Why A Company Is Betting On A Netcafe And Esports Arena In Australia

In a world where mobile gaming is ubiquitous, publishers are streaming console games to your phone, most people play games on multiple platforms and the power of thin-and-light laptops is improving, someone’s building a new netcafe and esports arena. It’s ambitious and seems hugely risky, so I sat down with one of the creators of Fortress Melbourne at PAX Australia to ask: why?

The chief executive of Fortress Melbourne is Jon Satterley. He’s not someone who hails from a publisher, esports or anywhere really associated with video games. He was previously the chief digital officer at Village Roadshow, which is where he came up with the original plans and ideas for building what’s being pitched as a “new kind of entertainment experience” that combines an esports arena and a high-class netcafe environment with full-service bars and restaurants.

[referenced url=”https://www.kotaku.com.au/2019/09/melbournes-getting-a-huge-esports-arena/” thumb=”https://www.kotaku.com.au/wp-content/uploads/sites/3/2019/09/melbesports-410×231.jpg” title=”Melbourne’s Getting A Huge Esports Arena” excerpt=”Fortress Melbourne has announced it’s planning to open a 200-seat esports arena in the city’s CBD in 2020. This means the biggest gaming entertainment arena in the Southern Hemisphere will soon call Melbourne home.”]

“We were lucky to be able to observe, while we were germinating the idea, everything that’s happening around games, esports, live events, and social, physical spaces for gaming,” Satterley said. “All those social live experiences existed, they existed in these small niche pockets. So what I mean by that is that we had lan cafes, internet cafes that were only focused on a narrowing offering for hardcore gamers with no food offering or a Snickers and a Coke or something. Or you had bars, like GGEZ or Beta Bar, games or esports themed bars, where you could drink and get food but not play games. And then you had events like IEM Sydney or [Melbourne Esports Open], where people turn up and then on the Monday, all of those good vibes dissipated into the ether.”

To hammer home the point, Satterley referenced the other part of gaming: arcades like Timezone or smaller bar-offerings like Melbourne’s Bartronica, 1989 in Sydney’s Newtown or Fortitude Valley’s Netherworld. “What if you could do it all under one roof? And do it at such a scale, that when it was considered at such scale, everyone thought it was something new? And that was the thinking. We could start small and grow, but that’s kind of what’s going on right now – everyone’s trying to carve out a niche – or we could say, we could change the nature of what it’s like to go out of your home, be immersed in games culture, and build something grand that catches that.”

It’s a story I’ve heard before, and one you hear from a lot of observers when they go to their first PAX, see a world-class IEM for the first time, or really understand what the live esports experience is like. Fortress Melbourne began life as an esports idea as well, but as the thinking evolved the creators understood that they needed to appeal to a much broader gaming demographic.

[referenced url=”https://www.kotaku.com.au/2019/10/the-trends-in-australia-gaming-and-entertainment-to-keep-an-eye-on/” thumb=”https://www.kotaku.com.au/wp-content/uploads/sites/3/2018/05/x60ein0soeoqp6ilidld1-410×231.png” title=”The Trends In Australian Gaming And Entertainment To Keep An Eye On” excerpt=”Every year, professional consultants PwC compile an outlook of the Australian media and entertainment landscape, looking at the past 12 months and the likely changes over the next five years. It began as a survey into general trends of advertising and media, but with the rise of video games and experiences around gaming, the report has increasingly focused on the world of video games. Late Thursday afternoon, the report’s authors took Australian game publishers, government bodies and other industry members through the latest projections, offering some context and thoughts throughout. Here’s some of the most interesting bits from that report.”]

The topic of Gfinity Australia came up, as it often does in local esports circles, and Satterley noted that the sponsorship-backed model wasn’t sustainable in Australia. “We were careful not to build out a business model that was relying on advertising and sponsorship. Because you read over the postmortems from Gfinity and the fellow who’s the boss there … rightly lamenting that the sponsorship wasn’t there and the media agencies hated all the metrics out of Twitch and they couldn’t connect the dots between what they were achieving and getting the requisite amount of cash. So that’s a mug’s game,” Satterley said.

Fortress Melbourne’s goal is to go the other way, to be the Auskick of esports. “We want to be an esports for everybody else, not the 1 percent, but everyone who wouldn’t mind having a crack. Maybe it’s a $500 prize pool and you come out for shits and giggles and beers and a burger, it’s a fun community event rather than an elite event that’s trying to get millions of eyeballs online.”

Being more diversified also looks better on paper. The problem is that a lot of places in Australia that would want a venue like Fortress Melbourne for grassroots events — maybe a small Smash tournament, or something like a D&D and trivia night — might have difficulty covering the booking fee or charge for the larger spaces. And a key concern from the PwC media outlook was that general discretionary income in Australia wasn’t keeping pace with rising household debt, which basically means people have less real money to spend, and they’re more cautious about what they do spend money on.

Satterley’s background in entertainment is helpful, though. “Typically in recessions, cinema business goes up. Entertainment industries often thrive when there’s declines, or when times get tough, because people’s discretionary income they reserve for entertainment, to try almost to salve the wounds, find some happiness in their lives when things aren’t going so well,” he said.

That’s a challenge to Fortress Melbourne too, because people these days also turn to video games not just for mental escapism, but economic escapism as well. Games are incredibly cost-effective for the money-to-time ratio, and if you’re already cautious about spending and you’re spending a lot of your time playing games already, why travel to play games somewhere else?

Gamers don’t mind spending money on an experience they can’t get elsewhere — it’s partially why the live gaming orchestras or the physical VR experiences like Zero Latency and Disney’s The Void are doing so well. But those are high production operations that create an environment that you can’t recreate in your own home, and a lot of gamers have already spent a lot of money upgrading their home environment, not to mention the cost on gaming hardware, peripherals, or the games themselves.

Fortress Melbourne’s answer is to split gamers into different segments, targeting each with a different proposition. One is the core gamer that wants to play a particular multiplayer or singleplayer game for hours on end, the Dota 2 or CS:GO fan that might also spectate esports events and likes to share with their friends. For them, the atmosphere is a key element, similar to sports fans who enjoy going to the MCG or at a minimum will go to a pub, RSL or brewery to watch some TV because of the environment.

“People, no matter who you are, are social. That’s why Netflix still hasn’t killed movies — people still go to the movies. You can be entertained at home, but people are always seeking experiences in real life,” Satterley said.

Something the size of Fortress Melbourne won’t survive on that alone. So other pillars are for the people who might enjoy a place like GGEZ, Spawn Point or Bartronica on a Thursday or Friday night, but they might want something a little more interactive. People don’t think about going to a netcafe as an alternative to seeing mates at a small bar, but if the experience around it was much nicer — better food, better drinks, a space that’s inviting to hang out in, as opposed to one that’s solely for the purpose of playing games — then the situation might be different.

Getting all of this off the ground won’t work without content, and Fortress Melbourne has been spending years trying to lay the groundwork with local publishers. Satterley explained that most of the local publishers have been open to the idea and listening to the evolution of the project, even when he was still pitching the idea at Village Roadshow. It probably helps that Satterley hasn’t been pushing them to support Fortress Melbourne with money at this stage, which he acknowledged wouldn’t have made sense until the arena was closer to being built.

“We know that we’ve gotta prove ourselves and then when they see the value, and they’ll see what’s happening, they’ll say, ‘Hey can we do a launch for Cyberpunk or can we do The Last of Us 2 in your venue?’ And we can say, yeah there’s a price to that. It’s a win-win, they get an awesome showcase and can drive a lot of traffic in Melbourne to that.”

A lot of Fortress Melbourne’s goals are built on the kind of ambition that’s fairly rare in local gaming. It’s the tonic to the talk that was echoed a lot earlier at the Game Connect Asia-Pacific conferences, where developers talked about how the Australian industry was scared of growing. They didn’t want to expand their teams, take on bigger projects, grow to the kind of scale that makes governments and major publishers take notice, because that involved a lot of risk that could cost them everything.

It’s an experience Satterley shared, particularly coming into gaming as an executive from another industry. “When I started in the games world, learning the ropes, I went to some marketing conferences — I couldn’t believe how small the thinking was about the industry, coming from where I come from in music. I felt like I was hearing things that I heard in the ’90s, in 2015 and 2016. This is like babies, in terms of the evolution of thinking, and this is a time now where people outside of [gaming] can bring some new thinking to it, scale it up so people can see what we’ve seen in other industries. You don’t want to get cocky and say, build it and they will come, but you can say, ‘Look at this! Let’s bottle PAX on a day to day basis.”

Some of that might come in the form of holding D&D nights in the bar section, where people can get a combo deal on a burger and drink and reserve some tables for their Shadowrun or 5th Edition session. Satterley spoke a lot about reaching out to various communities as the arena continues to get built, working out ways they could help support grassroots events from the local fighting game community, to larger developers to the kind of person Satterley described as “games curious”, the punter that would visit a venue like Holey Moley for a bit of drunken mini-golf.

More support all-around will be crucial, but what’s missing most right now is backing from the first-party platforms. Satterley mentioned that Sony has been receptive to their pitches in the past — if not outright supporting, then at least hearing them out — but Fortress Melbourne has struggled to get more help on acquiring the consoles, accounts and titles they’d want to be playing in the venue. The arena wants a space for showcasing console gaming as much as the high-end PCs and PC esports, but it’s been hard work getting the publishers on board, and getting the buy-in from Microsoft and Nintendo has been even more difficult.

“The console thing has been a bit disappointing because it’s been so hard; the love’s just not been there,” Satterley said. “Again, we’re not plugged in — we’re outsiders, we’re trying to break in, and I didn’t have a deep console gaming network in my LinkedIn world.”

The first-party platforms have rules around companies monetising consoles as well, which adds another set of hoops Fortress Melbourne have to jump through. Since no venue has tried the sort of scale that they’re aiming for, it’s a problem that they can’t work through without the support and blessing of PlayStation, Nintendo and Xbox, but to date, they’re still waiting for clearance and guidance on what’s required.

Hopefully the venue doesn’t get hung up on that. As Satterley explained, the venue needs to service gamers of all kinds and having console gaming as a regular feature is a part of that, whether it’s just playing rounds of Jackbox in the bar or offering consoles with Xbox Game Pass accounts that someone can just sit down and chill on for a few hours on a Friday. Of course, the venue will need much bigger and grander events as well, and it’ll be fascinating to see what those look like in March next year, when the venue is scheduled to open.


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