Serena Wu, China Lead
Life has been turned upside down by the global pandemic. Organizations and businesses have been forced to adapt at breakneck speed to the new norms of social distancing, ‘working from home’ and of course all things digital.
Sporting events across the world ground to a halt with only some leagues just beginning to play ‘behind closed doors.’ Digitalization has no question enhanced traditional sports, but by far the most significant development in the sporting world is the growth of esports.
Introduced in the early 2000s and fuelled by rapid digital advances and, more recently, access to a new potential audience with the majority of the world experiencing lockdowns, esports has grown at an exponential rate. From its relatively modest beginnings of gamers competing from their computers at home, esports is maturing fast with global competitions, professional teams and record-breaking prize pools; it’s now a multi-billion industry worldwide.
Global Esports Market
As of 2019, the Global Esports market is valued at 1.09 billion (USD) and projected to double within the next five years. The USA is currently the biggest market contributing to over 40% of this figure, but China will soon take the lead having already overtaken the USA in player numbers, now estimated at 600 million.
Esports is still relatively early in its development compared to more traditional competitive sports such as football and basketball. The industry is navigating through key issues such as governance & regulation; commercial partnerships and brand involvement, all of which will contribute towards further ‘legitimization’. With the digital nature of Esports meaning all fans can be both participants and spectators, viewership across all levels from amateur games through to professional events is significant which in turn increases traffic and demand for online streaming services (evident through the growth of Chinese streaming platforms).
China Esports Market
Esports in China has followed a similar growth path to other countries, but the growth has been significantly more rapid. The biggest difference is the platform on which games are played. Unlike in the USA and other markets where PC and Console games are the leaders, mobile gaming has absolute dominance in the Chinese market estimated at 63 billion CNY in 2020, almost doubling that of PC Games estimated at 34 billion. Recognizing this variance, publishers have introduced mobile versions of their successful titles and even developed certain titles specifically for mobile gaming such as ‘League of Legends’ and ‘Honor of Kings’.
China’s game live streaming market is also unique and different to the West. There are multiple domestic game live-streaming platforms, specifically Huya and Douyu. These platforms are extremely successful due to content and localization.
Investment and commitment to esports by both the Chinese government and business has also allowed China’s esports market to accelerate and become global leaders. Tencent, which began as a communications company, was quick to spot the esports potential and is now a dominant force, not just within China, but also holds stakes in all top international Publishers (RIOT, Supercell, EPIC, and Bluehole). Not limited to esports, Tencent has also invested in key businesses within subsectors of esports including Huya and Douyu (both listed on the Nasdaq) whom have a combined 80% market share in live streaming and over 56 million registered users; this subsector alone is estimated at 25 billion CNY in 2020. Most recently, Tencent were also announced as the founding partner of the Global Esports Federation.
China Esports Potential
The shift in attitude by the Chinese Government and general public in 2016 has both endorsed and grown recognition for esports in China. In September, the China Education Ministry introduced 13 new university degrees relating to esports including Esports Operations Management, Tournament Production Management and Gaming Design. This was reinforced further in October when Premier Li Keqiang listed esports as one of six key leisure industries that the Chinese Government would back. All these changes and the introduction of educational programs for esports are driving the industry’s legitimacy within China. More recently, significant infrastructure plans in Hangzhou to build over a dozen dedicated esports facilities in anticipation for the Asian Games, held locally in 2022, means only one thing for growth – it will be huge!
With esports maturing as a standalone sector, the focus on its players and their performance will also increase. For current and future players this includes physical assessments, access to sport psychologists, training programs, youth training camps, match analysis and review. Physical and psychological assessment will no doubt have an increased focus after gaming ‘hero’ Jian Zihao, recently officially retired from gaming aged 23, citing ill-health. Coupling these initiatives with clear rules, regulations and governance for the tournaments and matches themselves, will guarantee esports is able to sustain its rapid growth in the years to come.
At a business level, traditional brands are increasing their exposure by sponsoring and engaging into partnership agreements with esports companies and teams and in doing so capturing and engaging a younger consumer base, an increasing challenge for traditional sports. Brand partnerships between life-style brands and esports are becoming more common given the popularity of esports in China, including BMW with esports team FPX, as well as Manchester City with Honor of Kings. Tencent League of Legends Pro League, being one of the biggest leagues within esports in China, has a total of 14 brand partnerships including with Mercedes-Benz, Wahaha (a China-based beverage company), Nike (who supplies all teams with outfits and jerseys) and most recently SuNing (E-Commerce platform).
How can SRI help you realize this opportunity?
Currently there is an estimated 50,000 people working in esports in China with some sources suggesting that this will grow to almost half a million in the coming 12 to 18 months. In particular, esports need innovative, tech savvy, adaptable talent, well-tuned in to the esports customer base and segmentation. Commercial and marketing talent capable of implementing robust growth strategies and forging a new path in innovative partnerships will be in particular demand. SRI has a dedicated global esports and gaming practice with unrivalled credentials and a dedicated team in China.
Talk to us about shaping your talent strategy to realize the phenomenal opportunity that exists for esports in China.
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