Forget Going Pro, Los Angeles eSports Pivots Toward Amateur Leagues
Two companies betting on the Los Angeles eSports market aren't throwing in on glitzy, state of the art stadiums or sinking big bucks into the pros: They're banking on the average Joe.
The video game industry has been red hot, surpassing $120 billion last year. Many in the marketplace think the next area for growth is in the amateurs; a vast pool of recreational players who can, if provided the infrastructure, make hay for investors as competitive players.
Southland stalwarts like Blizzard Entertainment and Riot Games both have investments in the unpaid ranks, building programs around blockbuster offerings like Overwatch and League of Legends.
But companies without game development programs have found a way in.
Santa Monica-based Super League wants to anchor its tournaments and one-off events with geography, drawing crowds to local sites set up for tournaments at the local Buffalo Wild Wings, or maybe even a Dave & Busters. The company already has, launching the program four years ago.
In the age of wireless internet, any place with a strong connection is a potential tournament site.
Matt Edelman, Super League's chief commercial officer, wants to convert the millions who watch competitive gameplay on Twitch or YouTube gaming channel into Super League community members.
Think recreational league sports at the local YMCA or community center.
"Super League is not in the pro eSports business. We have really focused on the fact that every viewer, every player is a participant. And that's not the way it is in traditional sports," Edelman said. "Every single person who goes to a League of Legends event also plays the game. How do I get to play in person? That's where Super League comes in."
The cost structure includes games for as little as $5 or leagues that cost about $80.
Newzoo, a games and eSports analytics firm with offices in San Francisco estimates there are more than 2.5 billion gamers world wide.
Gaming has long offered the advantage of remote competition, allowing communities to grow nationally and even overseas. But Edelman wants to capitalize on the lure of local community, and the chance for digital friends to share a laugh and a high five in person.
The company also streams these events on services like Twitch, offering packages that beam the most captivating gameplay moments to a user's computer screen or television. It's like NFL Red Zone for gamers.
Super League is playing with the on-location model, holding 275 events in the U.S., Canada and Mexico. The company announced last month that it had partnered with Chinese-based Wanda Media to bring its model to more than 700 locations in the Middle Kingdom. Super League has not invested in brick and mortar locations, but has amassed a hoard of users, and sponsors who advertise through signage or commercials on gaming highlight videos.
The pro ranks are also sinking more focus into physical locations. Blizzard's Overwatch League will require teams, like the Los Angeles Gladiators, to play more games in their chosen city.
Nerd Street Gamers wants in on the Los Angeles market, too. It finished a round of funding last October, bolstering it with $12 million to help it bring its gaming centers, branded Localhost, nationwide. Fellow Philadelphia company and discount retailer Five Below provided the capital, following a long line of investors including Comcast, SeventySix Capital, Elevate Capital, and angel investor George Miller. The deal is a bet on the value of amateur eSports.
CEO and founder John Fazio said the appeal is largely because of its high school district, which is ranked the largest in the country.
"Those schools are full of kids who would love to take advantage of these kinds of opportunities," he said.
Fazio's company plans to build a massive gaming center where players can compete, and friends can watch. The facility, located in Hawthorne, is a planned 26,000 square-feet or, as the company reports, the size of five-and-a-half NBA regulation basketball courts. Loaded with 375 gaming PCs, it would have capacity for 120 teams and has planned its opening for summer 2020. It's the gamer equivalent of a basketball court or a soccer field. The company announced the arrival Feb 12 of a Southland addition to its previously established foothold in Huntington Beach located at 1524 Transistor Lane.
"I think the growth has accelerated. Right now is what's kind of crazy is we've seen growth with really just investment at the professional level," Fazio said. "We're taking hundreds of thousands — if not millions — of students and turning them into esports fans, if not future professionals."
He noted that developers have closely controlled the leagues they've created for college eSports teams, of which there are more than 250 nationwide. The casual gamer with competitive aspirations, he said, is where his company can find opportunity.
Both companies have their eye on the high-school market, too, but Santa Monica-based PlayVs has focussed their efforts on cornering that market. The company has been raking in investments, including $50 million in funding announced last September, designed to spread its platform to all 50 states.
Sari Kitelyn, director of eSports and project development at Full Sail University, a for-profit college with a focus on eSports, is keeping her eye on the unpaid ranks.
But the market remains in flux. Super League is still growing, recording year-over-year growth in of 350,000 or 129% during the third quarter. Nerd Street Gamers doesn't release financials because it is privately held, but received seed funding from Major League Baseball slugger Ryan Howard and is backed by Comcast.
Whatever the growth potential, Super League and Nerd Street Gamers have already made the commitment, investing in the amateurs in hopes of making big league dollars.
"I think this is the biggest area of market opportunity," Kitelyn said.
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