Melco bets big on esports in pursuit of japan casino license

Melco believes existing relationship with Chinese customers and popularity of eSports could be a winning formula for Japan casino license
An eSports stadium will play an important role in Melco Resorts & Entertainment’s bid for a casino license in Japan, Geoffrey Davis, Chief Financial Officer of the major gaming and hospitality company, has recently told business news outlet the Nikkei Asian Review.

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Melco made its first foray into the exploding eSports market earlier this year with the launch of its first eSports venue. Macau Estadium is located at the company’s Studio City property on Macau’s Cotai Strip. The 274-seat arena is the first one of its kind to open doors in the world’s largest gambling hub.

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It is planned to host major eSports tournaments and virtual gaming leagues and to livestream events taking place anywhere in the world.
With operational properties in Macau and the Philippines and one under construction in the Republic of Cyprus, Melco has now set sights on Japan, which legalized Las Vegas-style gambling late in 2016 and is currently in the process of building its casino industry.
Mr. Davis has told the Nikkei Asian Review in a recent interview that it “is very likely that the eSports stadium [will] become one of the key components for [their] integrated resort in Japan.” The official further pointed out that the eSports content to be offered by the time Japan’s integrated resorts open doors will be very diverse and advanced, and this will be expected to help Melco draw more customers to its property, in case it wins on of three licenses to be issued by the Japanese government.

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A Booming Market
The global eSports market has grown at a tremendous pace over the past several years and is only poised to expand further in the coming years. According to Newzoo’s Global eSports Market Report, the eSports industry was worth $655 million in 2017 and is expected to record revenue of $906 million in 2018 and of more than $1.65 billion by 2021.
The report also suggests that China and North America combined will generate more than a half of the overall global eSports revenue this year.
According to Mr. Davis, Melco’s relationships with Chinese customers will be one of the company’s big strengths to “contribute to Japan’s inbound tourism.” It also seems that aside from Chinese customers, the operator is also planning to bet big on millennials as part of its Japan expansion effort.

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Ayako Nakayama, Director of Operations at the Japan IR Association, has told the Nikkei Asian Review that more and more companies are now putting eSports facilities at their integrated resorts in a bid to “increase occupancy by bringing in international players worldwide for various tournaments.”
Melco will be targeting the so-called “premium mass” group of customers, that is big spenders that will be visiting its integrated resort not just for gambling purposes. Mr. Davis has pointed out that as under Japan’s casino rules the gaming floor at integrated resorts should not occupy more than 3% of the total area of the properties, other forms of entertainment will take central stage in their business model for the country.

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Melco is one of around 15 major gambling and hospitality operators to be eyeing one of the three gaming licenses up for grabs in Japan. The winning bidders are expected to be announced late in 2019 and if this happens, the actual licenses could get issued in 2020. However, analysts believe that integrated resorts are not likely to open doors in the country before 2024.
Asked whether Melco has picked a location for its Japanese resort, Mr. Davis has said that they have been looking at “big gateway cities where [they] can successfully deploy [their] capital.” Nikkei Asian Review points out that Osaka and Yokohama are two locations that match Melco’s description.

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