Seven local entrepreneurs are looking to take advantage of the explosive popularity of professional gaming by expanding their business – even though it hasn’t actually opened yet.
© Cole Burston
Nafe Heydari, operations manager, Levels E-Sports Centre
by Adam Feibel
Nafe Heydari and his team at Levels E-Sports Centre are looking to capture an as-of-yet untapped competitive gaming market in Ottawa. E-sports, as it has come to be known, can be hard to understand but just as hard to ignore. Forbes deemed 2012 the “year of eSports,” citing huge growth in participation and viewership.
“It’s growing very quickly, not really quick enough in Canada, but we’ve seen in other countries where it’s such a big part of the society there,” says Mr. Heydari, the company’s operations manager.
Levels is planned to be a gaming facility not unlike a recreational centre, where visitors can play games, socialize and train. “Battle stations” will be outfitted with gaming consoles and PCs, while separate areas will be set aside for tabletop games and a café.
It’s been more than a year since the owners began to promote the idea last spring. Online marketing and more than 1,000 surveys turned up an “overwhelming response” to the idea, prompting them to scrap the initial plan to open in June and expand their business model.
“We knew that this kind of thing required Levels to be much bigger than what we started with,” says Mr. Heydari.
The new vision roughly triples the size of the original plan – a move that didn’t please the company’s internal accountant at first.
“He was quite adamant that we don’t do this,” Mr. Heydari says. “It took some convincing. We put the numbers together and we realized it’s more risk, but the chances of success are also a little bit higher.”
The strategy may not be as backward as it sounds. James Bowen, a professor at the Telfer School of Management who specializes in startups, says Levels seems to be working along the lines of a newer business methodology called a customer discovery process: offering up a service before it has been fully developed.
“The reason you want to do that is because it is an emerging market and we don’t know exactly what the customers want,” says Mr. Bowen. “If people start putting money on the table, then you know you’re going in the right direction.” If not, it means the company will either flop, make some slight modifications and then proceed, or learn that the customers want something entirely different and offer that instead.
“They went, they got some feedback and then they made the decision to go bigger,” says Mr. Bowen. With that remodelling, Levels is largely relying on the keeners who are itching for a business of this kind and who will be eager to give them their business early on.
Levels’s accountant has valued the company at $2 million, and the team expects to turn a profit within six months of opening. That’s with an estimated $250,000 to $300,000 of startup costs, most of which has been fronted by the owners. They’re also looking to bring in finances from crowdfunding and – their most major need – investors, particularly a major partner that can organize and promote e-sports tournaments and other events to draw large audiences.
Revenues are expected primarily from pay-per-hour gaming. Main client targets are teens and young adults – the typical demographic of serious gamers – but also a potential after-school rush of younger kids, as well as an older crowd that will perhaps be more drawn to offline games. While the company’s overall concept is unique in Ottawa, many of its individual components will still have to compete with other game lounges, youth entertainment companies and nearby cafés.
The owners are projecting an opening date sometime this coming winter. But since the team launched the concept more than a year ago, one big concern is blowing their lead and losing the interest of their followers or seeing a competing e-gaming lounge open its doors.
“We are stressed about keeping our followers waiting,” says Mr. Heydari. “That’s a lot of pressure because people want this to happen.”