July 30, 2019

Retail Landlords Look to Esports to Lure Young Gamers

Property companies are building sports stadiums to draw players and their fans

A growing number of real estate owners are turning to esports arcades, lounges and even stadiums, hoping to breathe fresh life into their malls, hotels and other properties.

Esports arenas allow thousands of gaming fans to watch video content in-person, with even more watching online. Developers are remodeling convention centers by adding locker rooms, seating, broadcast studios, new fiber for high-speed connectivity and massive LED video walls similar to the ones at Times Square.

“We’re seeing investment in esports facilities happening on multiple fronts,” said Brian Mirakian, brand activation director at architectural and design firm Populous, which specializes in sports venues. “Live events are going to be a critical factor.”

Developers are spending tens of millions of dollars in some cases on esports stadiums that host videogame league tournaments.

A subsidiary of Comcast Corp and the Cordish Companies, a Baltimore-based developer, are building a $50 million venue that will be home to Activision Blizzard Inc. ’s Philadelphia Fusion, a team that competes in Overwatch League, a shooter videogame league.

In Arlington, Texas, city officials repurposed part of a convention center to build a $10 million, 100,000-square-foot esports stadium that opened late last year.

In June, mall owner Simon Property Group said it would be investing $5 million to become a shareholder of Allied Esports International Inc., and it plans to launch an esports competition that will be held at some of its malls in New York and Los Angeles.

“It’s cool getting to meet with friends and others that you’ve met online,” said Andrew Lee, a data analyst who attended a recent tournament at the New Yorker Hotel in Manhattan, which drew around 2,000 people, including cosplayers, over three days.

The 28-year-old said that he met with other gamers from Pennsylvania, Florida, Georgia and Louisiana. Some said they recognized him from the live streams recorded at a weekly tournament he attends in Brooklyn.

New York City is increasingly hosting such tournaments. Last weekend, thousands of fans and gamers attended the Fortnite World Cup event at Arthur Ashe Stadium in Queens, which is more widely known as center court at the U.S. Open.

MGM Resorts International last year turned a former nightclub in its Luxor Hotel & Casino on the Las Vegas Strip into an esports arena. The $20 million, 30,000-square-foot venue includes a 50-foot LED wall. It drew more than 4,000 people for a League of Legends three-day tournament in December.

The casino and hotel company is also exploring other ways to host esports events in existing bars and lounges, not just in arenas and theaters.

“We want to be as creative as possible,” said Lovell Walker, head of esports at MGM.

Allied Esports, the esports entertainment company that operates the MGM venue, said it has been courted by other commercial real estate landlords looking to draw foot traffic.

“We’re getting tremendous amount of eyeballs,” said Frank Ng, Allied Esports’ owner.

Not all esports events are profitable, and running an esports stadium has its challenges. Tournament organizers who come from the gaming community but have little professional experience handling logistics for big events could stumble on equipment failures, cost overruns and schedule delays, gamers and organizers say.

Landlords say they also have to figure how to engage gamers who tend to be younger and more tech savvy than property executives. They demand high-speed connectivity, which requires additional processing power, and affordable food and drinks.

“You’ve got to respect their gameplay and understand what benefits their experiences,” said Jill Renslow, senior vice president of business development at Mall of America in Minneapolis, where entertainment and dining operator GameWorks Inc. recently opened a dedicated esports lounge. The mall has also hosted other esports events in its open spaces.

Lodging companies are embracing the craze, too. The New Yorker hotel sold hundreds of rooms during a recent tournament at the Manhattan property with more than 1,000 rooms. The hotel is in talks with other organizers to host more esports events, said Anthony Amendola, the hotel’s director of sales and marketing at the hotel.

“They’re sitting on a gold mine,” he said of the tournament organizers.

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