How e-sports could change the property game

Just like the video games it relies on, the next few years look set to be action-packed for the e-gaming sector, which seems likely to level up significantly in terms of growth. Predicted by PwC to reach $1.6bn by 2022, the niche market is still at grass-roots stage in the UK but has gained an impressive following worldwide. Having exploded in popularity in Asia, where e-gaming will become a medal sport in 2022 at the Asian Games, the phenomenon has spread to the US and looks bound for meaningful growth in the UK. E-gaming – organised, commercially driven and competitive video-gaming – is also a leisure activity that Mike Ashley trumpeted in his parliamentary hearing in December on reviving the high street. Ashley’s own Sports Direct last year bought 50% of GAME Digital’s Belong business, which includes e-gaming arenas. Expanding market In recent years, competitive gaming has also spread across the basements of GAME stores, in shopping centres, and virtual reality arcades across the UK. Andrew Fahey, director and e-sports lead at PwC, says while it is “early days”, e-sports trends in the UK generally follow those seen in the US. He points to Walmart as an example, which is rolling out e-sports facilities across five locations. “On top of that, you have people who are curious about setting up e-sports venues in London and Birmingham,” he adds. The latter city in particular presents opportunities to build real estate specifically for e-sports, since it will host the Commonwealth Games in 2022 and already holds major e-gaming tournaments. Festivals and competitions staged at the SSE Arena in Wembley and the NEC in Birmingham sold out in 2018; by 2021 these are forecast to generate £8m in UK ticket sales. “It is a blank sheet of paper on what that might look like – whether it would be for a team based there or a gaming centre able to facilitate e-sports events,” says Fahey. Notably, Twickenham Stadium diversified into the sector last month when it signed a partnership with professional competitive gaming organisation Excel Esports. Fahey says: “The beauty of the industry is that there are no rules at the moment. Anyone with investment who wants to build a structure will be able to fill it – there’s no question about that.” More than a fad? Determining whether e-gaming is a mere fad is a challenge that comes from outside the industry, says Fahey, particularly from those seeing it “for the first time” – while the market remains immature, it is rapidly “evolving and growing”. “There is a difference between e-sports and [traditional] gaming,” he says. “People have teams and players they support, and each title is a different sport altogether. “Unlike other [modes] of entertainment, this is a social, community-driven form of entertainment, so the actual e-sports spectacle itself is secondary to the community around it. It [combines] technology advancement, changing consumer behaviour and current trends in social media and interaction. “I think the genie is out of the bottle, and the following for this type of entertainment is such that it may have a number of different reincarnations over the next 10 years, but it will still be here in one shape or form.” Hybrid appeal Much has been made of the growing importance of merging technology with bricks-and-mortar when it comes to retail. Arguably, e-gaming companies are part of an occupier group that has got closer than others have in combining food and beverage, leisure, technology and social interaction in a physical space. Shanghai-based Wanyoo Café has just unveiled its first physical store in Europe with the launch of its cyber café brand at one of Shaftesbury’s units on Charing Cross Road, WC2, and is positioning itself as an early mover in this space with £21m of backing from Wang Sicong, the son of Chinese billionaire Wang Jianlin. Its 5,330 sq ft, two-storey café, which opened in late January, features a 12-terminal e-sports battle arena, private rooms and booths, and public gaming and co-working spaces. There is also a large screen to display live streams of global tournaments as well as a food and beverage bar. Huge potential For Andrew Price, asset executive at Shaftesbury, the potential for e-sports is vast. The chance to expand the model for hybrid uses proved particularly promising. “By embracing the e-sports concept, we think it provides another dimension to Chinatown and its evolving leisure offer,” he says. “E-sports is one of a number of change initiatives that you’ve just got to understand and [experiment with], and who knows where it’ll go from here. You can’t ignore these sorts of movements. “It is early days, but I can really see it morphing with other technologies, whether it is hybrid use – for example, becoming a part of cinemas – or a general food offer.” Tapping the student market Price says that drawing in the core 18-35-year-old demographic will also drive footfall in surrounding areas, particular in the evenings when there is the most demand for e-gaming. “When Wanyoo came in, they had done a lot of work with various student bodies within the greater London universities,” he comments. “We know that in Chinatown – and we saw it with the growth of dessert bars – if you get the right offers then you can really start to attract repeat business from this younger audience.” Shaftesbury is now keeping a close eye on the launch, as well as trends in the broader e-gaming industry, to determine whether to add more e-gaming occupiers to its portfolio. “We’ll stay close to Wanyoo and see how their business develops. I wouldn’t rule it out,” Price says. “Five years ago, we had our first bubble tea operators in Chinatown; we’ve got up to five or six now, and we feel there is a market there. “You have to be careful and keep a close eye on saturation. But as long as you give businesses time and don’t bombard them, with one use at one time – you have to let markets evolve and grow.” A growing high street presence Zhaorong Chen, the chief executive of Wanyoo’s UK business, spent a year searching for the company’s first location in the UK, first by consulting with agencies before approaching Shaftesbury directly. For Chen, choosing London for Wanyoo’s launch was a no-brainer, notwithstanding the current political uncertainty. “The people, the culture, the economics – London is the best place for Wanyoo to align with and choose as its first shop in the UK,” he says. “More than half of our customers are students. The other half is the gamers, the YouTubers – and it is also a good place for people to communicate with other customers.” Wanyoo, which operates across 1,100 locations in more than 50 cities in countries including the US, Australia and Canada as well as China, plans to open at least three more stores in the UK within the next two years. Before the year ends, Chen plans to open a 4,300 sq ft shop in Liverpool Street, EC2, catering to its 65% student population. He is currently negotiating lease lengths on the second launch. “[The area] has six universities, and Liverpool Street is a very young place, so it is essential to open there. “We will also choose Manchester and Coventry, which are amazing places [full of] students and gamers.” Chen will look for leases with a minimum of five years in Manchester and Coventry. The space requirements for these premises will also differ slightly from that of the Chinatown flagship, which has 88 computers and is on a 10-year lease. In Coventry, he is aiming for a slightly smaller space of around 4,000 sq ft. “It will depend on the population of the place. In Liverpool Street, I may also [put in] 88 computers, but in Coventry I will maybe put in 50. We will test the market first and add more [or reduce accordingly].” Wanyoo has also said one of its goals is to work with universities to provide internships and employment opportunities. It’s still at an early stage but, as an occupier group, e-gaming could be a key part of boosting the appeal of physical spaces to younger generations and tapping into that all-important market. Either way, the future looks promising for e-sports, and may yet prove to counter the challenges in the retail and leisure industry, and battle its way into retail’s “League of Legends”. To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette