HomeMy WebLinkAboutReg 2020-03-02 Item 5D - Funding - $30,000 Lodging Tax Funding for Virtual Sports (Tukwila E-Sports Initiative)COUNCIL AGENDA SYNOPSIS
---------------------------------- Initialr
Meeting Date
Prepared by
Mayors relaem
Coutuil review
03/02/20
BJM
ITEM INFORMATION
ITEMNO.
5.D.
S"rAFF SPONSOR: B. MILES
O1ZKANAI,AGENDA DA'FE: 03/02/20
AGI NDA I•rEi`i TrrLE Lodging Tax Application, Virtual Sports: Tukwila E-Sports Initiative
CATEGORY ❑ Discussion
Aft
g Date
® Motion
Mtg Date 03/2/20
❑ Resolution
AItg Date
❑ Ordinance
Altg Date
❑ Bid Award
A1tg Date
❑ Public Hearing
Aft
g Date
❑Other
Mt Date
SPONSOR ❑Council ®Mayor ❑HR ❑DCD ❑Finance ❑.Fire ❑TS ❑P&R ❑Police ❑PIF ❑Court
SPONSOR'S VS is requesting funding to launch a "Tukwila Esports Initiative." The Initiative would bring
SUMMARY in over 200 esports tournaments in 2020 at VS Tukwila location. E-sports is a growing
amateur and professional sport seeing major growth, both in participants and viewers. VS
would host both local (Greater Seattle area) and national events. These events will bring
people into the City and thus increase the "feet on the street" and "heads in beds." VS has
extensive experience hosting and producing events. A draft scope of work is attached.
REVIEWED BY ❑ Trans&Infrastructure ❑ CommunitySvs/Safety ❑ Finance Comm. ® Planning/Economic Dev.
® LTAC ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm.
DATE: 3/2/20 COMMITTEE CHAIR: MCLEOD
RECOMMENDATIONS:
SPONSOR/ADMIN. Economic Development
COMMITTEE Forward to Consent Agenda
COST IMPACT / FUND SOURCE
EXPI?NDITURI? RFQ)UIItF1D AMOUNT BUDGETED APPROPRIATION REQUIRED
$30,000 $150,000 $0
Fund Source: 101 FUND.
Comments: Per State law, tourism funds can only be used for tourism promotion.
MTG. DATE
RECORD OF COUNCIL ACTION
03/02/20
MTG. DATE
ATTACHMENTS
03/02/20
Informational Memorandum dated 02/25/20
Virtual Sports LTAC Application, Tukwila E-Sports Initative
33
34
City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Planning and Economic Development
FROM: Brandon Miles, Business Relations Manager
CC: Mayor Ekberg
DATE: February 25, 2020
SUBJECT: 2020 Lodging Tax Funding Requests
Virtual Sports
ISSUE
Review of a lodging tax funding request from Virtual Sports (VS) in the amount of $30,000.
BACKGROUND
The City collects a 1 % lodging tax on certain qualifying overnight stays in paid accommodations
(hotel s/motels/Airbnb) in the City. State law limits the use of these funds to tourism promotion'.
There is currently just over $1 million in lodging tax funds available for use.
The City's Lodging Tax Advisory Committee (LTAC) reviews all requests, even by the City, for
use of lodging tax funds. LTAC then forwards a list of recommended applications to the City
Council for its review and consideration. If LTAC does not recommend an application be funded,
that application is not forwarded to the City Council. The City Council may approve or deny any
of the applications recommended by the LTAC. The City Council may also approve an
application and increase or decrease the dollar amount awarded'.
The City accepts applications on a rolling basis, with the LTAC reviewing requests monthly.
Pending Applications
Following its February 14, 2020 meeting, LTAC has forward the following application from VS to
the City Council for final action. LTAC and staff recommends the application be funded.
1 RCW 67.28.080 (6) defines "tourism promotion" as "...activities, operations, and expenditures designed to
increase tourism, including but not limited to advertising, publicizing, or otherwise distributing information for the
purpose of attracting and welcoming tourists; developing strategies to expand tourism; operating tourism
promotion agencies; and funding the marketing of or the operation of special events and festivals designed to
attract tourists."
Z On August 17, 2016, the Washington State Attorney General's Office issued an informal opinion regarding
whether a municipality could change the dollar amounts recommended by the local lodging tax advisory
committee. Specifically, the informal opinion states:
"When awarding lodging tax revenues pursuant to RCW 67.28.1816(2)(b)(ii), a municipality may award amounts
different from the local lodging tax advisory committee's recommended amounts, but only after satisfying the
procedural requirements of RCW 67.28.1817(2), according to which the municipality must submit its proposed
change to the advisory committee for review and comment at least forty five days before final action on the
proposal."
35
INFORMATIONAL MEMO
Page 2
1. Virtual Sports (VS), ($30, 000)
VS is requesting funding to launch a "Tukwila Esports Initiative." The Initiative would bring in
over 200 esports tournaments in 2020 at VS Tukwila location. E-sports is a growing amateur
and professional sport seeing major growth, both in participants and viewers. VS would host
both local (Greater Seattle area) and national events. These events will bring people into the
City and thus increase the "feet on the street" and "heads in beds." VS has extensive
experience hosting and producing events. A draft scope of work is attached with this memo.
E-Sports is a growing industry and this sponsorship helps Tukwila establish a small foothold as
E-Sports grows. These events are also consistent with the growing entertainment experience
the City see establishing in the Southcenter District. Other entertainment experience businesses
include i-Fly, Defy, and Sycart Racing. These businesses offer a completing reason for people
to come to the City and help to create a true live, work, play, stay district.
FINANCIAL IMPACT
The total amount of funding requested from the lodging tax fund is $30,000. There are sufficient
funds available in the lodging tax fund to pay the expenditures.
RECOMMENDATION
Staff recommends that the City Council approve the funding request, as recommended by
LTAC. Staff has placed this on the March 2 consent agenda (same night at P.E.D meeting).
ATTACHMENTS
A. Virtual Sports LTAC Application, Tukwila E-Sports Initiative
36
r%)Tinkwila
2020 LodgingTax
Application
Event or Activity Name if applicable)-
Tukwila Esports Initiative
Amount of Lodging Tax Requested:
$30,000
Applicant Organization:
Virtual Sports Tukwila WA LLC
Federal Tax ID Number:
465252232
Mailing Address:
17600 W Valley Hwy, Tukwila 98188
Primary Contact Name:
Brian Deller
Primary Contact Phone:
425-359-5280
Primary Contact Email Address:
Brian@virtuals orts.net
Mark all the service categories that apply to this application:
• X - Tourism promotion or marketing.
• X - Operation of a special event or festival designed to attract tourists.
• X - Operation of a tourism -related facility owned or operated by a non-profit
organization.
• Operation and/or capital costs of a tourism -related facility owned by a municipality or a
public facilities district.
Check which one of the following applies to your agency:
• Non -Profit (Note: Attach a copy of your current non-profit corporate registration from
the Washington Secretary of State Office)
• Municipality
• X - For Profit Business
I am an authorized agent of the organization/agency applying for funding. I understand that:
I am proposing a tourism -related service for 2020. If awarded, my organization intends
to enter into a services contract with the City; provide liability insurance for the duration
of the contract naming the City as additional insured and in an amount determined by
the City; and file for a permit for use of City property, if applicable.
• My agency will be required to submit a report documenting economic impact results in
a format determined by the City.
,BAzz�zn ISe11e2
Signature:
Date:
02 / 10 / 2020
City of Tukwila
6200 Southcenter Blvd.
Tukwila. WA 98188
37
r%k)Tinkwila
Applications are considered on a rolling basis. Please contact staff to discuss the process for
having the application reviewed by the City's Lodging Tax Advisory Committee.
Completed applications should be submitted to:
Lodging Tax Advisory Committee
c/o Brandon Miles
City of Tukwila
6200 Southcenter Blvd
Tukwila, WA 98188
Or,
Brandon. MilesPTukwilawa.gov
Questions?
LTAC Contact:
Brandon J. Miles
(206) 431-3684
Brandon. Miles@Tukwilawa.gov.
Updated: December 31, 2019
City of Tukwila
6200 Southcenter Blvd.
Tukwila. WA 98188
`)Ti�W1a
1) Describe your tourism related activity or event.
a) Featuring over 200 esports tournaments in 2020 on -site at Virtual Sports in
leading titles.
b) Virtual Sports is launching an esports initiative targeting beginner, advanced,
semi pro, and pro -am style competitions ranging in size from 20-500 participants
and attendees.
2) If an event, list the event name, dates, and projected overall attendance
a) VS Esports
b) Smaller scale weekly tournaments with projected attendance of 20-50 people will
be happening for different game titles on different days of the week, every week.
The purpose of the weekly events will be to drive awareness, attendance, and
building out the brackets for the larger, monthly events.
c) Monthly events will host an expected 100-200 participants.
3) Is your event, activity, facility focusing on attracting overnight tourists, day tourists, or
both
a) Both
b) Weekly events will host regional participants traveling within a 50 mile radius.
c) Monthly events will be primarily hosted on weekends and will drive participants
both from within the 50 mile radius as well as outside of it.
4) Describe why visitors will travel to Tukwila to attend your event/activity/facility.
a) Compete in the largest and most consistent esports tournaments in our region
that both offer prize pools as well as exposure to professional organizations
allowing for opportunities to earn pro contracts.
5) Describe the geographic target of the visitors you hope to attract (locally, regionally,
nationally, and/or internationally).
a) Weekday events will mostly draw participants within a 50 mile radius.
b) The larger monthly events will be hosted on weekends and will primarily draw
participants from the following regions: Washington, Oregon, Vancouver BC,
Alaska, Idaho, Montana, and Northern California.
6) Describe the prior success of your event/activity/facility in attracting tourists.
City of Tukwila
6200 Southcenter Blvd.
Tukwila, WA 98188
39
'�Tinkwila
a) We have hosted a number of gaming events throughout the region in a variety of
formats with the most notable being GE2 which was hosted in 2017 and 2018 at
Centuryl-ink Event Center drawing roughly 6,500 attendees both years. We had
attendees travel from roughly 20 different states and visit from all over the state
of Washington. We had room blocks of over 100 rooms sell out each year in
addition to the undocumented hotel nights throughout the region. The estimated
economic impact was roughly $1 m for the region each year.
b) Members of our team have also hosted dozens of smaller regional tournaments
that have rotated locations.
c) Additionally, our company has been in operation as a permanent entertainment
facility for over five years in the City of Tukwila.
7) If this is your first time holding the event/activity/facility provide background on why you
think it will be successful.
a) This is not our first time hosting these types of events. The experience of our
team hosting the aforementioned types of events at rotating locations led us to
the decision that hosting events in the proposed structure will not only increase
attendance to our events and our facility, it will drive awareness to within the
greater esports community that the City of Tukwila is receptive and offers a
number of other facilities to host different levels of esports events.
8) Describe the media strategy you employ to promote your event/activity/facility to attract
overnight and/or day tourists? Please list any digital or print media (newsletters,
e-blasts, social media, eetc.) your agency uses or intends to use to promote your
event/activity/facility.
a) The media strategy will include printed material, social media marketing, text
message marketing, email marketing, groupon and social media experience
platforms.
i) Printed material will be limited and offered in store or at targeted events
only as ROI is minimal and environmental impact is significant
ii) Advertising through our list of roughly 100,000 subscribers will be
frequent and variable based on specific levels of engagement of each
subscriber
City of Tukwila
6200 Southcenter Blvd.
Tukwila, WA 98188
")-TK�WIk
iii) A number of social media platforms will be used for a variety of different
purposes ranging from community engagement/development, advertising,
and communication.
(1) Discord, Facebook, Instagram, Snapchat, Alt Space (Microsoft VR
Social Hub), Tik Tok, Mixer, Twitch, YouTube
(2) We can elaborate on the strategies for each of these platforms
upon request
9) Describe how you will promote lodging establishments, restaurants, retailers, and
entertainment establishments in the City of Tukwila.
a) Each of the larger events will require multiple room nights and will need a hotel
partner. We intend to rotate the hotel partner for each event through the hotels
within the city focusing on the hotels that are within close proximity for each
event.
b) Our vision is to partner with hotels, restaurants, retailers, and business
establishments to provide our competitors and attendees places to eat, buy, and
lodge.
10) Is the City able to use your digital and print media for collaborative marketing?
a) We absolutely encourage the City to use any of our assets in future promotions.
11) Describe how you will use the name, "Tukwila" in publications, promotions, and for your
event?
a) We will include Tukwila in any generated media as the destination for competitive
gaming in our region. If specific wording or positioning is requested or preferred,
please let us know.
b) It is our understanding the the City of Tukwila is actively working to position itself
as a "Live, Work, Play" City for the Millenial and Gen Z demographics. We feel
that structured messaging portraying that would be prudent.
12) Measurements and Metrics (Note: You will be required to report these metrics as part of
the clouse out of the agreement between your organization and the City.)
a) Overall attendance at your proposed event/activity/facility.
i. Weekly Tournaments (Annual)
1. Onsite Visitors - 7,000-10,000
2. Live Stream Viewers - 50,000-75,000
City of Tukwila
6200 Southcenter Blvd.
Tukwila, WA 98188
41
r)Ti�kwila
ii. Monthly Tournaments
1. 5,000-10,000
2. Live Stream Viewers- 100,000+
b. Number of people who will travel fewer than 50 miles for your event/activity
i. 75% of our participants and viewers will travel fewer than 50 miles
1. 7,500 (Estimate)
c. Number of people who will travel more than 50 miles for you event/activity.
i. 25% of our participants and viewers will travel more than 50 miles.
1. 2,500 (Estimate)
d. Of the people who travel more than 50 miles, the number of people who will stay
overnight in Tukwila.
i. Of the people who travel more than 50 miles, we estimate 50% of them
will stay in Tukwila.
1. 1,250 (Estimate)
e. Of the people staying overnight, the number of people who will stay in PAID
accommodations (hotel/motel/bed-breakfast) in Tukwila.
i. 99% will stay in paid accomodations
f. Number of paid lodging room nights resulting from your proposed
event/activity/facilitiy?
i. 500+
13) What methodologies did you use to calculate the estimates and what methodologies will
you use to track outcomes, such as total participants, estimated visitor spending, etc.
a. Our estimate was based off of the average number of participants for the tier of
events we will be producing and the frequency which they will be held.
b. Ticketing, social media engagement, competitor demographics, surveys.
14. Are you applying for lodging tax funds from another community? If, so, which
communities and in what amounts?
a. None
15. Are you applying funding from Seattle Southside Regional Tourism Authority (SSRTA)?
If so, in what amount?
a. None
City of Tukwila
6200 Southcenter Blvd.
Tukwila. WA 98188
42
"}T�kwila
16. What is the overall budget for your event/activity/facility? What percent of the budget are
you requesting from the City of Tukwila?
a. $150,000
b. 20%
17. What will you cut from your proposal or do differently if full funding for your request is not
available or recommended?
a. Advertising and frequency
City of Tukwila
6200 Southcenter Blvd.
Tukwila, WA 98188
43
Exhibit "A"
Scope of Services
As part of this Agreement, the City and the Contractor agree to the following scope of services
for this partnership. The goal of this partnership to help increase tourism promotion in the City
by helping bring visitors to the City and to help with the overall brand image of the City.
Intellectual Property and Use of Marks
1. Contractor grants the City a non-exclusive license to use of Virtual Sports marks and
images for tourism promotion activities.
2. City grants Contractor a non-exclusive license to use the City's tourism promotion
marks. Use of the City Seal is not authorized under this Agreement. The City shall have
the sole discretion to determine the content and extent of the City's tourism promotion
marks.
Presenting Sponsorships
Weekly Mixed Reality Concerts
• The sponsorship will include six months of our Thursday Night mixed reality
concerts hosted every Thursday and are being produced in partnership with
Microsoft. Concerts feature a virtual reality DJ that is broadcast to:
o Our video walls in the store viewable by our guests
o Microsofts "Alt Space" which is a VR "world" that can be accessed using
VR headsets from anywhere in the world.
o Microsoft Mixer which is a live streaming platform viewable from any
device including cell phones, computers, and Xbox consoles.
o Unique impressions are estimated to be in the 1,000's per event.
• As part of the presenting sponsor benefits, the City shall receive the following:
o Promotion for events shall state, "Presented by" including the City's name
and tourism mark exposure.
o The above referenced marks will be overlaid onto the production making
the sponsorship visible to anyone viewing the broadcast whether they are
onsite or online.
2. Esports Initiative
• Spring and Summer Seasons esports initiatives where we will be hosting
tournaments Monday, Tuesday, and Wednesday of every week (schedule
permitting) as well as monthly tournaments on rotating Saturdays in the primary
competitive game titles:
o Over 75 tournaments with attendance on site ranging between 25-75
competitors and 250 regular viewers on the live stream.
0 6 monthly tournaments scheduled with average attendance over 200
onsite and viewership over 1,500 through digital broadcasting channels
o Broadcasts to Virtual Sports Twitch.tv and Mixer channels including digital
marketing capability
Esports Summer Camps to include educational and competitive development
practices
o Personal development classes surrounding digital broadcasting
technology
o Education opportunities both in actively competing or tournament
organization and administration
As part of the presenting sponsor benefits, the City shall receive the following:
o Promotion for events shall state, "Presented by" including the City's name
and tourism mark exposure.
o The above referenced marks will be overlaid onto the production making
the sponsorship visible to anyone viewing the broadcast whether they are
onsite or online.
o Decals on all of the gaming PC's
o Logos on all of the desktops for the gaming PC's
General Marketing and Branding Activities
1. The location of all esports and music events shall be listed as "Tukwila" and not
referenced as "Seattle". This shall include social media posts and tags, as well as media
alerts, press releases and announcements if the actual location is mentioned outside of
posting the address which would inherently be Tukwila.
2. City shall receive at least one 15-second commercial spot during each broadcast which
will be pushed both onsite and online.
3. Virtual Sports will be available for the filming of any promotional videos that the City
would like to create in an effort to drive awareness by the target demographics.
Economic Development
For economic development promotion and marketing purposes, Contractor shall provide the
City the following:
1. A free to play gaming tournament for members of the community. Details are to be
determined between the City and Contractor.
2. A different lodging establishment within the City, chosen by Contractor and rotating
monthly, shall serve as the official hotel for all visiting teams and their guests throughout
the term of the agreement.
45
m
V/R:TV.1 LSPORTS
Pow"a" BY:
FIERO
Team
Brian Deller-CEO
10 years experience in LBE facility design
and operations.
Designed and co -managed the software
platform development.
12 years experience in CRE focused on site
selection, permitting, and upzoning.
Scott McCraw - CTO
22 years enterprise software development
at Microsoft
Two years at Amazon R&D Group
Two years in Silicon valley at a gaming
startup focused on children
Built 8 full stack mobile games focused on
puzzles; poker, and blackjack
Jake Greene - Community Development
10 years network engineering experience
20 years in competitive esports both as a
competitor and organizer
5 years of live stream production ranging
from small frequent streams, to full
broadcast viewed by thousands.
I •
Our Company
The "Top Golf" of Gaming
ViQrua�
SPORTS
Virtual Sports is our Brick and Mortar "CBE" Facility
Most people under 50 years old grew up with a Nintendo in their house. Our business
caters to them and their kids by creating an adult oriented, kid friendly experience.
Positioned to be the intersection of digital and physical experiences. We host
corporate events, birthday parties, concerts, esports tournaments; and more.
FIERm
Fiero is our Software Development Division of the Company
The proprietary tool connects disparate systems such as the POS and entertainment
systems to users and the player accounts they create. Data is tracked and experiences
are "gamified" driving repeat business through leader boards and valuable business
intelligence is generated as a by product.
i •
The arrnount of adult-s in America who regularly play video games.
50
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Problem
The ADHD Generation
Before Nlillenials
The overwhelming majority of people from developed countries; 40 and
under, grew up with an Xbox, Nintendo, or Playstation in their house.
After Millenials
Their discretionary dollars are spent on experiential entertainment. They
want activities, craft beverages, good food, and constant stimulation.
52
Solution
Facilities That Drive Attendance and Engagement Through Integrated Events and Experiences
53
Objective
Build a Sustainable
Esports Program ir'
the City of Tukwila
54
Our Model
Grow .
Foster the growth of the community I
and create a network effect through
social connectivity and sharing a
Acquire
Onboard users to the platform through
groups, events, and entertainment outings
�0
t
Engage
Drive repetitive engagement through
data enabled, social competition
56
Why
(fit
High Loyalty
Millenials and Gen Z dont
support big brands because
they feel big brands have
never done anything for them
but they wont hesitate to
donate money to their
favorite live streamer that
they watch DAILY.
■1
Trending
Esports, Gaming, Millenials,
and Gen Z are top of mind
right now. They are the most
difficult generations to reach
through traditional
advertising and they are the
future. Gaming is the conduit
for the messaging.
w\
•1
Connected
Hands down the most
connected and digitally
influential generations of all
time. Earn their loyalty and
they will spread your message
foryou organically. Which is
the only type of messaging
they listen to.
Proven Spenders
Experiences not things.
Between their $3,000 PC's,
XBQX's and (phone 11's,
they've got everything they
need. They drink, eat, and
create memorable socialize
experiences. Then they post
pictures about it on Instagram.
57
Spending Habits
Transportation
Food and Beverage Ft
! Community/Afterparties
Millenial�
Hotels p�-+ Merchandise
. I
Esports is growing on average 15%YOY projecting to hit 1.8 Billion by 2022.
59
The Audience
Player's and fans alike watch and
consume Esports content
primarily on Twitch, Mixer &
Youtube
Because ofthe digital format of
Esports, player & fan bases' are
global in nature
Esports content is streamed
online and for free, with most
esport Mans not owning a cable
subscription at all (cord cutters)
E �T_
'Sports J� J�
General Gaming Population
Top Tier
The player base for any given game is quite
large. Of that large community, a certain
percentage of that player base wishes to
compete against each other.
Grassroot events are typically put on by community
volunteers and leaders. White prizing is very minimal,
it allows the players who wish to compete an Outlet
to meet like-minded individuals and test their rnetal.
1-he Lop 10% of the player base would compete in more
organized competition with larger prize pools & minimal
travel to events.
The top 1% of a game's player base would compete in major events for
large scale audience's with huge prize pools.
61
Esports Strategy
Our Customers Both Create and Consume Esports Content
I
Regional Esports
Franchises
This concept will continue to grow and these teams only fill stadiums roughly
1-2 times a year in their home city. This is what we show on the screens and
host watch party events for.
A large, under -served, and critically important component to
success. The "Farm Teams" are top of mind for the industry right
now and there isn't a venue infrastructure in place to
accommodate these spectator friendly events.
These people play at home or in LAN centers where
Grass roots and Online Players crowds cant assemble. We drive engagement through
online tournaments allowing for larger qualifying
events in store.
62
Event Type Frequency_
Broadcast Specific
8%
63
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TAR. MT MARKETS
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