The landscape of modern sport has dramatically shifted over the past 20 years as the desire for exciting, fast-paced entertainment spectacles has increased exponentially.
We have seen the evolution of Twenty20 cricket, the rise of Rugby Sevens and now, as a new audience of fans take their seats, the arrival of e-sports on to the British sporting scene.
E-sports is a form of competitive video gaming that involves both professional and semi-professional competitions across various digital platforms.
What began as amateurs competing against each other in online computer games for leisure has rapidly developed into a competitive professional sport, with high value sponsorship opportunities and a vast number of spectators following through both online streaming and attendance at live e-sports events.
Gamers compete in a huge range of tournaments, from digitised versions of conventional sports including football and Formula 1, to revered team “combat” games, such as the technically demanding Dota 2 and current global phenomenon Fortnite. Such is the global interest in e-sports, the International Olympic Committee is considering showcasing e-sports as a demonstration event in the near future.
Globally, e-sports is already booming, with total revenues estimated as being close to US$1bn at the start of 2019, and projected to hit almost US$3bn by 2022. Revenue is predominantly generated through sponsorship, but increasingly so through sales of tickets to physical and digital events, as well as merchandising of computer equipment and, much like traditional sports, clothing.
While e-sports as a competitive platform is already a huge success in the United States and Asia, the progression from social gaming to commercialised e-sports in the UK is at its inception.
Nevertheless, the UK has a significant pedigree in the industry, housing more than 700 gaming businesses in London, Guildford and Cambridge. Where there is growth of this magnitude, the opportunities for investment and need for understanding cannot be ignored.
Despite their relative infancy, e-sports organisations are rapidly becoming active in the commercial property market. The gaming industry is not new to the high street of course, with retailers such as Game and CeX already prominent fixtures. However, the growing interest in e-sports, coupled with consumers’ increasing preference for “experiences” and interactive space over traditional retail, suggests that distinctive change could be around the corner.
In 2016, Game founded its e-sports experience offering, Belong, and it now operates 22 venues around the UK and Ireland. Each is home to an e-sports team of its own, but also allows consumers to rent out high-spec gaming hardware to participate in casual, semi-professional, and organised e-sports activities and tournaments.
The success and increasing prevalence of such venues shows the appetite in the consumer market for new entertainment space capable of transforming high street or shopping centre environments. With market trends favouring shorter-term leases, populating retail space with booming e-sports and gaming tenants with turnover-linked rent mechanisms is potentially lucrative for landlords looking to fill vacant space.
As the UK’s second-fastest growing entertainment and media sector (the UK e-sports industry is growing 21% year-on-year and is forecast to reach almost £50m in 2022), the need for e-sports organisations to occupy commercial property of their own also presents a unique opportunity for the regeneration of commercial real estate assets for investors and landlords seeking to redevelop or repurpose stagnant commercial space.
Welcoming e-sports tenants into commercial units also goes hand-in-hand with investors’ increasing desire for real estate assets to be “future ready”. The technological infrastructure and redevelopment required to operate an e-sports enabled space gives property owners an ability to market their properties as being ready to accommodate the changing preferences and needs of tenants in the modern market, creating more attractive investment opportunities.
The opportunity for investment in e-sports is not limited to retail space, however. Staggeringly, e-sports viewing numbers are forecast to surpass half a billion by 2021, and professional e-sports events can draw crowds capable of rivalling their conventional sporting counterparts.
In May 2018, ESL One, a live event where gamers compete for a prize pool of $1m, sold out the NEC Arena in Birmingham for three consecutive days of competitive gaming and, in 2017, 173,000 spectators attended ESL’s Intel Extreme Masters Season XI in Poland. In light of these numbers, property investors can look to e-sports for development opportunities to capitalise on the demand of e-sports fanatics for dedicated spectator venues and event space.
The unique viewing requirements of e-sports events cries out for purpose-built venues, so much so that conventional sportspeople and clubs are looking to cash in. Examples include the recent announcement by Leicester City’s Premier League-winning defender Christian Fuchs that he has purchased a 36-acre site in New York to develop an e-sports arena, and e-sports franchise Excel confirming its occupation of a bespoke training complex in partnership with Twickenham Stadium.
While there have been moves to provide larger e-sports arenas – such as the Haymarket Theatre in Leicester, which completed a £3m refurbishment to provide a bespoke e-sports venue for the city – UK spending on e-sports venues and events in 2018 totalled only £8.9m. Clearly, the potential for development and investment in e-sports is enormous, and if approached correctly, so too could be the commercial reward.
This article was first published in Estates Gazette in July 2019.