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eSports Venues: A New Sport Business Opportunity

January 2018
Journal of Applied Sport Management 10(1):34-49

DOI:10.18666/JASM-2018-V10-I1-8469

Authors:

Seth E. Jenny

Slippery Rock University of Pennsylvania

Margaret Keiper

None - personal page

Dylan Patrick Williams

University of Alabama

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eSports Venues

A New Sport Business Opportunity

Seth E. Jenny

Margaret C. Keiper

Blake J. Taylor

Dylan P. Williams

Joey Gawrysiak

R. Douglas Manning

Patrick M. Tutka

Abstract

Typically played via the Internet, eSports (organized competitive video gaming)

is becoming a global phenomenon. e popularity of video games and the

desire to spectate online and in-person gaming has amplied as Internet-based

gaming has improved. eSports competitions are hosted all around the world,

but particularly in the United States, Europe, and Asia. While eSports-specic

venues are increasingly being built, many venues that host eSports competitions

were constructed primarily for other professional sports or entertainment. ese

entertainment facilities must attract popular nancially benecial events in

order to survive. eSports events have great potential to t this mold. is paper

briey describes the development of eSports as well as discusses the current

trends in eSports spectator consumption. Moreover, current and future eSports

venues are described, highlighting potential licensing, equipment, and personnel

requirements needed for hosting eSports events. Open systems theory is utilized

to capture and explain the draw of hosting eSports events and how facilities must

adapt to their changing environment.

Keywords: e-Sports, video gaming, electronic sports, sport venues, facilities

Seth E. Jenny is a professor in the Department of Public Health and Social Work at Slippery

Rock University of Pennsylvania.

Margaret C. Keiper is an assistant professor in the School of Management at the University of

Alaska-Fairbanks.

Blake J. Taylor is an instructor in the Department of Physical Education, Sport & Human

Performance at Winthrop University.

Dylan P. Williams is an assistant professor in the Department of Kinesiology at the University

of Alabama.

Joey Gawrysiak is the chair of the Management Science Division, Harry F. Byrd, Jr. School of

Business at Shenandoah University.

R. Douglas Manning is the dean of Kinesiology and Athletics at Santa Ana College.

Patrick M. Tutka is an assistant professor of Sport Management at Niagara University.

Please send correspondence to dr.sethjenny@gmail.com

Journal of Applied Sport Management Vol. 10, No. 1, Spring 2018

https://doi.org/10.18666/JASM-2018-V10-I1-8469

Jenny et al.

Introduction

eSports, or electronic sports, are organized video game competitions and

this enterprise has become a world-wide sensation (Jenny, Manning, Keiper, &

Olrich, 2016). In 2014, 205 million people watched or played eSports (Casselman,

2015). However, eSports did not always have the popularity it is now receiving.

As Internet-based gaming improved, so did the popularity of video games and

the desire to spectate gaming online and in person. For example, the 2016 League

of Legends (LoL) World Championship—the most popular eSports tournament—

attracted 21,000 live spectators, was broadcasted by over 23 entities in 18 languages,

and garnered 47.7 million unique viewers with a peak concurrent viewership of

14.7 million people (Kresse, 2016a). Moreover, eSports attracts over $500 million

in sponsorships annually, including heavyweights Coca-Cola, Red Bull, Intel, and

Nissan (Casselman, 2015). Furthermore, beyond collegiate club sports, 42 U.S.

colleges and universities are members of the National Association of Collegiate

eSports (NACE, 2017) which recognize “varsity” eSports teams—many of whom

are supported by the athletic department and oer scholarships for these “student-

athletes.”

eSports t into the model of “nontraditional” sports along with other activities

that utilize technology to remove the participant from direct action (e.g., Drone

Racing League), that are on the rise in popularity, and oer a contrast to traditional

sports (e.g., baseball, football, basketball, etc.) (Gawrysiak, 2016). Similar to the

diering types of traditional sports, there are varying genres of eSports games,

including rst-person shooter (FPS), multiple online battle arena (MOBA),

ghting, real-time strategy, and sport video games. Video games such as St ar Cra 

2, Counter-Strike: Global Oensive, Defense of the Ancients (DOTA) 2, and LoL are

the most popular games within eSports (Moth, 2014).

With the help of ESPN and other broadcasting companies, along with Internet

streaming, the viewership in eSports is comparable to many traditional sports

(Grubb, 2015). Aside from online streaming, millions of fans attend professional

eSports competitions in varying venues (Keiper, Manning, Jenny, Olrich, & Cro,

2017). ese events involve eSports players arranged center stage in front of

desktop computer stations where the action is broadcast live via massive stadium

screens (e.g., Jumbotron) within the venue. eSports competitions are hosted

all around the globe, but primarily in large United States (U.S.) cities, Western

Europe, China, and South Korea. Many venues that host eSports were constructed

primarily for other professional sports or entertainment, but new venues have

or are currently being built specically for eSports (e.g., Esports Arena, 2017b;

Millennial Esports Arena, Akers, 2017).

e purpose of this paper is to apply open systems theor y to capture and explain

how facilities are adapting or being created to attract eSports events. is paper

provides a brief overview of the developing popularity of eSports, highlighting

the revenue possibilities and sport spectator consumption regarding hosting

eSport Venues

eSports events. Moreover, current and future eSports venues will be presented,

while briey discussing the necessary licensing, equipment, and personnel needs

for hosting eSports.

Open Systems eory

In its most basic form, a sports facility is an organization that must have a

plan to sustain long-term growth. For an organization to survive long-term in

an ever-increasing competitive atmosphere, consideration must be given to the

environment the organization constantly interacts within (Amagoh, 2008). e

indication that the external environment has an inuence on organizational

success or survival is aligned with simple open systems theory. Open systems

theory purports that organizations are strongly inuenced by the environment in

which they operate (Bastedo, 2004). Some of the general environmental factors

a sports facility frequently interacts with include economic, political, and social

factors that inuence the ability of the sports facility to reach its goals. e goal of

most facility managers surrounds the concept of attracting events that consumers

will attend, resulting in revenue for the venue. A major environmental factor that

has emerged in the sporting/entertainment realm that is satisfying the goal of

attracting consumers to a sporting facility is the surge in popularity of eSports and

eSports competitions.

eSports events appear to carry major nancial and economic impacts, which

are key mechanisms for long-term facility success. According to Gaudiosi (2016),

the 112 major eSports events in 2015 generated $20.6 million in ticket revenue.

Further, the Staples Center in Los Angeles, California, sold all available spectator

seating in 2013 and 2016 for the LoL World Championships (Howell, 2016; Tassi,

2013). Keep in mind, the Staples Center is a multipurpose arena and is the home of

the National Basketball League’s (NBA) Lakers and Clippers, the National Hockey

League’s (NHL) Kings, and Women National Basketball League’s (WNBA) Sparks.

ese pro sports franchises are merely tenants of the facility, meaning the Staples

Center must also attract a multitude of other events, such as concerts and award

shows (e.g., the Grammy Awards), to ll the venue. eSports competitions are an

example of these types of income-generating tertiary events.

us, the growth of eSports has led to the emphasis on attracting eSports

to existing venues as well as the creation of venues specically to host eSports

events—both of which are responses to the external environment in which an

organization operates. As such, open systems theory appropriately underpins this

analysis. However, in order to apply open systems theory and explain the changes

needed within a facility to adapt to hosting eSports events, an understanding of

the historical, social, and economic power behind eSports is needed.

eSports Spectator Consumption

By the early 2000s, Internet speeds became faster and video games looked more

realistic, responded quicker, and involved more strategy. ese advancements

Jenny et al.

extended the gap between the skilled and competitive gamer from the recreational

novice, while novice video gamers’ desire to watch elite video gamers perform

surged. Today, global eSports awareness has reached 1.3 billion people (up

15% from 2016), including 191 million eSports “enthusiasts” and 194 million

“occasional viewers” (Newzoo, 2017). Moreover, according to the Entertainment

Soware Association (ESA, 2016), at least one person plays video games at least

three hours or more per week in 63% of U.S. households, with the average gamer

being 35 years old (41% female). erefore, the industry of video gaming has

become a global multibillion-dollar industry. From 2006 to 2015, U.S retail sales

of video and computer games increased from $7.3 to $16.5 billion (ESA, 2016). As

consumers spend, event management and marketing opportunities thrive.

In 2016, 424 worldwide eSports events were held with prize purses greater

than $5,000, where combined prize purses totaled $93.3 million—over a 50%

increase from 2015 (Newzoo, 2017). e largest eSports tournament prize purse

is found at e International (Valve Corporation, 2016), which lists the current

prize pool at $20.7 million. With the continued rise in prize purses, Sallomi

and Lee (2016) predicted eSports will reach $1.2 billion in revenue in 2018. As

such, sponsors have taken notice and have begun to invest millions of dollars in

sponsoring eSports teams, events, and tournaments oen held at non-eSports-

specic venues. For instance, Hyundai, Gillette, 5-Hour Energy, and Dell have all

partnered with diering eSports tournaments, leagues, or teams in order to gain

footing in the eSports industry (ENPE Media, 2016).

As introduced earlier in this paper, in open systems theory, an organization’s

responsiveness to environmental change becomes vital for success (Homburg,

Grozdanovic, & Klarmann, 2007). One of the key groups within an organization’s

environment that can inuence the need for organizational change are consumers

(White, Varadarajan, & Dacin, 2003). In the sports event and facility world, the

value of consumers or spectators is clear. Spectators are what drives revenue for a

facility. Conclusively, sports facilities look to attract events that have the capabilities

to attract a large number of spectators, hence the appeal of eSports.

Watching eSports has become a stronger phenomenon than playing the games

themselves (Hamari & Sjöblom, 2017; Shaw, 2013). Newzoo (2017) revealed that

42% of eSports viewers (most commonly streamed through the Internet) do not

actually play the game they watch. ese spectators may only watch because

they may not have the same skills necessary to compete at such a high level, but

appreciate watching such talented players. is rationale highlights how eSports

spectatorship has moved beyond just video game players and shares similarities

with other sporting events like the Super Bowl or World Cup where many spectators

watch, but do not regularly play American football or soccer, respectively.

Karakus (2015) noted over 250,000 people streamed online LoL regular season

matches worldwide and over 27 million people watched the LoL nals—9 million

more than the 18 million viewers of the 2014 NBA nals. Moreover, 14% of North

eSport Venues

Americans aged 21 to 35 years watch eSports at least once a month, while 18%

of this group watch this amount of ice hockey—a comparable statistic (Newzoo,

2017). Headset microphones give eSports players the ability to communicate

with one another as the spectators listen, allowing fans to easily hear mid-game

player comments similar to NASCAR drivers and pit crews during races (Hamari

& Sjöblom, 2017). Twitch (2017), YouTube Gaming (2017), and Ustream (IBM,

2017) are commonly used live and recorded eSports online streaming platforms.

eSports is also shown on television with live commentating similar to

traditional sports. For example, Turner Sports broadcasts ELeague, a professional

Counter Strike: Global Oensive league featuring 24 teams from across the world

on TBS (Putterman, 2016). ELeague has achieved solid ratings, averaging 271,000

viewers across live and time-shied viewing. However, spectators attending live

eSports events are becoming more common. Lee and Schoenstedt (2011) noted

while traditional sport fandom may involve spectatorship at live events, the culture

of eSports consumption appears to primarily be an online endeavor. However, the

opportunity to explore live eSports events in sports stadia appears to be gaining

traction.

While there is little empirical data on why eSports fans would consider

watching eSports at a live event rather than via the Internet, there have been studies

investigating the motivations of consuming eSports compared to traditional sports

(e.g., Hamilton, Garretson, & Kerne, 2014; Karakus, 2015). Data shows that social

interaction is one of the main contributors to eSport consumption (Brenda, 2017;

Hamari & Sjöblom, 2017). Watching a live eSports event also gives the fan a means

of escape from reality, the drama of a sporting event, and the realized fantasy

of seeing their favorite players up close. Moreover, similar to National Football

League (NFL) fans wearing the uniform of their favorite player, many eSports

fans arrive at events dressed up as their favorite video game character—coined

“cosplay” (i.e., costume play). While these characteristics are similar to traditional

sports, eSports may be unique due to their oen intimate venues, technological

access to interact with others through live chatting and message boards, and oen

fan organized cosplayer showcases (Brenda, 2017).

“Vicarious achievement, acquisition of knowledge, aesthetics, social

interaction, drama/excitement, escape (relaxing), family, physical attractiveness

of participants, and quality of physical skill of the participant” (Trail, Anderson,

& Fink, 2000, p. 157) are common motives for sport consumption based on

social and psychological needs. Other factors that may aect fans’ motivations

to consume sport in person include gender, sport, stadium, and host of other

inuences related to budget, time, and/or personal interests (Wann, 1995; Wann,

Grieve, Zapalac, & Pease, 2008). Clearly, fans may have dierent motivations for

consuming sport in-person.

While traditional sports still depend on ticket revenue, multibillion-dollar

media contracts have diminished the consequence of sold-out stadiums as the

Jenny et al.

sole-source of revenue generation (PWC, 2011). Conversely, eSports began

as an Internet phenomenon and has morphed into in-person mega events,

while maintaining its presence through a variety of online channels. In-person

attendance at all sporting events is not tied to winning/losing, but instead,

stadiums as attractions and a “compelling entertainment experience” (Mullin,

Hardy, & Sutton, 2014, p. 466)—particularly for younger generations who seek

participatory experiences as opposed to passive viewership.

Hosting eSports

eSports stadium attendance has seen substantial growth over the last few

years. For example, 173,000 people attended a two-weekend tournament in

Poland in 2016, up from 113,000 in 2015 (Elder, 2017). In 2015, seven venues had

crowds over 13,000 for a single eSports event, with ve having over 20,000 (Kresse,

2016b). Certainly, these types of attendance gures have encouraged more venue

managers to have interest in hosting eSports events. However, the challenge for

many non-eSport-specic venues is providing the necessary infrastructure to

make eSports work (Hill, 2013). Fortunately, much of the needed technology

requirements needed to host eSports events are already included at major venues

due to pressure from traditional sports teams and other organizations that the

venue hosts (Maddox, 2016). e modern stadium provides many amenities

that fans nd attractive, from the beauty of the stadium itself, to comfort, access,

scoreboard quality, and the ease of the layout (Tutka, 2016). Several venues that

solely host eSports events already exist.

e following sections introduce three approaches or areas that sports venues

can respond, or have responded, to the changing event environment. Equipment

and personnel needed to host eSports events, adapting existing facilities, and

creating new eSport-specic facilities are all covered. All three topics covered are

various ways organizations have responded to the external environment within

sports events and facilities that now includes eSports.

eSport Venue Equipment and Personnel

Attracting eSports events cannot be done without considering the specic

needs to host an eSports event, which again draws on open systems theory.

e venue must respond to the environment in terms of specic equipment,

technological and personnel needs to host an eSports event. ough similarities

exist, the requirements for eSports events vary from other events such as traditional

sports events and concerts.

e equipment needed on the competition site for eSports are similar to those

of basketball as the two activities are played in similar size arenas with comparable

seating and lighting requirements (Howell, 2016; Tassi, 2013). However, eSports

require particular equipment that dierentiates itself such as computers/gaming

consoles for each participant, cables to connect all devices through a Local

Area Connection (LAN) to reduce lag time, headsets and gaming chairs for the

eSport Venues

participants, and large-scale monitors for the audience to see the in-game action.

e type of video game played within the event will not only determine whether

computers or gaming consoles are needed, but will also dene the peripheral

equipment—such as gaming mice, controllers, and computer monitors. Depending

on tournament rules, some professional gamers may bring their own equipment

which must rst be inspected by tournament organizers to check for any special

modications that may give that gamer a particular advantage. e proper

equipment is further contingent upon the type, size, and location of the event.

Similarly, the personnel needed to host eSports events parallels traditional

sporting events. Both event types need ushers, concession sta, custodians, security,

and ticket takers, but quantity diers based upon the size of the event and arena.

However, there are many unique positions needed, including technical sta for any

technology snafus as well as event/game managers who act as quasi-referees and

settle any rules disputes.

In addition, eSports event hosts act as main orators in order to address the

crowd, introduce teams, and present awards. is person also works with the

event/game manager to keep the event running smoothly. In some smaller live

events, this person may also assist as a broadcaster. Broadcasters are oen referred

to as “shoutcasters” or “casters” and provide commentary for the viewing audience.

Much like in traditional sports, broadcasters are oen former players of the game

played at the event and possess the experience required to be able to relay the action

to the audience. Casters serve an important role in all eSports competitions as they

are the ones that the audience relies on for game information and interpretation.

Adapting Existing Venues to Host eSports

Many venues that host eSports were constructed primarily for traditional

sports or entertainment events. For example, the Richmond Raceway is set to host

a 64-person NASCAR Heat 2 eSports tournament within their amphitheater prior

to the 2017 Federated Auto Parts 400 race (Richmond Raceway, 2017). Moreover,

the Durham Bulls Athletic Park will become the rst Minor League Baseball

venue to host an eSports competition when it hosts the inaugural DBAP Gaming

Challenge in the fall of 2017 (Durham Bulls, 2017). According to event organizers,

the three-day event will charge single and package spectator ticket options, operate

concessions throughout, and will utilize the PNC Triangle Club, party decks,

dugout tops, and the 63 by 25 feet Blue Monster videoboard within the facility

(Durham Bulls, 2017).

Many of these venues have been arenas, which support easy transition from

sporting events to eSports (Cano, 2017; Nino De Guzman, 2015). In concert with

open systems theory, these venues adapt to the needs of the community at large and

transition into venues that support concerts, conventions, and eSports (Bastedo,

2004). Table 1 provides a sample of venues that have made the transition to host

eSports.

Running head: ESPORTS VENUES 24

Table 1

Sample Venues that have Hosted eSports

Venue Name

Location

Seating Capacity

Size

Sample eSports Tournament(s) Hosted

Air Canada Centre

Toronto, Canada

19,800

665,000 sf

•LoL North America Finals (2016)

Bill Graham Civic

Auditorium

San Francisco, CA

6,000

31,140 sf

•LoL World Championships Group Stage (2016)

Chicago Theatre

Chicago, IL

3,533

4,500 sf

•LoL World Quarterfinals (2016)

Commerzbank

Arena

Frankfurt,

Germany

55,000

429,480 sf

•ESL One Frankfurt Dota 2 Tournament (2016)

Copper Box Arena

London, UK

4,000-6,500

25,833 sf

•Gfinity G3 (2014)

Key Arena

Seattle, WA

17,072

400,000 sf

•International Dota 2 Tournament (2014 – 2015)

Lanxess Arena

Cologne, Germany

20,000

86,111 sf

•ESL One Cologne - Counter Strike (2014 – 2017)

Madison Square

Garden

Manhattan, NY

19,830

20,976 sf

•LoL North American Finals (2015)

•ESL One New York-Dota 2 Championship (2015)

•LoL World Championship Semi-Finals (2016)

Mandalay Bay

Events Center

Las Vegas, NV

12,000

70,333 sf

•LoL North America Championship Series (2016)

Rotterdam Ahoy

Rotterdam,

Netherlands

15,000 (arena)

40,000 (complex)

581,251 sf

•LoL EU Spring Finals (2016)

Royal Opera House

London, UK

2,268

11,346 sf

•Call of Duty European Championships (2015)

Sang-am World

Cup Stadium

Seoul, South Korea

45,000

155,674 sf

•LoL World Championship Finals (2014)

SAP Center

San Jose, CA

19,190

450,000 sf

•Intel Extreme Masters Tournament (2015)

Staples Center

Los Angeles, CA

20,000

950,000 sf

•LoL World Championship Finals (2013, 2016)

Wembley Arena

London, UK

12,500

56,000 sf

•EU League of Legends LCS Championship (2014)

•eSports Championship Series (2016)

Note. sf = square feet; LoL = League of Legends.

Jenny et al.

Tabl e 1

Sample Venues that Have Hosted eSports

Running head: ESPORTS VENUES 24

Table 1

Sample Venues that have Hosted eSports

Venue Name

Location

Seating Capacity

Size

Sample eSports Tournament(s) Hosted

Air Canada Centre

Toronto, Canada

19,800

665,000 sf

•

LoL North America Finals (2016)

Bill Graham Civic

Auditorium

San Francisco, CA

6,000

31,140 sf

•

LoL World Championships Group Stage (2016)

Chicago Theatre

Chicago, IL

3,533

4,500 sf

•LoL World Quarterfinals (2016)

Commerzbank

Arena

Frankfurt,

Germany

55,000

429,480 sf

•

ESL One Frankfurt Dota 2 Tournament (2016)

Copper Box Arena

London, UK

4,000-6,500

25,833 sf

•

Gfinity G3 (2014)

Key Arena

Seattle, WA

17,072

400,000 sf

•International Dota 2 Tournament (2014 – 2015)

Lanxess Arena

Cologne, Germany

20,000

86,111 sf

•ESL One Cologne - Counter Strike (2014 – 2017)

Madison Square

Garden

Manhattan, NY

19,830

20,976 sf

•

LoL North American Finals (2015)

•ESL One New York-Dota 2 Championship (2015)

•LoL World Championship Semi-Finals (2016)

Mandalay Bay

Events Center

Las Vegas, NV

12,000

70,333 sf

•

LoL North America Championship Series (2016)

Rotterdam Ahoy

Rotterdam,

Netherlands

15,000 (arena)

40,000 (complex)

581,251 sf

•

LoL EU Spring Finals (2016)

Royal Opera House

London, UK

2,268

11,346 sf

•

Call of Duty European Championships (2015)

Sang-am World

Cup Stadium

Seoul, South Korea

45,000

155,674 sf

•

LoL World Championship Finals (2014)

SAP Center

San Jose, CA

19,190

450,000 sf

•

Intel Extreme Masters Tournament (2015)

Staples Center

Los Angeles, CA

20,000

950,000 sf

•

LoL World Championship Finals (2013, 2016)

Wembley Arena

London, UK

12,500

56,000 sf

•

EU League of Legends LCS Championship (2014)

•eSports Championship Series (2016)

Note. sf = square feet; LoL = League of Legends.

eSport Venues

Recently, some publicly nanced sports stadiums have come under scrutiny

with taxpayers sometimes feeling the brunt of nancial loss if these facilities do

not generate enough revenue within the community (Dorfman, 2015). With some

venues losing money annually, adding eSports to their event inventory may assist

with revenue generation. As previously noted, the Staples Center was one of the

rst American venues to invest in signicant infrastructure improvements to host

the eSports 2013 LoL nal, which sold out in one hour (Tassi, 2013). Other venues

have followed suit with Madison Square Garden, Key Arena, and the SAP Center

all improving their capabilities to better host eSports events (Gaudiosi, 2015;

Henry, 2016; Nino De Guzman, 2015).

While many venues have renovated to host eSports events, Sacramento’s new

Golden 1 Center was built to host eSports as one of its major components (Gatto

& Patrick, 2016). It includes 650 miles of ber optic cable and 300 miles of copper

in its infrastructure to support continuous technological improvement (Pierce,

2016). e facility will also house a 6,000-square-foot data center to allow the use

of technology to transform the building into whatever is needed from a technology

standpoint (Pierce, 2016). When the facility was designed, the goal of the venue

was to host events that needed large bandwidth such as drone racing and eSports.

e Golden 1 Center is an innovation of the open systems theory model of sport

facilities, showcasing its adaptability to future needs. However, certain eSports

events can only be hosted in venues of adequate size.

e capacity of each venue varies depending mainly on the location and type

of event hosted. For example, the 2014 LoL Finals were held at the Seoul World

Cup Stadium in Seoul, South Korea, which boasts a seating capacity of 45,000.

However, smaller gaming tournaments like NBA 2k17: Road to the Finals was held

in Orange County, California, at the eSports Arena with only a fraction of the

seating capacity and popularity.

Moreover, in order to host an eSports event, regardless of size, a tournament

and/or broadcast license from the game’s publisher is needed. In many cases,

small community events are covered under a community tournament license as

long as they are below certain thresholds and may not require formal licenses

from publishers. For example, Blizzard Entertainment (2017) established criteria

such as prize pools below $10,000 for a single event, not charging for online

streaming and not broadcasting on television, amongst others, that allow smaller

event organizers to put on the competition easily. Larger organizers that do not

t Blizzard’s outlined criteria would have to apply for a formal license instead of

using the Community Competition License.

eSports-Specic Venues

e nal approach to responding to the environmental change in the form of

the growth of eSports comes with a more all-embracing response. Cities or private

entities are building venues that are primarily used for eSports. is too is an

example of an organization responding to the environment in which they operate.