Hello Esports Enthusiasts!
Here is Part 2 of our big post-hiatus catchup! Two days ago we covered the following topics (check our website if you missed it):
League & Tournament News
Today we continue with:
Research & Data
Media & Streaming
And early next week we'll finish up with:
Brands & Marketing
I hoped to finish the post-hiatus catchup today, but it was a bit too much for one issue. So now I am hearkening back to my roots in the entertainment industry and stretching this content into a trilogy! Enjoy!
RESEARCH & DATA
►Adventures in the quest for accurate and meaningful data in esports
COVID-19 Continues to Impact the Esports Market: Newzoo Revises Its Esports Revenue Forecast. Although online consumption esports has increased in 2020, the heavy toll of event cancellations caused NewZoo to revise downward its 2020 estimate from $973.9M USD to $950.3M USD. NewZoo’s global esports revenue figures are heavily cited in the esports industry, despite their opacity, and wide divergence from estimates by many Chinese firms, which are similarly opaque. Having said that, the key takeaway here is that NewZoo is projecting flat growth overall in 2020, while also maintaining an annual CAGR of +15.5% for the 5-year the period ending in 2023.
In a month when Fall Guys: Ultimate Knockout came from nowhere to claim the top spot for PC game revenue, esports titles Crossfire, Dungeon and Fighter, and Free Fire all climbed the revenue chart in August, with usual chart toppers LoL, Honor of Kings and Peacekeeper Elite closely behind, according to Nielsen’s Superdata. These 6 titles continued to stay at the top of the revenue charts for PC and Mobile in September, with LoL in particular getting a lift, likely related to the start of Worlds 2020 (console games did very well in September, but are largely irrelevant to esports in China).
►Evolution and official action at the municipal and regional level
Chinese Communist Party aims to turn Beijing into an e-sports hub, backed by subsidy schemes. Beijing recently hosted the KPL (Honor of Kings pro league) Championship game as part of its Esports Beijing 2020 program and even folded in this year’s World Cyber Games as an online competition. Beijing’s Haidian district has been the main hotspot, signing $64M USD in esports related business deals last month.
Tencent's Esports V-Station Opens at Zhengtai Square in Lujiazui, Shanghai, with 5 experience centers and a museum to China's esports history.
Fuzhou signed a strategic cooperation agreement with Tencent to establish a new Esports City (Chinese). Perhaps the era of new “esports cities” is not over after all...
Tencent’s TJ Sports and Riot Games entered into a strategic partnership with Shenzhen Media Group to develop the esports ecosystem in the Guangdong-Hong Kong-Macao Greater Bay Area, while within the same ceremony LPL team announced that it will build a home venue in Shenzhen, progressing the LPL’s localization plan.
Nanjing welcomed KPL club Team Hero as its permanent home. Team Hero will establish a home venue in Nanjing and benefit from a new media and marketing partnership between its owner Chang Ao Sports and Jiangsu Sports TV.
Yaojing Culture to set QGHappy in Shanghai. Yaojing Culture is a major esports organization running top KPL clubs QGhappy and top QQ Speed club Qgspeed. Its new headquarters will be in Shanghai’s Putuo District, which has offered a raft of subsidies and preferential policies to develop a major esports hub.
MEDIA & STREAMING
►Esports media rights and content monetization in China
Huya + Douyu + Penguin Esports
Huya and Douyu agreed on a plan of merger that will combine the two Tencent-controlled companies into the world’s largest gaming and esports live-streaming company with more than 300M monthly active users (MAU), and integrate Tencent’s Penguin Esports to boot. The news largely lines up with my summary in Vol 3.29 (“Douyu and Huya to Finally Tie the Knot”) and fills in a few gaps: the deal is expected to close in early 2021, with Huya as the surviving entity (remaining listed on NYSE while Douyu delists from NASDAQ), the current CEOs will become co-CEOs, and Tencent will ultimately control 67.5% of the voting shares. According to ECO Sports, the new company’s Chinese name will likely be「虎鲨」, or “tiger shark”, reflecting a combination of Huya and Douyu brand icons.
The combined company should have over 70% of market share based on gaming and esports livestreaming users. This is an industry expected to be worth nearly $5.98B USD/¥40B RMB in 2021, according to Chinese research firm iResearch. Douyu and Huya had already effectively squeezed out all non-Tencent controlled competitors in the space by mid-2020, but there is concern about new ripple effects on the gaming and esports industry, as nearly 70% of game streaming hosts are covered by the 3 companies and only 1 of the top 10 most popular livestreamed games on Douyu and Huya currently is not a Tencent game. Huya has been reaching into global markets as well through its NimoTV product, which is currently seeing the most success in Brazil.
One of the expected benefits of the merger is a ceasefire in the frequent talent poaching between Huya and Douyu, and resulting lawsuits that always seem to land hardest on the clubs and players involved. Case in point: Douyu’s recent legal victory against major esports organization RNG in the amount of $US4.48M/¥30M RMB, for violating its exclusive streaming agreement with Douyu for, among other things, letting one of its players stream on Huya.
In other news:
Bilibili, Huya/Douyu's largest remaining competitor in the game and esports livestreaming market (notwithstanding Tencent's 8% ownership stake), posted strong earnings in 2Q2020 with $370M USD in revenue, and 172M MAUs, including 12.9 paying MAUs. Last quarter it opened a third headquarters in Nanjing’s Jianye District, and is planning a secondary listing in Hong Kong to raise up to $1.5B.
► Finally, a quick shoutout to my friends at Shanghai Media Technology (SMT), who have been doing an amazing job with Riot, TJ Sports, and others producing Worlds 2020 from SMT's XR studio in Shanghai. Here is an article on their preparation. I also recommend this wonderful behind-the-scenes video from Mediastorm (h/t Josh Ye).