Are eSport Bars A Viable Business Model? The unique challenges of monetizing and marketing a budding worldwide concept.
The young owners of two separate esport bars in Scandinavia tell of their experiences bringing a novelty concept to life. I speak with Klas Bergqvist and Nikolaj Sørensen, who discuss how creatively adapting to a consumer base that is growing in both numbers and demographics has been key to their success.
On the narrow but busy Sankt Peders street in Copenhagen lies a bar known as ‘The Grid’. It looks like any other cosy cafe bar in the neighbourhood, with cushy seating and a rustic vibe. TV screens are mounted on the walls and glossy menus offer a wide selection of drinks. Yet this isn’t any ordinary bar. The Grid happens to be one of several esport bars to have opened in Scandinavia in the past five years. The bars’ founders are on a mission to provide an esports space every bit as welcoming as the average sports bar, making them amongst the first to fine-tune a relatively new business concept.
In 2014, VICE covered the widespread boom of competitive gaming with an article that revealed the promising turnout to what was then an entirely new esport bar named ‘Meltdown’. The article echoed what was the consensus of virtually every pop culture analyst and gaming journalist at the time; esports was on the very verge of becoming mainstream. With its break-through inevitable, the normalization of esports bars was claimed to be just around the corner.
To a large extent, their predictions have been correct. In the four years since the publication of VICE’s article, Meltdown has turned into an international franchise with 35 establishments across the world, in locations as diverse as Canada, Panama and Germany. In those same four years, the esports industry has come to be valued at $905.6 million and brands as big as Nike are sponsoring esport players while ESPN is now covering tournaments. There’s no denying it. Esports is mainstream.
Out of the many career paths that the budding esports industry has created, running an esports bar is high up on the list of most desirable jobs. The truth, however, is that the job is a lot harder than one might assume in light of esports’ astronomical success. The reasons are multifold, but it might be fair to highlight that it doesn’t that something is no longer niched just because it is no longer mainstream.
The notable presence of esports in popular culture hasn’t rendered the world of competitive gaming any less exclusionary for those can’t tell a ‘Tank’ from a ‘Carry’. Like K-Pop or Star Trek, esports remains niched and therefore somewhat inaccessible – with all the marketing challenges that this entails. To bring in a steady profit, bars must attract customers besides the local die-hard esport community which, more often than not, is limited in numbers.
So how do these bars overcome the perceived ‘exclusivity’ of esports which intimidates the more casual gamer? And as for the more hardcore gamers – how does an esport bar succeed in attracting these typically introverted players to a social bar setting? These obstacles must be tackled if esports bars are to survive at a time when the competitive gaming industry is still undergoing transformation. It raises the question; will esports bars ever prove a viable business model in the long-term, considering the unique nature of esports and its fans?
Fortunately, there seems to be a promising consensus in the business on how to deal with the unique challenges of running an esports bar – and doing so with long-term success. Finding adequate sources of income beyond traditional bar monetization, and making well-considered decisions with regard to design and ambience, play a huge part. At least, that’s according to two successful esport bar founders in Denmark and Sweden.
Nikolaj Sørensen is a Danish local and esport fan who founded The Grid with his British friend, Jake Simonelli, last year. The two of them met through World of Warcraft over a decade ago, and spent well over a year conducting market research and business planning before opening the bar in Copenhagen. Sørensen tells me that one of the biggest hurdles lies in how esport bars are still primarily perceived as events-based.
“People are mainly interested in the bar for viewing esport tournaments. With the recent CS:GO match we were so packed that people were sitting on tables, meanwhile this weekend that just passed we had considerably fewer customers come by,” Sørensen says. “We hadn’t intended for the bar to be just about esports matches but it’s nonetheless the case that we’re most popular during tournaments.”
In response, Sørensen and Simonelli are looking at ways The Grid can attract visitors in between tournaments. “Initially we imagined the bar would be a meeting spot for gamers to get together and talk about games, with the same feeling as any other bar,” Sørensen explains. “We’re hoping that as competitive gaming grows and becomes more normalized, esport bars will gradually come to be seen as a hang-out spot all year around.”
I ask whether the tendency for gamers to develop online-based friendships meant that face-to-face social interaction is not as appealing as it might be for other groups of people with shared interests. Sørensen agrees that there may be a preference for online communication amongst gamers, however he also believes that this is unlikely to remain a problem, as the appeal of esports is broadening fast enough for there to be a growing number of highly social fans.
Sørensen and Simonelli, as such, remain optimistic about the potential of the bar to eventually become as popular place for socializing as any other. “The response to the bar has been overwhelmingly positive so far. People really like the place and leave kind reviews, so we just have to battle the misconception that the bar is only for screening games,” Sørensen says. “What we’ve realized is that the bar needs something extra, that will encourage people to view it as something more than just a good place to watch esport tournaments.”
The ‘extra’ element to which Sørensen refers could come in the form of arcade machines, board games, quiz nights or console gaming, to name but a few. However Sørensen tells me that he and his partner agreed from the start that they would avoid overcrowding the bar with computers or consoles, adamant that The Grid remain a bar and not evolve into a gaming space. “We’re going to be very particular about any additional aspect we introduce,” Sørensen says.
Klas Bergqvist, one of the owners at Kappa Bar in Gothenburg, reveals how the Kappa franchise has not shared that same concern over introducing gaming facilities. In all three Kappa Bars across Sweden, visitors can join LAN games at the ‘GameZone’ part of the bar, or hire a VIP room full of consoles and games, which provides an additional source of revenue for the Kappa franchise.
For other esport bars across Europe, sponsorships from sportsbooks and betting companies venturing into the world of esports have become an additional means of monetization. “We are having talks with different betting companies,” says Bergqvist. “I think this will be great for our guests and also the people who are less interested in esports. People wants to place bets, just like in the more classic sports. The interest for esports will increase if it becomes easier to bet. I don’t think the interest in horse racing would be as big if it wasn’t for betting, for example.”
But even with the added revenue source of in-bar gaming facilities and brand sponsorships, the average esport bar must still find a way to market to a wider range of consumers, and not merely the most avid of esport fans. Fortunately, this is something both Sørensen and Bergqvist embrace. They want their bars to be anything but exclusionary, and actively seek to make them as welcoming for the casual gamer as they are for the more serious esport fans.
This focus on inclusiveness is reflected in everything from The Grid’s marketing to its interior design. Kappa Bar, similarly, features modern but unobtrusive interior which wouldn’t immediately suggest to the outside observer that competitive gaming was the main focus of the establishment. Bergqvist tells me that making esports more inclusive through Kappa Bar has been a principle from the very start.
“We want to be the most obvious restaurant to visit for any esport fan. Kappa Bar should feel like a second home to gamers, but at the same time we want to run a genuinely great restaurant in itself, with food and service that rivals any other, so that everyone has a reason to visit,” he explains. “In other words, we’ve always aimed to create an environment where hardcore esport fan can bring their mothers and both of them have a great time.”
Bergqvist admits that striking this balance when marketing to both esports fans and a more general crowd has at times been challenging. However, just like at The Grid, refraining from an esport-heavy interior design and gamer theme has been key.
“The bar needed to be welcoming for people who maybe don’t really understand esports but are maybe interested in learning more. The interior is definitely more minimalistic for this reason. There are references here and there to games, of course, – like ‘mana’ and ‘health potions’ on the cocktail menu, but in the same way sports bar aren’t decorated according to sports, we don’t see why an esports bar should go over-the-top on the esports theme,” Sørensen says.
But whether the exclusiveness has truly worked in attracting a broader crowd beyond the core esport community, or whether the diversity in customers simply reflects the widening demographics of the esports fanbase, is difficult to say. It is nevertheless the case that both The Grid and all three Kappa Bars in Sweden are succeeding in gaining a variety of returning customers.
Predictably, the average customer remains young and male, but Sørensen and Bergqvist both comment on how they are coming to see an increasing number of couples stop by the bars. “Initially we were worried about only attracting a younger crowd but this definitely hasn’t been the case,” Bergqvist adds. This was a concern Sørensen shared but has similarly had mitigated.
It would seem that, even in light of unexpected challenges that have left some cynical as to esport bars’ viability, both Kappa Bar and The Grid are testament to how the business model can be sustained through multi-faceted monetization and by being accessible to the average bar-goer. As for the future, Sørensen points out that gaming is so popular in Denmark that there are legitimate gaming academies and esports courses at high school and university.
Meanwhile, Newzoo reports that the global esport audience is comprised of around 280 million viewers – 165 million of those being enthusiasts while the other 215 million are occasional viewers. “As we see the younger generation grow older, it follows that gaming-related bars will become increasingly popular and a lot more common,” says Sorenson. “This is a generation that will grow up expecting to see esport bars and other social hang-outs based around their interest in games. We’re already here.”
Bergqvist is equally confident about the future of esport bars and considers the Kappa Bar franchise ‘ahead of the game’. He reveals plans to expand internationally within the coming years. “We will definitely see esports bar all over the world in some years. Sure, it’s going take some more time for esport bars to become as popular as regular sports bar but it’s going to happen in the close future. That is a fact,” he tells me. “We know that our journey has just begun, but it’s moving faster than we could ever imagine.”
One can conclude that esport bars are not currently in a place to market exclusively to a hardcore esport crowd – but that having to broaden the bars’ appeal for a sustainable income is not necessarily seen as a disadvantage by those in the business. On the contrary, the owners of two of Scandinavia’s biggest esport bars are excited about the way in which their venues can further bridge the gap between esports and mainstream culture.
So whilst esport bars may not look how we envisioned them just five years ago (futuristic venues crammed with esport fanatics with menus modelled after a Minecraft inventory), they are finding a way to flourish across the world. That’s because, in 2019 – a year which has seen esports officially become a billion-dollar industry -, the successful esport bar looks just like any other popular bar. It offers a pleasant atmosphere, friendly service and good food. And you’re welcome to pop by, whether or not you know the difference between a ‘Carry’ and a ‘Tank’.