Esports is exploding. It’s expected to grow past $2 billion in annual revenue by the end of 2022, from only $500 million in 2016. Professional sports see the future: the NBA, FIFA, Formula 1, and the Dallas Cowboys owner Jerry Jones and Mavericks owner Mark Cuban have invested in teams and leagues. Big brands see the value in esports communities. Luxury brand Mercedes-Benz recently signed on as the global sponsor for DOTA 2, one of the most hardcore esports tours.

But the business models surrounding location-based esports have been sketchy. Investors have built esport arenas, but they haven’t found a way to fill them consistently enough to warrant the investment yet. Esports arcades have popped up but getting players to pay for something they can do as well at home for free is a challenge. These businesses rely on food and beverage sales because they’re essentially in a low-margin PC rental business.

VR offers the promise of a profitable business model around esports. Since less than 10% of households own a VR headset, the only way for most people to experience VR is at an arcade. And there are now some VR esports games exclusively available to arcades.

But challenges still exist. VR is priced at a premium. Serious players need to hone their skills which requires practice. Omni Arena, one of the early entrants into location-based VR esports published that it has dozens of teams that have played hundreds of games at more than $10 each. But that still represents a tiny fraction of their total player base.

VAR BOX, a new entrant to the market, offers short intense games that last only 2-4 minutes each on more affordable hardware. Operators are encouraged to charge only $2-3 a game, which means it’s more affordable for players to build their skills.

Both VAR BOX and Omni Arena offer more than $100K in prizes each year. Players vie for position on the leaderboards with cash paid for the top scores each week or month. Smart operators also run local tournaments, offering smaller prizes to their players so every location has winners every month. Bringing those players in to collect prizes and celebrate together begins the community. As the community builds, live tournaments build excitement, adding spectators to the community.

Once the community hits critical mass, some locations are using subscription models. Players pay a monthly fee of up to $100 for unlimited play during off-peak times. A few locations in Asia, the birthplace of esports, have 10 teams of four players each paying US$100 a month. That’s $4000 a month in recurring revenue on a $60K investment not including casual play revenue.

Esports is all about building community. I have partnered with TrainerTainment to build an esport training program for FECs. We help locations engage staff, recruit teams of players, train community managers, and build their esports communities for recurring revenue. For more information, contact us via this

“VR offers the promise of a profitable business model around esports.“