eSports: the game changer in HK entertainment?May 11, 2018 / By
Electronic Sports (eSports), also known as competitive gaming, has gained a lot of attention lately after the government set aside HKD 100 million in its FY 2018/19 budget to promote its development. Half of the budgeted amount will go into building professional eSports competition and training facilities at the Cyberport shopping arcade in Pokfulam, Hong Kong.
Once viewed as an activity for nerdy teens, eSports has bloomed into a multi-billion dollar industry and will even be included as an official medal event in the 2022 Asian Games. According to Newzoo, the global eSports market generated USD 696 million in revenue in 2017, up 41% y-o-y, with China being the largest market. By 2020, revenue is forecasted to have more than doubled to reach about USD 1.5 billion, representing CAGR of 31.8% over the course of a five year period (Figure 1).
Figure 1: Global eSports Revenue Growth 2016-2020Source: Newzoo
Hong Kong is no stranger to international sports tournaments. The Hong Kong leg of the World Rugby Sevens Series, alone, has brought in over 60,000 overseas visitors in recent years. If the city can attract rabid rugby fans from around the world to attend a world-class sporting event, then it definitely has potential to become a regional hub for eSports. To put into perspective just how big eSports has become, consider the following: in 2017, over 360 million unique viewers tuned in to watch the League of Legends World Championship tournaments. This was triple the viewership of last year’s HSBC World Rugby Sevens Series.
So how can the city’s property market benefit from this booming new industry?
Purpose-built eSports arenas typically resemble amphitheaters. Along with a competition stage, they usually also have broadcasting and training facilities. Many feature theatre-style viewing setting with multiple large screens streaming live games. This requires properties with high clearing heights and fast broadband connections. In other parts of the world, where eSports is more developed, we have seen operators repurpose cinemas, taking advantage of design features that naturally lend themselves favorably to gaming arenas.
The impact of eSports on the retail property market is not only limited to arenas. For example, K11 mall has partnered with Chinese mobile game developer, Hero Entertainment, to create a network of 2D eSports-themed spaces in K11 projects in at least nine cities in China, including Hong Kong. The opening of new arenas also has the potential to draw in more technology and gaming tenants.
Yet comparing to traditional entertainment venues, such as cinemas and ice-skating rinks, eSports arenas incur higher upfront investment and operational costs. As a result, the rental affordability of operators is lower than traditional entertainment trades. If we use cinemas as a benchmark, the rental affordability of eSports operators in Hong Kong is likely to be around HKD 30-40 per sq ft per month (NFA) in a prime retailing areas (Figure 2).
Figure 2: Rental Transactions of Cinema Spaces in Hong Kong
Source: JLL, Land Registry, Market Source
As a former gamer, I would love to see a world-class tournament taking place in Hong Kong. It’s also exciting to see more diversified entertainment offerings in our retail scene. Let’s wait and see what eSports can bring as the industry matures over time.
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