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Esports Moves Beyond The Virtual: Building Homes For A Huge New Industry To Move Into The Real World

Esports Moves Beyond The Virtual: Building Homes For A Huge New Industry To Move Into The Real World

Several years ago, Philadelphia software company founder John Fazio and some work buddies were gaming in an esports arena, though they didn’t know that’s what it was. The world wasn’t ready for that yet.

“We were a bunch of engineering nerds hanging out in a North Philly warehouse. We were just hanging out after work ... playing video games,” Fazio remembers.

Fast forward a few years and Fazio, now CEO of Nerd Street Gamers, and his company are among the players at the forefront of the next step in esports: building the places where gamers can play, hang out together and watch the games.

Esports is now an established industry, expected to bring in more than $1 billion in worldwide revenue this year, about 40% of that in the United States, and working its way ever closer to the cultural mainstream. But it’s happened mostly in a niche e-world, where players play — and watch each other play — on the internet.

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Build It

But now, esports is moving into physical spaces, with gamers playing not just on Twitch or YouTube, but together in the “real world,” allowing for the communal type of event that has made other sports a big part of community culture.

And it needs places.

It needs esports arenas similar to stadiums where other sports take place, big venues where large groups come for tournaments. It also needs smaller spaces where amateur players can join the community and play on the high-powered gaming computers professionals use, and where leagues can be held.

Both are taking off, and major brands beyond the gaming industry, like Comcast Spectacor, a subsidiary of Comcast Corporation (NASDAQ: CMCSA), MGM Resorts International (NYSE: MGM) and even discount retailer Five Below Inc. (NASDAQ: FIVE) are investing in what many see as the next wave of esports opportunity.

The First

The Esports Arena, which opened in 2015 in the Los Angeles suburb of Santa Ana, claims to be the first venue specifically designed for esports competitions in the United States.

Esports Arena has since expanded beyond its Orange County roots, and now has other facilities around the country, thanks to a multimillion-dollar investment by Chinese Esports company Allied Esports.

Among its facilities is the HyperX Esports Arena, in MGM’s Luxor Hotel on the Vegas Strip. One publication called the “Yankee Stadium of Esports.”

The Biggest

The 100,000 square foot, $10 million, Esports Stadium Arlington opened last year in Texas as the largest dedicated esports facility in the country. The venue, part of the Arlington Convention Center, was also intended by its builders to push the communal potential of gaming.

While there is no doubt esports can fill some big venues — competitions have sold out major all-purpose arenas — Esports Arena founders Paul Ward and Tyler Endres noted in a Sports Business Journal story that the smaller spaces are important.

“Most people will experience esports in either their bedrooms or a mega event at the Staples Center or KeyArena,” Ward told the publication. “We think the actual sweet spot is in between those two things.”

That’s also the model for Fazio’s Nerd Street Gamers, which has as its mission broadening access to esports. While its facilities can host big tournaments, it's aimed at making e-gaming accessible to players who aren’t necessarily pros - grassroots building of the game.

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Nerd Street Gamers has built a business around its chain of Localhost Esports gaming centers where amateur gamers can play on the high-powered gaming computers the professionals use. The centers are also used for tournaments.

Nerd Street Gamers recently joined the list of firsts in esports venues, teaming up with Comcast Spectacor to open the first esports space in a professional sports stadium, opening a Localhost gaming center at Philadelphia’s Wells Fargo Center, home to the NBA’s 76ers and the NHL’s Flyers.

That hockey night crowd might find a new pursuit, Fazio said, if they happen to walk into the Nerd Street Localhost space between periods. The next Wednesday night, maybe they’ll show up to play video games with their buddies.

“We target them with the beer league model,” Fazio said.

Nerd Street also recently partnered with Philadelphia-based retail chain Five Below to build dozens of Localhost gaming facilities attached to Five Below Stores.

Fazio says the time to build out an infrastructure for esports is now, predicting that tens of thousands of facilities could exist in a decade or so.

“In a 10- to 15-year timeline, esports is not only going to be the largest form of competitive entertainment,” Fazio said. “It will be the largest form of entertainment.”


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