December 2019 //

20/20 Vision: The Year Esports and Video Gaming Experience Came Into Focus

By Myra Vaughn


In this series, Myra Vaughn, Principal of MG2’s Consumer Experiences Market, will share how Esports (the competitive segment of video gaming) and the video gaming industry will create impactful consumer experience intersections of opportunity for retailers, brands and real estate developers in 2020 and beyond.


The Gamer Community and Consumer: An Emerging Lifestyle Category

The misperceptions of gamers continue to be a barrier toward understanding this consumer group and community. Although the notion of the “gamer community” represents a broad range of interests, games, and interactions, there are notable commonalities. The targeted ‘gamer consumer’ of the industry is predominantly male, ages 18-35. However, there is an insurgence of female gamers – mostly casual and mobile players.

According to Statista 2019, 67% of Millennials and 90% of Gen Z’s consider themselves gamers. These percentages include PC, console and mobile players.

In February 2017, I wrote an article for VMSD Magazine entitled, “The Remarkable Rise of Esports:  How Gen Z’s love of gaming is fueling a movement of competition, ingenuity, and community.” This article began to identify why this industry was so compelling to Gen Z. The desire for competitive platforms, hyper-relevant and fresh game content, and a shared sense of community were strong characteristics that continued to draw Gen Z to video gaming and Esports.

Until recently, very little research had been available on Gen Z, the generation after Millennials, and those born between 1995 and 2010 – the oldest of which are currently around 24 years of age. During a time when the retail industry was experiencing unprecedented disruption by the Millennial consumer, the emerging Gen Z consumer continues that disruption to retail. However, data on Gen Z consistently pointed to one powerful commonality within this group – a passion for video gaming.

“The stigma around gaming is shedding rapidly.”

According to Dan Kelley, Director of Corporate Marketing for HyperX, the negative stigma around gaming is diminishing. The stereotypical view of a gamer is that they are reclusive, a very common mischaracterization, when, in fact, they are very social. Esports events are creating a community connection, and gamers will continue to reach out to and rely on this community. Dan also emphasizes that there is a massive trend toward gaming becoming part of a lifestyle. Gaming has become a passion so deep with this group that they want to talk about gaming. HyperX has broadened its brand ambassadors to include professional athletes and recording artists, enforcing that gaming is truly a sport. And HyperX continues to advocate for the benefits of gaming – a very social and dynamic community.

Building community – bringing an online community into a venue

Simon Temperley, Chief Revenue & Marketing Officer for Allied Esports cautions that the gamer community is a vast cross-section and that ‘gamers’ should not be marginalized. Gamers are very different. A person playing NFL Madden is different than the person playing Overwatch League. He stresses that looking at the big picture is fine, but this is a very sophisticated audience.

According to Simon, the reason Allied Esports’ business is where it is today is that gamers wanted to have a place that creates a sense of community. As a marketer, experiential offerings are vital to connecting brand and consumer. Good things happen as a result. With live events, however, scalability is a challenge. Gaming has allowed Allied Esports to engage communities that live online and bring that online community into a venue. All venues are fully dedicated to gaming. Their goal is to “create venues that are aspirational – a place that makes them feel like it was made for them, is permanent, isn’t manufactured to leave town in the next week.”

“The existing consumers are gamers themselves.”

Nate Eckman, Co-founder and Chief Creative Officer with Ultimate Media Ventures and gamer lifestyle apparel brand ULT, states that when ULT apparel was getting asked to sell their brand in traditional retail channels, there was immediate concern that the classic retail brands were going to fundamentally alienate their core customer by suddenly introducing a brand that represents the gaming customer. “Is the gaming customer a net new customer to our store that will make our ‘cool’ kids feel alienated?” However, through research, Nate stated that the traditional retailers realized that their customers were already gamers, and the young adults managing their stores were also gamers. Whether they are casual gamers, mobile gamers, hardcore PC competitive gamers, they identify in some way in their lifestyle with gaming – a shared passion point. Per Nate, “Like understanding the modern consumer – gamers also like streetwear, they like fashion, music, and follow Post Malone, seeing him talk about video games and the media they consume.”

Traditional retailers were expecting a bifurcation of their customers walking into their store – those that were into gaming and those that were not. According to Nate, supporting and integrating gaming lifestyle product categories “says as a brand that we acknowledge that you are also a gamer and that you also have some exposure to that culture and are aware of it. That consciousness is evolving more rapidly all the time. Not only are gamers not alienated from existing shoppers; in many cases, they are  the existing shoppers.”

 

Creating the ‘Best in Class’ Uniquely Branded Experience

2020 will be the year of the esports and video gaming bricks and mortar experience. In 2018 and 2019, there were several primarily large arena venues constructed, including the HyperX Esports Arena in Las Vegas (30,000sf competitive arena) and The Esports Stadium in Arlington, Texas (100,000sf and currently the largest Esports venue in North America).  The $50 million Fusion Arena in Philadelphia, Pennsylvania, slated to complete in 2021 – a 3,500 seat Esports arena by Populous, a global architectural design firm and in conjunction with Baltimore-based Cordish Companies.

These large-scale, permanent venues address the demand for more permanent facilities dedicated to Esports and the number of franchise leagues and tournaments increasing each year. The Esports industry has outgrown the use of traditional sports arenas and stadiums and is taking their place in the landscape of permanent venue experiences.

When Allied Esports completed the flagship HyperX Esports Arena in Las Vegas last year, they intended to meet a need in the Esports industry for more permanent event venues and create an experience that accommodated the emerging gaming community – at all levels. According to Simon Temperley of Allied Esports, Las Vegas was selected as their flagship location because “Vegas as a market was becoming more family-friendly and was becoming a sports town.” The venue supports the robust and local gaming community but also serves as a venue where “the enthusiast makes that pilgrimage.” With a competitive stage set-up that can accommodate 5v5 tournament play or individual tournament play, gamers have an opportunity to play at a venue where pro gamers can play – “creating an opportunity to have the same feeling as a pro gamer, on stage.”

With the emergence of small to mid-sized Esports and video gaming venues on the rise, potentially populating various types of locations, what will make some more successful than others? Within a homogenous “sea” of gaming venues with similar design aesthetic, equipment, layouts, what will make a brand’s experience stand out from the rest? Based on insights from various Esports industry leaders and conferences coupled with strategies for building unique brand experiences, the following are critical considerations for creating the ‘best in class’ Esports and video gaming bricks and mortar experience.

The “why” in pursuing an Esports and video gaming venue is essential and will inform brand-differentiating strategies going forward.

Capturing and engaging the demographics associated with this user-group (Millennials and Gen Z) is a common goal. The high percentage and concentration of gaming enthusiasts in these generations are attractive to retailers, brands and developers looking to capture this audience to achieve brand awareness and activate existing locations.

Fulfilling a need within the Esports industry to provide permanent space is another common goal. As global franchise leagues increase, so does the need for tournament event spaces (of all sizes). However, this strategy needs to be closely tied to their specific locations to enable successful outcomes.

In addition to these goals and as brands consider developing concepts, their brand’s unique expression within the venues is essential to their success. Whether it is a strong commitment toward supporting specific regional gaming communities or leagues, to provide customized content and access to equipment, to provide a physical place for online communities to meet in-person, to create an opportunity for gamers to ‘feel like a pro,’ or to entice and capture the non-gamer with a fun, energetic and non-intimidating environment, having a clear understanding of the “why” will chart the course for achieving a unique brand experience.

Establish a signature design aesthetic and language.

The majority of existing Esports and gaming venues fall under a familiar design aesthetic – mostly dark with LED and theatrical lighting – and quite masculine in appearance. The design aesthetic and language of the space will become the hallmark for differentiating from other brands. Developing an iconic entry experience, a unique logo and brand name, along with establishing a signature design aesthetic that elevates the experience above the “norm” and creates an atmosphere of inclusivity will be a powerful tool for brand differentiation.

Esports and video gaming venues will succeed in cities and locations that have robust existing gaming communities to support them.

When defining real estate strategies for where venues would be most successful, testing the market by researching the density of existing gamers and local gaming leagues is critical in determining the future success of a place, mainly if tournament play is part of programming. The “build it and they will come” strategy is more successful for the massive stadium and arena venues that accommodate tournaments and events for major global franchise leagues – essentially becoming “pilgrimage” destinations for a broad audience.

Will the venue accommodate individual gaming stations only, or tournament events as well?

The answer to this question dictates the size and layout of the venue, along with other requirements such as equipment and furnishings. Considerations of hosting or providing tournament events would also be best supported by the presence of existing gaming communities for consistent participation.

Partnering with reputable endemic brands and/or companies will provide the necessary authenticity and validity to engage the gaming community.

The gaming community gravitates toward authenticity and firm commitments toward embracing the gaming industry. Endemic brands such as HyperX, PlayStation, Nintendo and Xbox are examples of potential partnership brands.  In addition to endemic product brands, partnerships with game publishers or live-streaming platforms (Twitch and Mixer) demonstrate a strong commitment to the gamer consumer. Visible brand placement and sponsorships are important. However, engaging these endemic companies as advisers to inform the experience is also valuable.

Consider being “game agnostic” and “platform agnostic.”

PC gamers are different than console gamers. NBA 2K players are different than those who play League of Legends. Being aware of these differences and offering appropriate options or events that cater to a broader swath of gamer preferences will add to the success of the venue. However, the saying, “trying to please everyone will please no one,” rings true in this instance. Researching the local gaming communities and understanding their preferences may help in determining the appropriate mix for the experience.

Provide experiential amenities that surprise and delight.

Food and beverage offerings that are affordable, yet high quality are baseline expectations. The assumption that gamers prefer low quality “junk food” is a mischaracterization. The gamer culture includes all levels of players, and like retail consumers, they expect quality in their choices.

Retail options and products that are unique to Esports and video gaming venues is an opportunity to engage endemic brands that otherwise don’t have dedicated bricks and mortar brand environments to showcase and sell their products.

Access to high-speed IT infrastructure and connectivity, electrical capacity is paramount.

Since multi-player is a popular gaming format, high-speed connectivity is crucial to optimum game play. And with the high volume of gaming equipment, screens, environmental technology and supporting back-of-house equipment, electrical capacity requirements will be above the norm.

Content creation and live broadcasting can provide additional engagement with consumers.

Just as traditional brands rely on social media platforms such as Instagram to share their brand stories and products, live-streaming platforms offer the same for Esports and video gaming venues. Venues can broadcast content created within their locations on live-streaming platforms via their own branded channel.

High-performance gaming equipment and gear is a requirement.

Monitors and screens with optimum gaming specs, gaming headsets, and keyboards, as well as gaming PCs and consoles that are current and high-performance, will be the baseline expectation. Gamers will go to these venues expecting to experience equipment and gear that they might not have access to at home, providing an opportunity for endemic product brands to introduce new products to potential consumers.

Programming events will keep the experience fresh, exciting and engaging.

In addition to individual gaming stations, creating programming for and operating tournament events will engage a larger audience, keeping venue content fresh and relevant. In conjunction with a newly released game or collaboration with a traditional sports event, tournaments can provide variety to the venue experience. Programming and operating tournaments can be challenging. However, partnering with operators such as Allied Esports or Ultimate Media Ventures can assist venues and ultimately help elevate the overall experience.

Identify the key revenue sources and overall business model.

Pay-to-play (by the hour), membership-based access, ticket sales from tournament events and entry fees, food and beverage, retail sales/merchandise, third-party tournament and event rental fees, as well as brand sponsorships, are all available options for revenue sources. Depending on the appropriate structures that align with the venue size and offerings, the opportunities for revenue generation vary.

Designing to achieve flexibility and scalability will increase experience options.

Utilizing modular furnishings and equipment, designing the electrical and digital infrastructure to accommodate “plug and play” mobility in layouts; strategies for creating small, medium and large activation spaces will allow for a variety of gameplay and tournament configurations, as well as develop areas for hosting special events. Flexibility in lighting design will allow the space to transform through color to accommodate a specific brand or event.

 

Meet the Industry Leaders

Dan Kelley, Director of Corporate Marketing for HyperX.  HyperX is the high-performance gaming division of Kingston Technology Corporation and slated as a top brand for game peripherals such as headsets, keyboards, and microphones.

As Director of Corporate Marketing, Dan has been instrumental in elevating the HyperX brand by positioning it as an active sponsor for the Esports and gaming community. According to Dan, HyperX “makes the gear that helps you play the game.” As a leading endemic brand for gaming peripherals, HyperX has amassed an influential group of brand ambassadors that include professional athletes and recording artists. HyperX’s tagline is, “We are all gamers.”

Nate Eckman is the Co-founder and Chief Creative Officer for Ultimate Media Ventures and the gamer lifestyle apparel brand ULT. ULT was one of the very first apparel brands to partner with global franchise leagues and a globally connected consumer. Based in Huntington Beach, CA, their headquarters includes an Esports arena/studio that can host events, tournaments and live broadcasts.

Nate’s mission in creating UMV and the ULT apparel brand four years ago was to help define what the gaming lifestyle means to this generation of gamer. As an endemic brand to gaming, Nate seeks to tell the story of the gaming lifestyle through culture.

Simon Temperley is the Chief Revenue & Marketing Officer for Allied Esports, a global Esports entertainment company with nine venues across the globe:  five in China, one in Europe, and three in the US. Allied Esports’ venues create a community for gamers, “no matter what game you play.” The sites support tournament play and regular gameplay, demonstrating their dedication to the players and industry.

In 2019, Allied Esports received a $5 million investment from Simon Property Group, one of the largest mall operators, to develop a partnership and integrate Esports venues in SPG’s properties across the country.

 

About Myra Vaughn

Myra Vaughn, a leader within MG2’s Consumer Experience market, is driven by her insatiable curiosity to spot new trends and to understand the impact intersecting non-traditional markets and industries have on redefining consumer experiences. As consumer spending continues to shift towards services and experiences, having a finger on the pulse of future trends has become essential. Throughout this evolution, we will continue to see a blend of hybrid design concepts created as a result.

Through the journey of connecting with industry leaders and asking the right questions, visiting Esports venues, attending events and conferences, and observing her Gen Z son and his peers, Myra’s renewed passion for gaming has helped her uncover critical, current Esports and video gaming industry trends shaping the evolving “consumer experience.”

Her pathway toward trend-spotting within the Esports and the video gaming industry led her across multiple facets of this complex eco-system and to the various professionals and leaders that influence it. What started as a renewed personal interest very quickly evolved into an investigation of an emerging industry that is rapidly informing and impacting the future of consumer experience.

In March, Myra and Dan Kelley of HyperX recorded a podcast for Shop! Association entitled, “Esports, Gaming, and Retail – The Potential for a Powerful Convergence.” Dan later introduced her to Nate Eckman with Ultimate Media Ventures and Simon Temperley of Allied Esports. Myra hosted a panel discussion for the Shop! Association in October to continue the conversation. These connections and others provided valuable insights into the evolution of Esports and gaming and their impact on consumer experiences.

 


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