News Roundup: Jan 1, 2021 - A busy end to a singular year for China's esports industry
Vol. 3.39 | Jan 1, 2021
|John Oliverius||Jan 2|
Happy New Year, Esports Enthusiasts!
I hope you had a great time celebrating the end of Annus Horribilis. Call me superstitious, but I wanted to completely close the books on 2020 before sending out my last news digest for the year.
And so ends Volume 3 of the China Esports Business News Digest! Over 39 issues we covered developments and trends in the core businesses (i.e. “Leagues & Tournaments” and “Club News”), the total public/private ecosystem (i.e., “Research and Data” and “The Ecology”), commercialization (“Media/Streaming” and “Brands & Marketing”), and influential events on esports’ horizon (“Beyond Esports”), hopefully providing actionable insights for those in or touching the industry. I won’t be doing a year in review, but if you are interested in tracking any of these trends over 2020, check out the archive; the above topics are all clearly identified in each issue.
For 2021/Vol 4, I will be trying out some new things. The first couple months may be a bit irregular, so bear with me. As always, thank you for your readership. I am sincerely grateful to everyone accompanying me on this journey, and for allowing me to share my passion for China and esports with you.
新年快乐！ - John
Leagues & Tournaments
2022 Asian Games
The Olympic Council of Asia (OCA) officially added esports as a medal sport to the 2022 Asian Games in Hangzhou, China, ending speculation that esports would be dropped or remain a demonstration sport after OCA appeared to backtrack from its 2017 roadmap to make esports a medal sport after its debut as a demonstration sport at the 2018 Asian Games in Jakarta. I have a lot of thoughts about this, which I will expand on in a separate piece to come. Stay tuned.
League of Legends (LoL)
The Demacia Cup, the last pro LoL event of the year in China open to a live audience, was held at the Baoneng Qoros Cultural Center [宝能观致文化中心] in Huangpu District, Guangzhou, with TES beating Team WE for the Cup. The tournament is not an official part of China’s pro LPL system, but is important as a showcase for the new season rosters and new talent.
The LPL All-Star Weekend which was postponed due to the discovery of a COVID-19 infection in Chengdu, will be held today and tomorrow at the Chengdu Financial City Performing Arts Center. Although no new cases have been reported, the offline event has been retooled and scaled down in an abundance of caution. Meanwhile, Chinese LPL fans had to settle for an online LPL vs. LCK (South Korea) All-Star event, in which the LCK came out on top.
Honor of Kings [王者荣耀] (HOK)
The 2020 King Pro League (KPL) Autumn Finals concluded with DYG sweeping Chengdu All Gamers 4:0. The finals were held in Chongqing for the first time, and had 8 sponsors, all domestic brands, which is somewhat unusual for a massively popular esports tournament, but reflects the concentration of that mass popularity to China (as noted in “Beyond Esports”, below).
The Honor of Kings pro-am "Unique Skills Cup" hosted by Tencent and VSPN opened on Dec 25 and will run through Jan 6, featuring top anchors and a mixture of entertaining game modes.
The first major HOK tournament of 2021 will be the 2020 Honor of Kings Winter Champions Cup, opening on New Year’s Day in Shenzhen and running through Jan 24 (and here I thought we were done with 2020).
QQ Speed [QQ飞车]
The 2020 QQ Speed Mobile Asia Cup finals were held at Guangzhou’s Tianhe Sports Center Stadium, with RNGM.Yunhai coming out on top. The tournament was hosted by Tencent and VSPN, with 24 drivers competing from China, HK, Macau, Taiwan and Thailand. (See “The Ecology” below for more on the Tianhe District.)
World of Warcraft (WoW)
Blizzard announced that for 2021, the Mythic Dungeon International tournament, a WOW raid racing challenge, will separate into global and China tournaments, with 4 cups during the season, and a global finals in which 8 teams, including 2 from China, will compete for a $300K prize pool.
The 2020 NBA 2K Online 2 (NBA2KOL2) national league finals were held at Shanghai Baogang Gymnasium, the culmination of a national competition that initially attracted more than 100,000 participants, according to SHINE. NBA2KOL2 is a PC version of NBA2K developed by Tencent and Take-Two specifically for the Chinese market, where a decade-long game console ban hindered adoption of the global version.
In related news, China’s regulators pulled NBA 2K20 from Apple’s App Store in China, along with 39,000 other paid games or games with in app purchases that had not received valid publication licenses in China. The move was not unexpected; the App Store has been a loophole for these games that the National Press and Publication Administration (NPPA) announced it would close back in February.
Nenking Group [能兴集团] announced that it acquired the LPL seat and roster of Wuhan eStarPro, for an undisclosed sum (English, Chinese). Wuhan eStar Pro has a strong KPL team and recently won the KPL2020 Autumn Playoffs, which it also hosted at its home venue in Wuhan, and was said to be shopping its LPL seat in order to deepen investment in KPL. For reference, Rogue Warriors was reportedly seeking $24.3M USD / ¥160M RMB for its LPL seat, which is more than twice the initial seat fee for an LCK franchise. Nenking Group also owns the Guangzhou Charge, making it now one of the few companies in the world with franchises in both the Overwatch League and League of Legends.
In related news, the now KPL-focused Wuhan eStarPro merged with Shenzhen Weiwu, owner of LPL team Victory Five (V5), to form a new esports organization headquartered in Wuhan's Optics Valley [光谷], called 武汉星竞威武文体发展有限公司 (Wuhan Star Weiwu Culture and Sports Development Co., LTD ).
37 Interactive Entertainment [三七互娱] made a major investment in Chengdu-based All Gamers, one of China’s oldest pro esports clubs and runner up in the recent 2020 KPL Autumn Playoffs. 37 Interactive's primary business is game development and online education, and this is its first esports investment.
FunPlus Phoenix (FPX) unveiled a new brand design and an anthem by Chrissy Costanza, famous for her League of Legends collaborations. FPX recently expanded into Valorant and Call of Duty Mobile, and is reportedly planning to acquire GODSENT's CS:GO roster.
The city of Shenzhen announced new policies and subsidies to develop the esports industry in the Nanshan District. Financial incentives include:
A ¥1M RMB bonus for each new game developed in Nanshan that has a major esports competition;
Up to ¥5M RMB for top clubs that establish home venues in Nanshan (with ¥1M bonuses for making the podium in league finals)
¥3M RMB incentives for globally influential events
Up to ¥2M RMB for esports expos and similar activities
Rent subsidies for esports organizations
The plan explicitly sets a goal of making Shenzhen’s Nanshan district the esports hub of the “Greater Bay Area” of Guangdong, Hong Kong, and Macao.
Also in a bid to create the Greater Bay Area’s esports hub, Guangzhou released a 10-year plan to build its Tianhe District into a world-class esports center. The goal is to build a 100B RMB local industry with an ecosystem based integrating event hosting, content production, entertainment experience, talent training and equipment manufacturing, and to host at least 3 international esports events before 2022.
Huya and DouYu Merger Under Review for Anti-Monopoly Concerns. Tencent is solidly in the crosshairs of China’s recent antitrust backlash against big tech companies, following its recent regulatory action against Alibaba and Ant Financial. See Vol 3.31 for background on the merger and its potential to consolidate the massive game livestreaming business in China.
Esports MCN Elephant Goose Media HK Limited (EGM) reports that it received major capital infusions from Bilibili and Kuaishou. Other major investors include Tencent, Huya, Douyu, and Shanda. EGM, which was formed in March from the merger of Little Elephant Entertainment and Big Goose Culture MCNs, became the leading gaming MCN in China. According to Sportsmoney, EGM generates over 12B monthly average views, via 30,000 signed artists and 14,000 game streaming hosts, 300 of which have more than 1M followers. SportsMoney expects EGM to expand and diversify into pan-entertainment content, with an IPO possibly on the horizon.
Trovo and Allied Esports team up for mobile tournaments. Trovo is a new, mobile-focused livestreaming service owned by Tencent, focused on the market outside of China. It came out of beta in June 2020 and is still well under the radar, but with Tencent’s backing and its financial incentive to promote games like PUBG Mobile and Call of Duty Mobile, expect further developments.
Brands & Marketing
Ping An Bank [平安银行] became the title sponsor of Bilibili Gaming, now “BLG Ping An Bank Esports Club”. According to Lanxiong Sports, naming rights were not available as sponsorship assets in the LPL until TJ Sports instituted a rule change in late 2019. As part of the sponsorship, Ping An Bank has launched BLG-themed debit cards for its customers.
JD.com Zeros In On China’s Growing Esports Market. JD.com announced the launch of the JD Esports Game and Mobile Phone Industry Alliance, which will lean into its esports properties such as Jing Dong Gaming (JDG) to market products and services to gamers, and develop talent.
According to Sensor Tower, combined revenue from PUBG Mobile and its Chinese version Peacekeeper Elite [和平精英] was the revenue leader for mobile games in 2020, generating $2.6B so far in-game. Second place went to Honor of Kings with $2.5B in revenue. The PUBG Mobile figure represents a 64.3% YoY increase, while Honor of Kings is up 42.8% YoY. These two titles, which are two of the top core esports titles in China, not only earned more than double the revenue of any other mobile title, but the vast majority of revenue earned was generated in China. HOK has essentially become an online social hub for many male and female Chinese mobile gamers, reaching 100M daily average users in November.
The latest generation of Playstation and Xbox consoles obtained an important certification by Chinese regulators, signaling that a China launch may be just around the corner.
Perhaps the most Game of Thrones thing to ever happen in the video game industry was the tragic poisoning of Lin Qi, CEO of Shanghai-based Yoozoo, apparently by a colleague Lin was trying to push out. YooZoo is the developer of popular title – wait for it – Game of Thrones: Winter is Coming.
The likelihood that COVID-19 will continue to significantly disrupt China’s esports industry: I agree that events will still largely remain offline, with live events reserved for big events, which will be interesting for all those “home venues” built in 2020. I am less sure about Hongyu’s prediction that overseas investment will slow; Tencent for instance already has a web of worldwide investments and exploring online events outside China (which will be the only kind of esports events outside China in 2021) could be low-hanging fruit.
The rising trend and potential of women in esports in China: I really hope Hongyu is right about this one, although so far the phenomenon seems mainly concentrated around HOK and its widespread cultural influence in China. However, this is an area where China is well ahead of other countries, and it is vital to the development of a healthy esports market.
The likelihood that China’s first crop of graduates in the first 4-year university esports degree will have a hard time finding jobs: I have mixed feelings about the argument here. On the one hand, there are some thoughtful programs being rolled out for Chinese higher education institutions focused on esports business management and production, and it’s too early to judge their impact. On the other hand, there have been too many vocational schools merely churning out streamers for some time, and the government has not sufficiently quantified its dramatic forecast of millions of job opportunities in esports for the next five years. Add to that the unknown impact of top-down initiatives that will affect the entire industry, like skills standardization for esports professionals, and the future is uncertain for job-seekers, but not necessarily bleak.
We’ll see! (my New Year’ Day motto)
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