and gambling revenue has declined even as the number of annual visitors continues to climb. In place of classic slot machines and poker tables, people are increasingly interested in esports (electronic sports) or online video game competitions, as well as the opportunity to participate in video game play themselves.

According to research conducted for YWS by GFK Consumer Life, 65 percent of Americans 15 years and older play electronic games up 70 percent from 2007. The changes taking place in gaming are, in part, a reflection of that ever-important emerging generation currently spanning 22-37 years old: This demographic has grown up with gamification and sharing snippets of their lives with online communities. Unsurprisingly, they’re quick to adapt to new technology, easily navigating through apps and mobile spaces. They are savvy spenders who crave experiences, carefully considering how they spend their money, but eager to engage in activities at the cutting-edge of innovation.

However, the growing phenomenon of esports is not tied to any single demographic. Though 81 percent of those ages 15-24 and 78 percent of those ages 25-34 engage in electronic gaming, those 50 and older have seen the largest jump in electronic gaming: In 2007, 24 percent played electronic games at least monthly, and in 2016, this jumped to 47 percent. Further, in addition to playing electronic games, the numbers of people interested in watching esports — either via live viewing or participatory streaming — have also seen a massive increase. In 2012, Twitch, a live-streaming video platform of video games, had just over five hundred thousand unique monthly streamers watching about 1.2 hours per month; today, it has more than two million unique streamers every month who are watching nearly 5 hours of gaming content per month. While 41.7 million of these enthusiasts live in the United States, this is a global phenomenon: worldwide, the esports audience is 292 million people.

To say there is an opportunity to turn this interest in video games into revenue-generating entertainment spaces is an understatement. According to our research, while the global audience of esports has grown an impressive 43% from 2014 to 2016, the total revenue has increased nearly 240%, from $194 million in 2014 to $463 million in 2016. Considering the fact 61 percent of that revenue was generated by those in their late 20s and early 30s — and as this demographic will soon be able to indulge even more with their discretionary spending — statistics indicate esports will continue to grow as a lucrative market into the near future.

Two business models are appearing to emerge. Esport arenas like the one at Luxor are similar to concert halls, showrooms, or other meeting/gathering venues in that they are primarily event based. Fueled by television/broadcast rights and product sponsorships, these events could be the cornerstone for a non-gaming entertainment venue. Any occasion where people purchase time, space, and access to view esports is an opportunity to produce revenue.

However, we believe there are non-event-driven opportunities as well. The traditional gaming floor of a casino, relying on a steady stream of customers drawn to entertainment on their own time, is not event-driven. Instead of being spectators, customers participate in game play. The traditional revenue model in this non-event-driven environment is simply finding a way to get people to play for as long as possible. Incentives such as free play, comps, and coupons are used to encourage continued play, and associated amenities and activities such as discounts and access to shows, pools, and nightclubs reward those who continue to spend money on the gaming floor. Right now, the traditional casino floor is sprawling and often overwhelming, creating an impersonal environment that attempts to cater to all people at all times—and fails to specifically speak to any one person on an individual level. Future casino floors must address this issue and be more modular, allowing for flexibility in creating different zones.

Esports is a relatively new industry and creating successful esports entertainment spaces is uncharted territory. What characteristics will entice visitors? The up-and-coming big spenders are particularly experiential and crave rewarding sensory experiences — something achieved not only by offering an inviting and intriguing gaming environment, but also by paying careful attention to the space’s lighting, visual effects, sound, ambience, and social-sharing moments. Of course, these elements have always played a part in good design, but now they play a larger role in the overall experience.

Technology also plays an integral part in all of this, of course, and its importance cannot be overstated. Retro gaming consoles feed that sense of nostalgia for an older demographic, but catering to a highly tech-savvy crowd requires investing in the newest innovations as well. In event-driven spaces, this means investing in the very best sound and display technology to create highly enhanced viewing experiences. In non-events-driven spaces where people can play video games, esports offers an opportunity to try cutting-edge technology like virtual reality, augmented reality, mixed reality, voice recognition, and other smart technologies.

How much the esports trend will grow in the coming years has yet to be determined, but in these times of uncertainty, only one thing is certain: Esports is an untested experiment, and it’s not entirely clear what the future holds, but it most certainly is part of the future of entertainment.

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