By South Florida Business Journal Digital Editor, Emon Reiser
As stadiums across the U.S. sit empty due to Covid-19, fans have discovered new players to root for in the virtual arena of esports.
Instead of making impressive plays on a court or field, professional video gamers can make millions of online viewers cheer with a well-timed click of a mouse. These expert players often don’t compete in games based on traditional sports like basketball, football and soccer. Their preferred sports are action-strategy games such as League of Legends, Fortnite and Call of Duty.
South Florida is an emerging market for the thriving esports industry, which presents local investment opportunities, as well as the potential to add high-paying jobs within the region’s nascent technology sector.
Esports ventures are both expanding and scaling at a time when the sector is estimated to generate $1.09 billion in worldwide revenue, and could expand to $1.59 billion in sales by 2023, according Newzoo’s latest Global Esports Market Report.
Key to this opportunity for South Florida is the arrival of Misfits Gaming, one of the world’s leading esports companies, which will relocate its headquarters to Boca Raton. In addition to the jobs it will bring, Misfits Gaming will enable other esports companies to scale in South Florida with its $10 million incubator.
“There’s a huge market of opportunity that is more or less untapped,” Misfits Gaming co-founder and CEO Ben Spoont said, alluding to the region’s large population of gamers. “We’re firmly entrenched in building this community and infrastructure here for local gamers.”
Industry rises amid downturn
Gaming became one of the few growth opportunities as the pandemic eroded economies worldwide.
The video gaming industry is known to be “recession resilient,” with the market rising 40% after the Sept. 11 attacks and the economic downturn that followed. It rose an additional 20% during the 2008 recession, according to IDG Consulting, which does research on the industry. Esports is the fastest-growing segment in that sector, research shows.
“We’re making esports a larger part of our portfolio. As it grows, we’re going to grow with it,” said Jayson Dubin, founder and CEO of Deerfield Beach-based Playwire.com. The company represents Misfits Gaming Group in advertising deals with brands and media agencies, and is hiring “in every position globally.”
Misfits Gaming will bring 100 employees to its new headquarters and create 30 new jobs with an average salary of $95,500 – about 70% higher than South Florida’s median household income.
“These are exactly the kinds of high-end jobs Florida and Palm Beach County have been after for years,” said Kelly Smallridge, president and CEO of the Business Development Board of Palm Beach County, which helped secure incentives for Misfits Gaming’s relocation.
“The state clearly saw that this was the company that could open the doors for similar companies to come here,” she said.
Virtual games, real money
Misfits Gaming’s minority owners include Miami Heat owner Micky Arison, the Orlando Magic’s DeVos family and the Cleveland Browns’ Haslam family.
They’re not the only investors from the traditional sports world making plays in the esports industry. Sports legends such as Michael Jordan and Steve Young have funded esports enterprises. Their investments show the sector was scoring points among “real” players and team owners even before the Covid-19 pandemic halted spectator sports.
“Esports has been on the rise the last couple of years, not just in the U.S., but globally,” said Jed Kaplan, CEO of Boca Ratonbased Simplicity Esports and Gaming Co. and a minority investor in the NBA’s Memphis Grizzlies. “Five years from now, it’s going to look more like traditional sports.”
Each esports game has its own professional league run similarly to a traditional sports league like the NFL. Misfits, Simplicity Esports and other gaming companies buy regional franchises and assemble teams of professionals who make salaries of six figures or more to compete in regional and global playoffs. They even trade players, and the games have pundits who explain what’s happening on screen.
As with traditional sports teams, fans buy branded merchandise from their favorite teams. The fans also make in-game purchases, pay entry fees for amateur tournaments and even purchase computer hardware endorsed by their favorite players.
For Kaplan, a Wall Street executive since 1986, the value of esports clicked when he noticed increased coverage of the esports phenomenon. That spurred him to start Simplicity Esports in 2017.
Kaplan said he decided to base the company in Boca Raton instead of California, now the main hub for video games, because of South Florida’s proximity to Latin America, a target region for his business.
Simplicity Esports owns multiple esports teams, hosts online tournaments and operates 45 gaming centers nationwide, including in Boca Raton, under the name PlayLive Nation. Key to its growth is a recent license agreement with Brazilian sports club Flamengo, a name recognizable to South Florida’s robust Brazilian population.
“Esports is only in its second inning,” Kaplan said. “It’s gained a lot of stature because of the pandemic. It’s helped esports get noticed, and I think that will continue even after the world opens up.”
After the pandemic closed its gaming centers, the company doubled down on online tournaments by marketing to its database of 400,000 people who had played games at PlayLive locations.
“Every time we’ve had a tournament, we’ve sold out,” Kaplan said. “It’s opened a whole new line of business for us.”
Root for the home team
Although her company’s headquarters sits at the center of the U.S. esports world in Santa Monica, California, Super League Gaming CEO Ann Hand saw South Florida as an advantageous region for expansion.
Miami Menace was one of Super League’s (Nasdaq: SLGG) four founding amateur gaming clubs. Amateur and casual players make up the majority of the world’s 2.7 billion gamers – a much larger and lucrative market to capitalize on.
When Hand explains the company’s concept to investors who aren’t savvy about video gaming, she breaks down the wideranging and profitable demographics of gamers.
Millennial gamers spend an average of $112 a month on gaming content, according to the company’s investor presentation. Super League’s target customer plays video games for eight or more hours a week and watches up to nine hours of esports content each week.
Hand also stresses a facet of esports already familiar to most consumers: hometown pride. “The desire to root for your hometown is almost tribal,” she said. “Just like we saw early on in professional esports, everyday gamers would want their own recreational leagues.”
Like Super League’s amateur clubs, area universities are playing a part in boosting the local talent pool for the region’s esports companies. Universities are investing in gaming centers, and some recognize esports as part of their athletic programming. Others have launched esports-specific courses.
Florida Atlantic University, Florida Atlantic University and Barry University are among the many local colleges fostering the growth of esports.
And it’s not just college-age fans participating in tournaments for prize money and scholarships.
Stay-at-home orders resulted in more high school students lured to the trend, too, says Jordan Zietz, CEO of All Star Esports, a leading free esports league for high schoolers. The Boca Raton-based startup makes money from sponsorships and partnerships that target the league’s students from more than 20,000 high schools across the U.S.
“The first two weeks we were in quarantine, we had a 250% growth in our day-to-day player base,” said Zietz, 18. “As social distancing became the norm, we’ve continued to see unprecedented growth. It’s definitely something that could only happen in today’s day and age.”
Construction on Misfits Gaming’s new headquarters, at 5300 Broken Sound Blvd. N.W., continued through the pandemic. The company’s $1.35 million capital investment is expected to be completed by July and include a state-of-the-art practice facility and a technology-first office space.
Misfit’s incubator, MSF.IO, will accept five companies each year, Spoont said. The startups will receive investment capital from Misfits, in addition to development assistance and office space in South Florida, to scale their ventures.
It’s part of the company’s efforts to raise the profile of South Florida’s burgeoning esports sector. “Look at all the jobs the Miami Heat creates, for example,” Spoont said. “This industry is in the process of doing the same. This is professional sports for the new generation.”