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A League of Their Own

Esports is moving from huddles around a computer to becoming the next big spectator sport — and resorts are betting that it’ll bring Millennials into casinos.

Business & Community  |  Apr 3, 2017  |  By Jason Scavone

Illustration by Ryan Olbrysh.

If, in your various time-travel hypotheticals, you wanted to eschew the Biff Tannen sports almanac route for success but still make a killing, investing in a Las Vegas nightclub around 2008 — just prior to the DJ explosion — would’ve been a blue-chip move.

Now if you’ve got a few bucks lying around and want to join the ranks of Magic Johnson, Washington Wizards and Capitals owner Ted Leonsis, and nightclub turntable mainstay Steve Aoki, the timing is pretty great for investing in a esports squad.

“If you’re asking my opinion, it’s probably the next nightclub phenomenon that is sustainable into the future,” said Robert Rippee, director of the Hospitality Lab at UNLV’s International Gaming Institute. He led the school’s first official esports lab course in the fall semester. “I think ultimately, this is the evolution of the casino.”

Rippee knew he had a hit on his hands when he put the course up for registration two weeks before the semester started. It filled up in three days.

Boiled down to the basics, esports turns video-game playing into a spectator event while its professionals soak up the glory, adulation, and cash that major league competition affords.

It has blown up to a massive degree in recent years in the United States. An October event at Madison Square Garden sold out two consecutive nights — something normally reserved for the Knicks and Rangers — and high-end tournaments, like last year’s Seattle-based The International, can top $20 million in the prize pool, including more than $9 million to the winning five-player team. And that’s just tournament earnings. Corporate sponsors like Monster and HTC chip in even more.

Rippee’s course focused on designing and developing hypothetical business models to show how esports can work in a modern resort-casino setting. Students were tasked with exploring events, profitability, loyalty, and customer engagement.

According to a report from research group Newzoo, there are about 148 million esports enthusiasts, and the industry is expected to generate $1 billion in revenue by 2019. In Las Vegas, Mandalay Bay has hosted major events like the League of Legends North American League Championship Series, and the SLS has recently kicked off its Battle on the Strip series.

“It’s a green field,” Rippee said. “A lot of people are talking about it; a lot of companies are trying to understand it. It just made sense to me that UNLV should play a leading role in advancing knowledge-based research and economic modeling to support the industry and allow them to make better decisions rather than having them come to us after the fact and saying, ‘Hey, help us figure this out.’”

If Rippee is right, the potential for profits for resorts is enormous. According to Nightclub & Bar magazine, in 2015, Las Vegas clubs in the publication’s annual Top 100 list combined for more than $445 million in revenues.

The trick is in anticipating how esports will fit into a resort’s entertainment profile, something students tackled from multiple angles during the lab. Their big takeaway: As much as playing video games appeals to enthusiasts, to make esports a transformational offering, it needs to move beyond just a dedicated following of hardcore gamers huddled around a local-area network.

“We’re seeing a lot of integration of other types of gaming,” Rippee said. “You’re seeing other types of technologies, such as virtual reality and augmented reality. You’re seeing integration into food and beverage, restaurant concepts, nightclub concepts, kind of mashing all of that together. The experience needs to be much broader and appeal to many more people than just the active gamer who wants to sit in front of a PC and play games for four hours.”

In practice, this means taking a page from some major nightclubs, which have integrated dining and other entertainment into the venues to create one overarching experience.

“You’re going to see a space that would transform over the course of the day. In the afternoon, maybe it is closer to being like a [local-area network]. You might have a pod you [and friends] all rent together and you’re served extraordinary food. Maybe as the day goes on the environment itself begins to change. Maybe in the evening there’s the insertion of some anime or cosplay, or music begins to come in later in the evening. You can still play the games, but maybe there are other things that begin to transform the energy and experience of the place so it appeals to a much broader group of people.”

The fall esports lab was the first class that any university has offered of its kind, focusing on the business elements. It makes sense for UNLV to be at the forefront, not the least of which because the university already has a robust esports community. 

Esports, Meet Rebel Pride

Milo Ocampo helped found 8-Bit eSports in 2012, a student club that serves as UNLV’s collegiate team in national competitions. Since then, the club has blown up to 900 members online, with 250 having signed up in person. The club’s weekly events regularly attract 80-100 people, making it now one of the largest student organizations on campus.

With Las Vegas developing into a major esports destination, the opportunities have been plentiful for Ocampo. The mechanical engineering major started the club as part of a collegiate program of 20 clubs around the country that League of Legends publisher Riot Games founded. That helped get 8-Bit interacting with major publishers, and this summer Ocampo was invited to Blizzard’s headquarters.

“It didn’t really hit me that I could be in esports the rest of my life until [then],” Ocampo said. “Mike Morhaime, he’s the CEO. He walks in the room and all the presidents turn their heads … from the corner of the room he just goes, ‘Is that Milo?’”

As president of 8-Bit, Ocampo had helped the company run a Heroes of the Storm event the previous year, raising the club’s profile off campus and inspiring him to keep developing it. The club even has its own version of the Fremont Cannon (a 3-D printed miniature replica) for intercollegiate competition in the spring—something 8-Bit has never lost to UNR in four years.

Former 8-Bit members have been drafted by professional teams, and the club is starting to consider how it can counsel its members through the amateur/professional transition. Because the club was founded at a time when few schools had esports teams, it’s in a position to take advantage of the maturing relationships between the professional esports world and its collegiate counterparts.

esports as a major in college, esports as a reason to go to a resort or a night club. It does it all. https://t.co/Q0ePc1FNZb

— Ted Leonsis (@TedLeonsis) April 4, 2017

Exploring the Esports Map

The maturity in the esports industry points to the vitality of programs like the esports lab. By the end of the spring semester, IGI plans to convert part of its casino gaming lab to a permanent multiuse esports facility. It will be a technologically advanced classroom and a lab for exploring the emerging industry’s unknowns.

For example, conventional wisdom in the gaming industry holds that millennials, broadly speaking, prefer skill-based gaming to games of chance. That’s something supported both by research conducted by the International Gaming Institute and Rippee’s own interactions with students.

“It’s stereotyping an entire generation but I think you can say by and large, it’s true.”

But why? First, they perceive the random game, the slot machine, as an old person’s game. “A 22-year-old walking into the casino and walking up to the poker room or walking up to a blackjack table may be intimidated from actually sitting down because everyone sitting there is [middle-aged and older],” he said. “They’re looking at it as I don’t want to look foolish.”

Through the esports lab, researchers and students find ways to remove that intimidation.

In addition, he said, “You have to remember this is a generation that has grown up playing online games. They’re a click away from the answer to every question.” So their perception of slot machines is that they are pure chance.  “Even students in my class who do not gamble will say ‘You’re going to lose. Why would I want to throw my money away? At least League of Legends is skill-based — I may be crappy at first, but I’ll get better.’”

Now, the question is how casinos capitalize on those attitudes and trends. It’s one UNLV is leading the quest to answer.