China Esports Recap 2020
After I finished the China Recap of 2019 last year, I finally had time to rest and took my flight back home (Chengdu) to celebrate the Chinese New Year, the most important holiday in my country’s culture. I’ve never thought I would spend a whole year in my home to continue my esports career.
On Jan.20, I sent a message to my colleagues at The Esports Observer: “There is an infectious disease in China.” After that, I became the first person in TEO who got affected by the COVID-19 pandemic, and my work (China Recap) suddenly also became a weekly report on the coronavirus situation in China. Fortunately, I could do most of my work from home as a journalist, and attended a few esports offline conferences and events lately, thanks to the government successfully making the pandemic controllable.
There are always business opportunities in a turbulent year, especially this year for the esports industry. Here are my top five stories of 2020 in China esports industry:
No. 5: The Three-Year League of Legends Media Rights Deal
After Chinese live-streaming platform Bilibili secured a three-year strategic partnership with Riot Games for exclusive Chinese broadcasting rights to International League of Legends competitions in August, many western publications and agencies asked me whether the deal was a loss-leader.
Before answering this question, It needs to be clarified that the financial terms of the deal were not disclosed. As we reported last year, the deal was reportedly valued ￥800M ($113M) for only the League of Legends World Championship (Worlds) media deal, but the new deal includes not only Worlds, but also the Mid-Season Invitational and All-Star events.
Eleven days after Bilibili announced the deal signed, it agreed to share the Worlds 2020 media rights with DouYu, Huya, and Penguin Esports. This operation could be considered a double win for both Bilibili and Tencent. On the one hand, Bilibili monetized the deal, and still controls the media rights in the next two years. On the other hand, the three platforms are now all owned by Tencent. Tencent is also the second-largest shareholder of Bilibili, owning 13.4% of total shares. In February, Bilibli responded to Chinese and western media outlets that the company’s CEO Rui Chen is still the top shareholder of the company, owning 15.1% of total shares.
In addition, Bilibili also reported that the platform has 197M monthly active users (MAU) in its Q3 report, which marks a 54% increase in the same period of last year. In some ways, Bilibili is still growing fast, and the League of Legends media deal certainly attracted a number of esports viewers.
No. 4: Esports and Olympic Games
Since I first connected to the Chinese esports industry in 2007, esports joining the Olympic Games has been always a dream of the people who work in esports, because it equates to gaining global recognition.
On Dec. 16, the Olympic Council of Asia (OCA) announced that esports was approved to be included in the 2022 Asian Games in Hangzhou as a medaled sport. In addition, OCA revealed that there will be six esports titles.
This news was actually the first “BREAKING” news I wrote for TEO in the past two years. Though OCA has not disclosed what specific titles to be played during the event, it also means there will be nearly a year for game publishers to secure involvement in the Asian Games, one of the biggest four-year sports events in Asia.
The 2018 Asian Games held in Jakarta also featured six esports games but were included as demonstration titles, including League of Legends, Arena of Valor, Pro Evolution Soccer 2018, StarCraft II, Hearthstone, and Clash Royale. However, Chinese viewers were not able to watch the competition as China Central Television (CCTV) didn’t showcase esports matches for a single second due to the National Radio and Television Administration signing an injunction in 2005 – “No esports competitions to be aired on state-run TV.” As the 2022 Asian Games will be hosted in Hangzhou, the injunction will likely be lifted.
It’s also worth noting that there will be a competition in who will organize the tournaments. Alibaba Group is considered the biggest technology company in Hangzhou, and will be the official partner of the 2022 Asian Games. However, Jason Fung, the senior director and global esports of Alibaba Group left the company and joined ByteDance as global head of gaming content in June. I’ve heard that Alibaba Sports’ esports department has disbanded, which means Alibaba Sports’ annual Olympic-style esports event World Electronic Sports Games (WESG) became history.
Chinese tournament organizer VSPN could also be a potential candidate due to the company being involved in the broadcast works at the 2018 Asian Games. However, the company has a close business tie with Tencent, and the International Olympic Committee (IOC) made clear in October that the organization will not recognize Tencent-backed Global Esports Federation (GEF).
No.3: The End of China’s Gaming Live Streaming Battles?
“Tencent is planning to merge DouYu and Huya.” I first heard of this information in April. After six months the plan came true as DouYu acquired Tencent’s Penguin Esports for $500M first, and then the company completed the merger with Huya in H1 2021. This news indicates the battle of China’s gaming live streaming platform has finally entered an end, the three kingdoms (DouYu, Huya, and Penguin Esports) turn over to a giant.
The battle started in 2014, and hundreds of live streaming platforms have failed in China, including Panda TV and Chushou TV. All of them have the ambition to become the Chinese equivalent of Twitch. The long-term business competitions have generated massive bubbles and disputes for competing streamers. For Tencent, as the owner of all of DouYu, Huya, and Penguin Esports, the merger is a solution to reduce the cost of unnecessary duopoly frictions. In the future, we might not see a big amount of bonuses for signing streamers.
In the big picture, the merger is a way for Tencent to defend itself from other challengers in the live streaming industry. Obviously, gaming is only one of the major sectors in the live streaming industry, among others like just chatting, e-commerce, music, and education, and the COVID-19 pandemic did accelerate the development of all sectors in live streaming. Here, Tencent faces challengers from Kuaishou, ByteDance’s Douyin, Bilibili, as well as e-commerce platforms, such as Alibaba’s Taobao, and Pinduoduo.
However, the merger is currently facing challenges from policies and the government. In June, DouYu and Huya were both issued a formal warning from the Cyberspace Administration of China for involving “vulgar,” “sexual,” “anti-scientific,” and “gambling” content. In December, the government started to investigate the merger between DouYu and Huya to determine whether it violates China’s new antitrust law. Those all have bought uncertain factors to this merger, as well as Tencent.
No. 2: VSPN Crowned China’s Biggest Esports Company
As many esports tournament organizers and teams are struggling to survive during the COVID-19 pandemic, it’s hard to see a big amount of investment in the esports industry.
In October, Chinese esports solutions provider VSPN (Versus Programming Network) raised close to $100M in a series B financing round, led by Tencent Holdings. Further investors that participated include Tiantu Capital, Susquehanna International Group, and Kuaishou.
Before this investment round, I did an interview piece with VSPN President and co-founder Ethan Teng, and he told me that the goal of the company is to break the young age (20-30-year-old) and male-dominated image of the industry.
There is probably no esports production company with as much presence in a single market as VSPN has in China. The company handles productions for the biggest competitions, such as Honor of Kings’ King Pro League (KPL), the Peacekeeper Elite League (PEL), NetEase Warcraft III Golden Series, and the PUBG Mobile Club Open (PMCO) competitions hosted outside of mainland China.
Backed by the support of Tencent and the local government, VSPN co-hosted the world’s first large-scale offline esports competition during the pandemic, the $4.6M Honor of Kings World Champion Cup (KCC) with a limited live audience in July in Beijing. Tencent also promised to put more than $30M for the Peacekeeper Elite esports ecosystem in 2021, and both PEL and Peacekeeper Elite Championship (PEC) are hosted by VSPN. Even during the Tencent Global Esports Summit, VSPN was nominated as the only tournament organizing partner by Tencent COO Mark Ren during his speech.
No. 1: League of Legends Esports Takes Over The World
You probably did not see a single match of the League of Legends competition, but you might have heard about a song called “Take Over” if you are esports fans. “Take Over” is the official theme song of the 2020 League of Legends World Championship, as well as an unofficial word that refers to “acquisition” in the business school where I studied for my Masters degree.
The song repeated a lyric that “We (League of Legends or Worlds) are taking over,” that I think perfectly fits the situation in China – that League of Legends is taking over the leading position in China’s esports industry, and esports is taking over traditional sports.
Because of the pandemic, the 2020 League of Legends World Championship hosted in Shanghai became the biggest esports competition of the year. It broke the record and achieved over 23M average minute audience views across all platforms, according to Riot Games.
For the final, Riot Games and TJ Sports made a wise decision in allowing 6,312 live audience members at Worlds Final for free. More than 3M people registered online to attend the final, and I was lucky to represent TEO as media to attend the event. This decision generated high-quality reputations for both companies from the esports community, as well as showing other esports titles that strict COVID-19 safety measures and a facial recognition technology could solve the scalping issues in esports.
During the whole month of the competition series, Riot Games also integrated Extended Reality (XR) during the broadcast; the same technology was also applied in Disney’s Star Wars: The Mandalorian.
In China’s top League of Legends competition, League of Legends Pro League (LPL), the competition’s international broadcast of Summer Split Finals surpassed 10M hours watched, which marks an increase of 351% from last year.
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