Nerd Street is opening its first collegiate esports facility this week at Rowan University in what could be a sign of things to come for the Philadelphia startup.
The new venue on Rowan's South Jersey campus will mirror Nerd Street's Localhost locations, spanning about 7,100 square feet.
Esports "labs" and dedicated rooms for gaming are popping up on college campuses across the country, but they don't rival the scope of what Nerd Street has built at Rowan: a facility that has 50 personal computers on a main floor, 10 more elevated on a stage and 10 additional gaming screens in a private room. As the industry continues to grow, Nerd Street CEO John Fazio believes the size of on-campus esports facilities will too. Nerd Street is looking to be the go-to company to provide that infrastructure.
"We intend fully to build out the infrastructure at the collegiate level because we believe that building a national network of collegiate infrastructure venues for gaming will unlock scale," Fazio said.
Along with its headquarters at 401 N. Broad St. in Philadelphia, Nerd Street has opened venues in North Brunswick, New Jersey; Fullerton, California; Denver and St. Louis. The company holds private events, gaming tournaments and other programming open to the public at its various "Localhost" locations.
In addition to the Rowan facility, Nerd Street is planning a 10,000-square-foot esports hub on Albright College's campus in Reading. Fazio said the company is in active conversations with a number of colleges to build similarly designed spaces on their campuses. He said the goal is to build out about a dozen more on-campus facilities in the next two years and Nerd Street has a pipeline of about three dozen colleges and universities that are considering the prospect.
"The demand we're seeing from colleges gives us a really strong opportunity to chase that category," Fazio said.
The National Association of Collegiate Esports, which is a partner of Nerd Street, launched in 2016 and now boasts over 240 member schools representing more than 5,000 students.
Fazio said there's a progression for schools that introduce a dedicated room for esports. They host a varsity team, but it comes with a high cost to maintain the facility and buy the technology. If they want to open up programming to a broader audience, it means more investment. With Nerd Street's model, the company develops the venue and maintains the facility. Schools will pay what is normally a five- or 10-year subscription for students and a varsity team to use the space. Nerd Street will also host programming similar to what it does at its Localhost locations, which will be open to the surrounding community.
Fazio said it wasn't always part of his vision to lean so heavily into college campuses, but he's seeing it as a way to quickly grow the business.
"We realized that this collegiate model is what's most impactful to the industry and what's more scalable for us as a business," he said.
The Esports Advocate, citing industry sources, reported in February that Nerd Street Gamers is grappling with financial difficulties and looking for a buyer. Asked about the report Wednesday, Fazio said the company is "focused on profitability and fundraising."
Nerd Street posted record revenue in 2022 at $8 million, the third year in a row the company doubled sales, according to Fazio. He said the company is looking to raise a $10 million round from accredited investors despite facing "by far the toughest fundraising environment that we've experienced." Nerd Street has raised $24 million to date from investors that include Comcast Spectacor, Five Below, Elevate Capital and SeventySix Capital.
Fazio thinks the competitive esports world is set to skyrocket. Statista projects the global esports market will grow by 8.3% between 2023 and 2027 to an estimated $2.24 billion.
"I believe there's going to be 10,000 of these venues built in the United States, whether we do it or not," Fazio said. He added, "I think the reckoning is finally here. We hope we can be a major part of the solution in providing an infrastructure that five, 10 years from now is the reason a professional esports team or professional league has scalability to profit."
