Allied Esports Finds New Revenue Stream During Outbreak: Online Gaming

With the vast majority of the sports industry basing its business around live in-person events, many are now looking towards online events in the interim.

Even for Allied Esports, the esports entertainment company that largely bases its U.S. business on live events, a similar pathway has emerged.

FOS REPORT: 54.5% of industry executives believe that it would be at least 60 days before leagues resume play.

Allied Esports, perhaps best known for its $20 million HyperX Esports Arena in Las Vegas, decided that rather than shut operations down amid the coronavirus outbreak, it instead moved a production staff into an employee’s living room and is now hosting events online, Allied Esports Chief Executive Officer Jud Hannigan said. 

“To see traditional sports stop on a dime and not be active, people are looking for some form of competitive entertainment, and if we can continue to be that offering, we were excited to do it,” Hannigan said. 

In the fourth quarter of 2019, the Las Vegas arena hosted more than 75 events, nearly one a night, with each featuring a different game. Whether Fortnite or Mario Kart, Hannigan said they were more often than not sold out, based on the number of competitors each game allowed.

Now with the online offering, the same is true – but with a broader audience. And with no time constraints, Allied is running two tournaments a day rather than the one nightly event.

While the coronavirus outbreak has brought much of the sports world to a halt, Hannigan said Allied Esports is finding a “silver-gray lining” by figuring out another line of revenue for once life returns to normal. 

“It’s exciting for us when it does normalize,” he said. “When we layer it on to what we were doing, it only continues to act as a funnel to drive people in properties.” 

The fundamentals of the company’s U.S. business won’t change from in-person and event-based, but Hannigan said the scope of these online tournaments would continue and grow the ecosystem.

While people would drive from Los Angeles for Saturday night Mario Kart tournaments in Las Vegas, now they’re seeing participants from Mexico and Turkey.

READ MORE: Allied Esports Sees Major Opportunity in Entertainment Side of Esports

Along with the Las Vegas arena, Allied Esports is working with real estate company Simon to open a venue at the Mall of Georgia, the first of likely many mall-based esports locations. None of those locations have been opened as of yet, but there are affiliate Esports Arenas in Orange County and Oakland.

“For us, we monetize in different ways at physical properties, largely with sponsorships, and with a wider net of people participating, that value will increase,” he said. “Also, a wider net of people participating is a wider net of people viewing, so more consumers into our ecosystem is a real positive.” 

The online – event business isn’t entirely new for Allied Esports. It is its primary revenue driver in Europe, where Allied started in 2016 with a mobile stage truck rather than physical locations. That experience is part of why it was a quick move to online events in the U.S. 

When society returns to normal, Hannigan said the nightly live events would continue, and so too would the online tournaments.

How they all blend, however, is still being ironed out. 

“So much is happening, still so new, still trying to figure out how to tweak the offerings for the fans,” he said. “It’s wild that there’s not a lot of competitive content out there, and we’re still able to provide it. It’s not that we expected something like this, but trying to make sure we have an offering that can fill that void.”