In October, I found myself seated in an autonomous shuttle vehicle that’s part of the PAUL (Piloting Autonomous Use Locally) service launched by Site Selection’s home city of Peachtree Corners, Georgia, in partnership with T-Mobile 5G and Beep, an Orlando-based company that creates “multi-passenger, electric, autonomous mobility solutions.” Detrick Traylor, a U.S. Army veteran who came out of retirement to apply for a position with Beep, was operating the shuttle with what amounted to an X-Box controller as he took passengers on short rides, temporarily overriding the autonomous operation. “I applied because the technology seemed interesting,” he said.
As he spoke, I looked out the window to see a drone filming the shuttle’s staged demonstrations. The drone’s operator, like Traylor, was also using a controller that resembled a video-game console. Or did the gaming console resemble the drone controller?
The virtual world of video games was merging with our forthcoming world of smart transportation. Thus the metaverse expands, making way for another meta-layer: the phenomenon of video game creation and esports.
“This whole esports movement is unlike anything I have ever seen,” Chris Camacho, president and CEO of the Greater Phoenix Economic Council, told my Site Selection colleague and Conway Data Custom Content Managing Editor Savannah King in 2020. “The social media and the physical following have created an entirely new sector in the last seven years. Some of our cities are working to establish esports stadiums. We’re still early in that game, but we’re seeing a lot of interest out of California and Boston.”
Next door in New Mexico, where film and TV momentum is fast and furious since the arrival of Netflix, one of the projects supported in 2021 by the New Mexico Film Office was the development of a new video game, “Xenotheria,” by Ganymede Games, an independent studio in Las Cruces.
Already valued for its parallel-but-just-as-real economy, the film and television production arena is opening up to the economic development opportunity inherent in video game production and esports. The most notable recent step in this convergence was the announcement by Netflix in November that it’s getting into esports by launching five mobile-phone games based on Netflix titles such as “Stranger Things.”
Things work in the other direction too: Netflix last May announced it was partnering with Riot Games to develop the animated event series “Arcane,” based on Riot Games’ League of Legends franchise.
At the time of the Netflix announcement, Riot Games had amassed over 14 billion views of its videos globally, and its League of Legends 2020 World Championship esports competition had tallied over 1 billion hours content consumption around the world.
According to research by the Entertainment Software Association and Newzoo, esports viewership is expected to grow to 646 million by 2023, representing 10.3% CAGR from 2018 to 2023. The games market will grow with a CAGR (2019 to 2024) of +8.7% to reach $218.7 billion in 2024. The esports component of that is projected to reach $1.6 billion in revenue that year.
Chain Reactions
“Changing dynamics within esports itself have pushed the industry beyond an entirely online existence and toward an expanding physical real estate footprint,” said Jim Renne, national director, Sports and Entertainment, JLL, as the service provider released a report on the sector in October. “Fans want a place to celebrate their favorite teams, and teams themselves are settling down in home cities and looking for local support.”
The report covered esports only, not the entire universe of video game development. Even so, the need for retail, team training/HQ and venue space is coming, said JLL. “New global sports do not come into existence often — and hardly ever with the speed that esports has grown,” said Renne.
“Between the heavy tech focus and a relatively young audience, a broad range of experimentation in space use and design will be seen in esports real estate,” said Henry D’Esposito, Research Manager, PDS, JLL.
The game companies behind esports may be founded on our need to watch, but they need three-dimensional real estate too.
Founded by Brandon Beck and Marc Merrill in 2006 and led by CEO Nicolo Laurent, Riot is headquartered in Los Angeles, California, and has 3,000 Rioters in more than 20 offices worldwide. In September, multiple sources reported the company was subleasing 131,000 sq. ft. of space in the Lantana Entertainment Media Campus in Santa Monica from Beachbody Co., the digital fitness and nutrition subscription company known for, among other products, the popular P90X exercise series.
Not far away in that same city, video game publisher Activision was leasing 90,000 sq. ft. from Gilead Sciences’ Kite Pharma for its headquarters. The appetite for gaming and esports space thus gloms onto an already “incredible demand for media-oriented real estate such as studios, soundstage and even office space,” says CBRE Senior Vice President Patrick Amos.
A visitor to the Netflix HQ in Los Angeles might suspect from looking at the walls that esports would be the company’s next world to conquer.
Photo courtesy of Netflix
“Gaming is particularly popular in Southern California,” adds CBRE Vice Chairman Anthony Gatti. “While our region is usually more associated with the film industry, gaming is a rapidly growing sector. The Greater L.A. metro is home to nearly a million people who work in the creative sector in some shape or form, according to our research. Of those, more than 150,000 are focused on technology. This fact has resulted in the rise of roughly 140 gaming companies, including such well-known entities as Activision-Blizzard. And just as gaming grew beyond arcade cabinets into home consoles and now smart devices, the commercial real estate requirements of this sector are reaching beyond office space and into entirely new arenas — literally. Esports has exploded in popularity over the last 10 years and games are now more or less treated as real-life sporting events.”
Hi-Rez Expo 2019 took place in the company’s hometown of Atlanta in November 2019.
Photo courtesy of Hi-Rez
That’s true abroad as well. In October, Riot Games announced it will open a new 120-job Remote Production Broadcast Center (RBC) and Content Production Center in Airside Retail Park, Swords, County Dublin. It’s the first of “up to three facilities in a global follow-the-sun model, with each RBC having the ability to produce six events simultaneously across production and audio rooms, bullpens and live stages, all built upon a scalable technology backbone for future growth.” Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar hoped it was a strong sign for the esports world: “We introduced a new tax credit as part of the budget, which will, we hope, encourage the digital games industry to grow here.”
The commercial real estate requirements of this sector are reaching beyond office space and into entirely new arenas — literally.”
— Anthony Gatti, Vice Chairman, CBRE, on the exploding popularity of esports
Riot Games first set up its EMEA headquarters in Ireland in 2010 and has grown over the past decade to 165 employees in its Dublin city center office.
“We chose Dublin for this strategically important investment because we are confident in the tech talent available, the attractive business environment, and our positive experience of serving our players from across Europe since we first set up here,” said Alan Bridgeman, managing director, Riot Games.
In North Rhine Westphalia, Germany, a new “Fusion Campus German Center of Games Competence has opened in Düsseldorf. “For our country, games are an important driver of innovation,” said NRW then-Minister President Armin Laschet when he cut the ribbon. “This branch of the economy has enormous potential and is an important driver of the digital transformation in Germany.”
New game development capacity is also landing in Louisiana, where game development executive Jeff Strain was joined by Gov. John Bel Edwards in October to launch Possibility Space, a game development studio that will build large-scale video games and join “Louisiana’s growing interactive entertainment cluster,” said a news release, “which includes inXile, a Microsoft Xbox Game Studio; High Voltage Software, part of Keywords Studios; Testronic and Turbosquid, all in New Orleans, and Electronic Arts in Baton Rouge.”
Epic Games turned 30 years old this year (the average age of a video game player is 31). Epic isn’t outgrowing games, but is outgrowing its workspace in Cary, North Carolina, where it’s been based for more than 20 years. Earlier in the year, the company, Turnbridge Equities and Denali Properties announced an agreement to transfer ownership of the 980,000-sq.-ft. and 87-acre Cary Towne Center to Epic, with the goal of converting the property into its new campus by 2024.
urnbridge and Denali had acquired the Cary Towne Center mall in January 2019 in a distressed sale following the loss of three of its five anchor tenants. A rezoning allowed the redevelopment project to proceed with a transformation suited to the digital age, where the jobs are a bit better compensated than a retail cashier. In July 2021, Epic Games showed 166 job openings in locations around the world. The $28.7 billion company has more than 50 offices worldwide.
Another traditional economy company is pouring money into esports in Dallas, where Gray Television early in 2021 announced it was leading a $40 million investment round for esports and entertainment company Envy Gaming. Envy owns and operates the world champion Dallas Empire team in the Call of Duty League, among other teams. Envy’s year was busy, including partnering with Belong Gaming Arenas to bring multiple gaming centers to North Texas; and opening a 21,000-sq.-ft. training facility and live production and content studio in Dallas.
“Esports and gaming is the fastest-growing area across all of media and entertainment,” said Adam Rymer, CEO of Envy Gaming. “Building global communities through content and engagement, similar to what the world has seen in the music, film and TV industries, is an endeavor we’re incredibly excited to work on with Gray as our partner.”
The SCAD Effect
As it happens, Gray is also the entity that in fall 2021 bought the former Doraville General Motors plant site in Atlanta from Integral Group for $80 million. The property had been renamed Assembly Yards, and is home to Serta Simmons’ North American headquarters as well as film and TV production company Third Rail Studios. Gray’s plans for its Iconic Studios development at the site include retail, residential, office and yes, TV and esports production.
Atlanta is also where you’ll find creative services company MEPTIK, which specializes in experiential design and virtual production with extended and augmented reality (XR/AR) workflows. The company is partnering with Savannah College of Art and Design to build a 2,000-sq.-ft. XR stage at SCAD’s 10.9-acre expansion to Savannah Film Studios, complete with a Hollywood-style backlot. MEPTIK was co-founded by SCAD alumna Sara Linebaugh.
“It’s very unique to have a university adopt this,” said Nick Rivero, one of the founders of MEPTIK, in a press release from SCAD. “Nobody else is building a pipeline, and a technology, at this scale.”
A second xR stage is under construction at SCAD Atlanta and scheduled to open in Fall 2022. Of the nearly 15,000 SCAD alumni from entertainment and digital media disciplines, 3,500 SCAD alumni work in the multi-billion-dollar Georgia entertainment industry, the school said in announcing its studio expansion last spring. SCAD President and Founder Paula Wallace even went so far as to proclaim, “Think of the great backlots of movie history — Paramount, Pinewood, Universal, and now, SCAD.”
Three other SCAD buildings totaling more than 139,000 sq. ft. are undergoing major renovations and expansions in order to host a film field office, three new soundstages, a building dedicated to set design and costume design, and classroom space. All told, the university’s film, television, and digital media footprint will amount to more than 300,000 sq. ft. across the Atlanta and Savannah locations.
SCAD’s vision encompasses esports too. The school recently added a GamingFest to its annual film festival and added a new SCAD Games Studio, noting that Georgia is home to more than 125 game development companies.
A New Kind of Film Hub in the UK
Since January 2018, Site Selection has tracked more than 100 film and TV studio and soundstage facility investments around the world. The lion’s share are in the U.S., led by California but with Georgia, New York and Texas hot on its heels. Outside of the U.S., Canada and the United Kingdom are the largest recipients of studio investment. Now the UK is about to get one of the largest studio investments in the world.
In mid-December, the famed Pinewood Studios site in Buckinghamshire, England, that’s hosted production for James Bond and Star Wars films, among others, received planning permission from the Buckinghamshire Council’s Strategic Sites Planning Committee to move forward with a £500 million (US$667 million) investment to create a global screen growth hub called Screen Hub UK. The Pinewood development will include new soundstages, a skills and training hub to be operated by the National Film and Television School, a business growth hub and a film-inspired visitor attraction. It is expected that the project will result in a £355 million boost to the UK economy and create over 3,500 jobs.
In November, Pinewood announced its decision to expand Shepperton Studios in Surrey too, with 1 million new sq. ft. that will comprise 17 soundstages. Concurrent with that announcement came the news that Pinewood had agreed to a long-term contract with Netflix to double the size of its existing production hub at Shepperton Studios, which now will become one of the largest film and TV studios in the world.
