Internet & Tech

The big leagues

Why internet titans are throwing their weight behind eSports


Will they watch an eSports league?

A common debate played out in bars – and even on the links courses themselves – is whether golf is a sport or simply a game. Members of the “sport” camp received a major concession last year when golf was welcomed back to the Olympics after a 112-year absence. The legitimisation of eSports – as a mainstream ‘sport’ – will surely prove to be a more contentious issue, but surging profits are bound to smooth the process.

For those wondering, eSports is the name that has broadly been adopted for competitive video gaming. Contests have been held since the Eighties when Atari began hosting Space Invaders tournaments. But now mobile gaming is pushing the industry to new frontiers.

At the forefront of this development, perhaps unsurprisingly, is Tencent, which has grabbed 80% of the mobile gaming industry in China. Over 47% of the company’s 2016 revenue was generated by its gaming business (see WiC367), thanks to popular titles such as League of Legends and Honor of Kings, which was China’s top-grossing mobile game last year with 200 million downloads.

The mobile gaming industry is more than just downloads. Newzoo, an eSports data analytics firm, predicts that in 2017 the income of the global mobile gaming market will surge 41% to $696 million, with most of that revenue coming from sponsorship, advertising, broadcast rights and ticket sales for the competitions themselves.

Newzoo also predicts that the industry’s “revenue-per-fan” will reach $5.20 by 2020. That said, this is still minor compared to major sports leagues, and it doesn’t even amount to a third of the current ratio for sports like basketball.

One obstacle in boosting revenues is the fan base itself, a demographic Business Insider describes as people who “live online and on social media, are avid ad-blockers, and don’t watch traditional TV or respond to conventional advertising”.

The star players of the competitive video gaming world don’t yet have the marketing potential of traditional professional athletes either (think Cristiano Ronaldo or Roger Federer).

Take Zeng Zhuojun, who has won a number of world championships in fighting games such as King of Fighters. The 28 year-old, who plays under the “Xiaohai” alias, is a superstar in the gaming world but said hardly anyone would recognise him on the street. Two fans also told TMT Post that it wasn’t fair to call the top gamers “celebrities”, offering instead the looser definition that they’re “just people who play games really well”.

Tencent has been keen to spur the development of eSports. It announced in April that it would begin franchising the China League of Legends Pro League (LPL) starting this summer. This will establish 14 permanent LPL teams, for which sponsors can purchase exclusive rights.

The LPL will also pair up some teams with specific cities, introducing a “home and away” dynamic, which the eSports Observer thinks could help drive interest in competitive gaming and boost revenues through ticket, broadcast and advertising sales.

Furthermore, Tencent will launch a dedicated eSports TV channel, called ESPTV, in partnership with other online games developers. This new platform should give Tencent greater control over LPL broadcasts and thus revenues from advertising.

PVP Live, an eSports news site, writes: “As the LPL’s broadcast rights are retained by its publishers via the new media outlet [i.e. Tencent and ESPTV] it means that Tencent has effectively cut out the middleman in its pursuit of profitability for the world’s biggest eSports scene.”

Tencent clearly has high hopes for the future of eSports: last month it announced it is to begin building an “eSports town” in the city of Wuhu, Anhui province. The town will have an “eSports university”, an animation studio, and several “creative blocks”.

There will also be an eSports theme park, and another in Chengdu based on Honor of Kings.

Ironically, in spite of all its investment the most significant mainstream recognition of eSports hasn’t come courtesy of Tencent – but rather its rival Alibaba. The latter has used a partnership with the Olympic Council of Asia to get eSports accepted as a demonstration event in next year’s Asian Games in Jakarta and as a medal event in 2022 when the Asian Games will be held in Hangzhou, where Alibaba has its headquarters.

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