How has COVID-19 affected esports?

During the COVID-19 pandemic, there’s been plenty of talk about the benefits to esports companies. Look the LCS is on ESPN! Las Vegas has opened up esports competitions for betting! Athletes are playing games  on Twitch!

While that exposure is good for esports, the reality is this pandemic has been incredibly hard on many esports companies. The Modern Times Group, the operators of ESL and Dreamhack, reported a net loss of $13.4 million due to the coronavirus. Activision Blizzard’s franchised leagues planned to use the eventual home-and-away format to justify lofty buy-ins, but COVID-19 forced competitions online. Now star players are retiring from both the OWL and CDL.

Besides competitive leagues, there was a burgeoning industry in the west that brought gamers together in public spaces. Much like the PC bangs in South Korea that have made the country the dominant force in many esports, in-person gaming hubs were catching on in the west as well. Colleges are creating esports lounges for students, bars featuring top games are popping up and even airports are adding spaces for gaming.

There are tons of benefits of in-person gaming. Being near teammates improves communication and breaks down toxicity. Public spaces allow for anyone to be able to play with a high-quality PC, improving accessibility. Gaming areas in spaces like airports give more people a chance to play games that otherwise wouldn’t try them out.

“The experience has to be better than what the consumer has at their own house,” said Jordan Walbridge, the founder and CEO of Gameway, a company bringing gaming lounges to airports. “Some gaming locations are just not going to cut it. I think we are set up in a location where we are going to thrive.”

But COVID-19 changed a lot of things and, in the case of the physical gaming location, may have halted a lucrative industry before it was able to get off the ground.

Do People Still Want to Game in Public?

Everyone is on high alert right now. As some states open back up in various stages, there’s an air of unease that hangs over any public event. Will sports return in the fall? Will they have fans in the stands? Half capacity? There is no blueprint for reopening a country with an invisible pandemic looming and that uncertainty creates a massive challenge for many companies.

“We were about to go on our two year anniversary and we had seen double digit growth basically every single month,” Walbridge said. “Then COVID hit. In airports, almost everyone shutdown. Besides maybe one coffee shop and one to-go place, everything shutdown. That sucks. There’s no way around it. We were in a great position prior to that point, and, once that fear is alleviated, we feel like we will be in a good position going forward.”

Unfortunately, fear isn’t quantifiable. While some people are happy to take advantage of cheap tickets, many other travelers are hesitant to get into enclosed metal tubes with 100 strangers. Some investors are washing their hands of airports altogether. Warren Buffett’s Berkshire Hathaway dumped over $4 billion in stock in four major airlines in early May.

“The world has changed for the airlines. I don’t know how it’s changed and I hope it corrects itself in a reasonably prompt way,” Buffett said during Berkshire’s annual shareholder meeting on May 2nd. “I don’t know if Americans have now changed their habits or will change their habits because of the extended period.”

If Buffett, nicknamed the Oracle of Omaha and one of the most successful investors of all time, doesn’t know the future of a business, it’s unlikely anyone else does either.

Can Gameway Weather the Turbulence?

A global pandemic is not ideal for anyone. But when your business relies on people moving through heavily-trafficked areas with uncertainty abounding, it’s even more difficult.

“Fear drives a lot of people and their decision making process,” Walbridge said. “Can people leave their house and feel safe? Then, can they leave their house and go fly somewhere? Then, once they fly somewhere, can they rent a car and vacation? There are many steps to alleviating fears and we are in the middle of that process.”

Now, even if airports struggle, Gameway’s client base could come back quicker than airlines as a whole. The coronavirus is most dangerous to elderly populations – not necessarily Gameway’s target audience. For younger generations, the combination of a youthful sense of invincibility and extremely cheap flights could bring them back to airports quickly.

“We serve people in their 20s and 30s,” Walbridge said. “What we’ve seen nationally is that when something opens up they are rushing to go there. They’re rushing to the beaches. They’re rushing to restaurants. They are the ones who are fearless in the face of COVID and that fearlessness will also translate to coming into a clean facility like Gameway.”

In Las Vegas, the strip opened on June 4th and casinos were filled to the new capacity limits within minutes. While fear may abound, never discount the human spirit for wanting to do fun things.

The in-person gaming industry is a good one. It’s lucrative as people get access to top-of-the line equipment and it’s a more welcoming space which prevents the toxicity that many female gamers cite as the reason they don’t play competitive games. Plus, anything that can hamper boredom in an airport is welcome to most travelers.

But with the coronavirus, Gameway and other companies like it who were set up for success have had to deal with an unprecedented issue. While esports has received a lot of exposure, many of the companies creating the framework for esports growth are in trouble. For Gameway, they are confident they will succeed in the future, but what that future looks like is anyone’s guess.

Written by Mitch Reames