There are already legendary islands off China’s southern coast where the millions travel to play games of chance. Soon an additional island will host throngs of gamers turning out to watch others play Xbox, complete with a 15,000-seat arena.
The arena will be the centerpiece of a $2.8 billion gaming theme park. A Hong Kong-based developer, Lai Fung Group (1125:HK), has just announced plans to build the video game complex. A handful of dedicated facilities for video game competitions have begun to emerge, part of a trend that marks a sort of coming of age for “e-sports.”
The project is one of the fanciful proposals that has money pouring into Hengqin Island, which sits in the Pearl River Delta, adjacent to Macau’s booming casino wonderland and its 30 million annual visitors. For the last five years or so, China has been planning to develop Hengqin as a sort of Macau-spillover zone connected by bridge to both the gambling hub and Hong Kong. The idea is beginning to bear fruit. Chinese news reports this week pegged the overall value of projects being recommended by the local government at about $22 billion.
The idea for the V-Zone, as the wider project is called, was conceived about a year ago, when Lai Fung approached AEA Consulting, a New York-based arts and culture firm. The developer had already purchased a plot on the island and was looking for an up-and-coming industry to build an attraction around. “We started with a blank sheet of paper, and we were looking for what would be the fastest-growing field in the world,” says Chew Fook Aun, Lai Fung’s chairman. AEA suggested several potential targets, including music and cars. “The trends were with video gaming,” says Chew.
Indeed. Over 500 million people in China play video games, and about 145 million of them play more than an hour daily, according to Eedar, a market research firm. In addition to playing games, an increasing number of people like to watch. Gaming videos are some of the most popular content on YouTube (GOOG), a trend that Microsoft (MSFT) and Sony (SNE) acknowledged by building streaming capabilities into their new consoles.
Live gaming competitions such as those to be be staged at the new arena on Hengqin periodically fill arenas and draw huge online audiences. A League of Legends competition last November attracted 32 million viewers, and a Call of Duty tournament last month included a $1 million prize purse.
What the competitive-gaming industry hasn’t had is a Madison Square Garden of its own, says Mike Sepso, president of Major League Gaming, a company that runs leagues and broadcasts competitions online. Lai Fung contacted MLG last year to ask if it would run the Hengqin arena and offering to fund it completely. There was no chance Sepso would turn that down.
The two companies are currently trying to determine how a video game arena differs from, says, a basketball arena. While traditional sports facilities generally have a field surrounded by seats, for example, it probably makes more sense to design a gaming arena like a Broadway theater, with a stage for the players and large screens above their heads. “When you’re watching the Knicks, you’re actually watching them lose on the court, not on a screen,” says Sepso, whose conversational strategy relies heavily on New York sports metaphors. “In the e-sports world, you’re watching the players, you’re getting that emotion. But when the game starts, the action is really on the screen.”
While the new arena will be the center of the development, it would make up only one part of a wider gaming-themed park to be built on a one-kilometer square site. Lai Fung hopes to attract tourists as well as gaming companies, who would build offices in the area.
The first phase of development, which includes the arena, is expected to cost $480 million and is slated for completion in 2017. China’s real estate industry isn’t without white elephants, so some caution seems prudent. But Hengqin hopes to tie its fortunes to those of Macau, which has been largely immune to China’s economic woes.
For his part, Sepso believes the chances for success can’t be any worse than they would be at home. “They build a lot faster in China than we do in Brooklyn,” he says of the borough that recently built a new home for an NBA team. “It won’t take anywhere near as long as Barclays [Center] did.”