Top 10 Misconceptions of Starting an Esports Center

 In Announcement, gg Twitchcast, ggLeap, News, Video

Today on our ggCircuit LAN Center and Esports show, the highlight of the episode is discussing the top 10 misconceptions of starting an esports center. The purpose around the video is that we get multiple calls weekly from groups starting an esports center and needing consulting. Many of these calls surround the same few questions, and we want to get individuals on the right track before mistakes are made down the road. This is from the successes and failures we have had over our 15 years of business as well as doing revenue models around what makes starting an esports center work.

Starting an Esports Center

Starting an esports center is a lot of work. It’s way more than just throwing up some PC and consoles and believing that people will just roll in the door. As a center owner it can be tough to find a balance of running your business, adding employees, putting out fires, and marketing to your clients. We have talked to over a hundred people in the last two years that are looking at starting an esports center. The following sections discuss the common misconceptions and questions that we hear regularly. We want to help new owners avoid making the same mistakes we have.

#1 Taking your business plan to get a bank loan

It’s really hard to go to the bank and get a loan or a start up business. It’s especially hard or esports centers or LAN gaming locations which are mostly unproven models. Don’t think that the world’s greatest business plan will get you an immediate loan. A bank does not want to be your business partner, they want to be paid back. They want to make sure with your business plan and your net worth that you won’t default on the loan. When starting an esports center we err on the side of finding a good partner to get your location started vs. going to the bank (01:32)

#2 Don’t build a plan around your funding ability

Build your funding around your plan, not your plan around your funding. Many times people will tell us, I have $75k, what can I build with this amount of money. We tell people at minimum they should have $150k+ to get started with an esports center. Planning around your funding ability will cause you to skimp on location decor and customer stations limiting your ability to profit. (03:15)

#3 “But I have a great location…”

Some people that haven’t yet started their esports center may have a good idea on a location, but that doesn’t always translate into a great location or esports. “Getting a great deal” is usually a symptom of you get what you pay for. Usually there is a reason why it’s a “good deal”. In addition, be wary of serving the close to a college market. College student priorities for money are most likely beer, pizza, and signiicant others. Their gaming interaction is usually free within the dorms and apartments. They will not be your core business except for special gaming nights and tournaments. (06:04)

#4 “My passion is gaming…”

Passion can only get you so far in the esports industry. Business acumen and chops will need to go along with your passion and love for gaming. Many rumors run rampant in the esports center industry, mainly that it’s easy to make a lot of money. That is not true, we’ve survived over the years and know only of a few esports centers in the US that really have it down and make a decent living from gaming only. (09:25)

#5 Starting small with a future plan to grow

This topic somewhat goes along with planning around your funding ability. Some potential owners come to us saying that they will start with 20 PCs and expand as their business grows. The only way this method would work would be a business that is adding gaming to an already successful business to accentuate what already exists and is working. We also hear many that want to do this along with PC/Phone repair. Tread carefully because if you are just starting out with both repair and gaming and don’t have an established and successful repair model this plan can also fail. (11:15)

#6 I can get a huge Internet pipe for super cheap

This is similar to rent. If you can get a great deal on Internet, there’s probably something to it. ISPs generally pay $3k – $4k per gig wholesale. If you’re paying $99 for 1GB you’re actually not getting a gig but sharing it with other people. You need to have enterprise grade connection and dedicated bandwidth because first impressions of your store are everything. You should have symmetrical bandwidth and apply network shaping so that each player has a similar experience. They should also be able to see that ping times in your store that are significantly better than what they can get at home or they’ll find no reason to come back. (14:10)

#7 Testing success with consoles

When you are setting up there should be conscious decision around whether you are PC only or a good mixture of PCs and consoles. Do not just put out a couple consoles and see what the success rate is. If you want to succeed with consoles you need 15-20 of each type of console. Making customers switch to a platform they aren’t comfortable with to play the game they want on console isn’t beneficial. Nor is a small amount of consoles on a Saturday night when 10 people want to come in and play Fornite on an Xbox One and you only have two available. Plan for the best case scenarios and keep more customers. (17:54)

#8 We can do all the work

This can be a hard one to define. Basically it’s putting stress on you and your partners by doing all the work to save on payroll. Make sure to budget for employees to ease the stress of getting your business up and running. It is close to impossible to be able to do daily esports center tasks, run your business, and take care of your personal life. Eventually partner in-fighting will occur and you will cause unnecessary family stress by “pursuing your passion” and not bringing home a regular paycheck. (19:11)

#9 Marketing isn’t needed to succeed

If you have had some success in your local gaming community and know a lot o people, that doesn’t always translate into paying customers through your door. Marketing is critical to any business. Starting an esports center more or less will need double the marketing. We’ve had a standing location for a long time and every day someone comes in and asks what the location is all about. Put marketing dollars into your business budget, don’t just count on your contacts. It is a unique niche business and most will not understand what you’re going for. (20:54)

#10 The focus will be on food and beverage

The attitude of focusing on a bar or food and beverage may be a good idea if you have experience in that industry. A decision will need to be made on if you are a restaurant with gaming on the side or a gaming business with snacks on the side. We can’t provide insight on a restaurant or bar side because that isn’t our specialty. Our specialty is location consulting or esports and modern gaming.  (23:03)

What are the major things to keep in mind when starting an esports center

The main points to keep in mind is not to be underfunded and put too much on the line personally. This is not a guaranteed model or anyone, yet. If you can’t be prepared to lose everything then this isn’t something you should do. We are encouraged lately with the amount of large businesses and corporations wanting to add an esports center model to their portfolio. They can most likely bounce back if it fails. If you can’t bounce back, it may not be the right time to pursue it. Number two would be not to go into this as a passion project but as a business. It’s ok to make money. The third item would be to do a crazy amount of research and become an esports center expert before you throw your money down on the table.

If you have further interest in doing consulting with your start up, contact us at info@ggcircuit.com

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