In 2016, only seven universities had an esports program. As of 2020, 170 institutions have a varsity esports team established on campus.
The rise of esports in higher education will be a key differentiator for prospective students in 2021. Colleges that are thinking about starting an esports program should have a plan for how they are going to double in size by year two, according to Michael Brooks, Executive Director of the National Association of Collegiate Esports.
When Boise State University opened its esports program, 20 students enrolled. Last year they had over 200 applicants. The future revenue potential of collegiate esports is vast, esports as an industry is set to surpass $1.5 billion in revenues by 2023, according to the Esports Ecosystem Report, and in its early years of adoption institutions are eager to add a sports team that can operate at full capacity in a virtual environment.
Although esports programs have many advantages, prioritizing the investment can be a challenge for institutions.
Two Obstacles Schools Often Face
1) Upfront Capital Investment
Esports require cutting-edge equipment and the initial cost investment can prove challenging with tight budgets. Even though it’s a no-contact sport, it requires budgetary considerations similar to traditional sports, including designated practice spaces, arenas spacing, furniture, jerseys, technology, software and travel. All of these expenses are incurred before program revenue starts to come in.
2) Technology Obsolescence
Esports equipment needs to be refreshed frequently to support the ever-evolving gaming software. Unlike regular student computers on campus, esports systems require extra bandwidth in order to support live, high resolution games. Having a proactive plan and strategy to managing technology requirements is analogous to maintaining state of the art traditional athletic facilities to retain athletes.
Examples of Success
1) Dealing with Upfront Capital Investment Requirements
A private college in Indiana was challenged with budgetary constraints as they were looking to start up their 2017 esports program. First American was able to align their initial startup expenses to future program revenues through a step payment structure.
This allowed them to not only improve their cash flow and stay within budget, but strategically balance their capital and operating costs. By accelerating their start date, the institution was able to quickly recruit a large team and grew their roster to more than 80 players within the first two years.
2) Managing Obsolescence Risk
First American customized a technology renewal program for a private college in Pennsylvania to improve their IT life cycle management. With a simplified end of lease process, it made it easy to quickly return and refresh equipment freeing up their staff’s time and resources.
By aligning their ongoing technology expenses to the useful life of the equipment, the institution was able to lower their total cost of ownership and invest in the most cutting-edge technology for recruitment. The college launched their program in 2020 – primarily in a virtual setting – with 25 members, 9 of which were freshman.
If you are considering implementing an esports program that would benefit from working with First American, please fill out the form below for more information.