The Future State of Real Estate and Franchises in Esports
The 2018 Overwatch Finals sold out a 10,000 seat venue in the Barclays Center and drew in over 11 million viewers online. That’s a venue 1/6th the size of U.S. Bank Stadium in Minnesota, which hosted the 2018 NFL Championships, and about 1/4th of the total viewers.
Construction contracts for sports venues are constantly sought after, and ones for e-sports may not be far behind. Royal Never Give Up, China’s League of Legends Champion, just recently unveiled the largest LoL arena in Beijing.
Real estate for professional sports teams will likely continue to rise, at least in China, and later make its way to the US. These venues might not be as big as Metlife Stadium, with a seating capacity of 82,000+, but limited seating might work even better in esports. Regular season games in football don’t always sell out the stadium, and limiting esports arenas to several hundred seats ensures that those tickets will skyrocket.
But esports is more diverse than professional sports. Games continue to cycle each other out, with some catching the mainstream wave for several years before falling out of fashion to new games. This affects not only arena ownership, but also franchises.
As gamers lose interest in one game, revenue goes down, and it will become financially unjustifiable to keep the arena as an asset. The team will be forced to sell the arena to another team, one most likely focusing on a different game. Venues for teams of that particular game, especially championship venues, will continue to shrink until teams start disbanding or being sold for a fraction of what they were once worth at their height, and this will affect the strategical thinking of franchises.
While most franchises currently own one team, long-term sustainability for an esports franchise relies on multiple teams. Franchises like 100 Thieves have already realized and embraced this strategy, with four teams under its umbrella. Games quickly cycle out, and to maximize the opportunity, esports franchises need to cycle out teams periodically. Where that leaves players, though, is another question on its own.
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