THE ESPORTS ISSUE - CHINA SPORTS DIGITAL, DATA & INSIGHTS A REPORT BY - Mailman Group
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INTRODUCTION Esports have never been bigger, some way off being accepted by global consumer spending on hotter or more talked about. the IOC, any discussion shows esports in 2017, totallying $51.2 Over the last 10 years, esports how seriously the rise of esports billion, of which China makes up have moved out from the is being taken. more than half. One major shadows and into the reason that esports has mainstream with bigger Much of the recent interest in exploded to such a level in competitions, more participants, esports stems from the China is due to large levels of and increased viewership demographic which it attracts. A investment. A lot of focus has around the world. Since the late recent study by Limelight been drawn to the support that 2000s, they have also become Networks found that men aged the government has provided to increasingly professional, with between 18-25 in the US prefer both football and basketball in modern esports players making watching esports over both recent years, however, esports huge sums from tournaments, traditional sports and TV shows. received more investment than team membership, and This resonance with the younger both sports last year. developing areas such as generation of consumer is live streaming. something that every sport can With so many clubs, ill afford not to take an interest in organisations and brands now Esports are now attracting such when considering their future. looking to China with increasing huge levels of investment and focus, esports may offer a interest that many of the world’s China has long been the golden opportunity to engage foremost sporting organisations global leader in esports. It has with huge numbers of fans who are looking to esports to a vast online population, with are unlikely to take note of increase their fan bases. These the most recent estimates traditional sports. This report will include the NFL, Formula 1, Paris putting the figure at over 800 offer a background to the Saint Germain, the NBA and the million people. Of this esports landscape in China, why NCAA. There has also been a lot population, over 25% played and it’s so popular and who the fans of talk about esports joining the watched esports last year, are. It will also give insight into Olympics following their putting the current active how brands are approaching inclusion in the 2022 Asian Chinese esports market esports, where the industry is games which will be held in around 220 million people. headed and what opportunities Hangzhou, China. Although still there are for sporting Asia will account for 47% of organisations. © MAILMAN
ESPORTS IN CHINA Examining Esports Who are the Fans in China Esports Fans? 79.8% A combination of factors are 81% male responsible for vast popularity of esports in China. At the core, of is the lack of traditional sports esports fans choose to watch culture in China. Whilst this is tournaments at home now developing, it was not 33% widely present during the upbringing of most Chinese of audiences 19% female millennials, the demographic that is now driving the growth of have watched tournaments at esports. This was due to a lack internet cafés of facilities, access to sports broadcasting and very little interest in getting people into recreational sport from Beijing. 50% 60% These aspects, coupled with the huge numbers of only children, of the esports audience is under 25 made playing video games a More than 50% of esports fans more common pastime than watch tournaments for more than participating in traditional sports. an hour at a time As the younger generations of Penetration 21.5% Chinese citizens have become rate of esports one of the main focusses of the in China’s 2nd world, their established passion tier cities is 21.5% of audiences watch for more for esports has come to the now 48% than 2 hours forefront. This has been aided by advances in technology 50% making it easier, cheaper, more engaging and more social than ever to play esports. of all users share their experience with friends after watching games. 40% 34.1% of esports fans would buy a ticket to attend esports events 40% of audiences watch © MAILMAN Source: Penguin Intelligence Report games alone. on Trends of China’s Esports Viewership 2017
China’s Favourite Games ONLINE BATTLES FIRST PERSON SHOOTERS No. Game China Operator No. Game China Operator 1. League of Legends (LoL) Tencent 1. Counter-Strike: Global Offensive (CS:GO) Perfect World 2. DOTA2 Perfect World 2. World of Tanks Kongzhong 3. Heroes of the Storm (HotS) NetEase 3. CrossFire Tencent 4. King of Glory Tencent 5. Starcraft NetEase CARD COLLECTION TRADITIONAL SPORTS No. Game China Operator No. Game China Operator 1. Hearthstone NetEase 1. FIFA Online 3 Tencent © MAILMAN
Where Do Fans Watch Esports? POPULAR DIGITAL VIEWERSHIP ACROSS PLATFORMS KPL (KING PRO LEAGUE) PLATFORMS IN ONE GAME SEASON TOURNAMENT Live streaming 5 billion + 2016 560 million total viewership in a 22-day session 700 million + Douyu Huya 2017 Panda NetEase CC 2.1 billion total viewership for the 130 million spring session Shihou Source: Tencent Source: Tencent TV 2016 CUMULATIVE VIEWERSHIP GTV Game Fengyun 480 million + Guangdong TV 460 million + 160 million © MAILMAN Source: Twitch
WHAT’S HAPPENING IN CHINA? Sponsorship WHY BRANDS SHOULD PAY Esports has its origins in social gain a great deal from esports ATTENTION TO ESPORTS media, however, over the past 5 sponsorship, is home food years it has broken out beyond delivery. As mentioned, esports 1 online video and into major live events attract huge crowds both Esports is a new growing events. In 2016, the League of in the venue and tuning into live market platform that allows Legends World Championship broadcasts and streams. For savvy marketers to reach Semifinals were held at Madison many fans, glued to their phones new audiences. Marketers Square Garden, NY, which was and computers, ordering food must be aware of trends and followed by its finals which were will be a very popular option, how untraditional platforms hosted by the Staples Center in much as it is during traditional work and create specific Los Angeles. Each event sporting events. However, a content around them. attracted more than 20,000 fans brand’s association to a game 2 and another 43 million viewers goes deeper than this, in that Most of the esports online. This year, the Worlds fans are likely to also want to community are millennials have returned to China, where order food when playing and generation Z. Engaging the finals will be held at the for themselves. with these audiences and 91,000 seater Bird’s Nest building relationships will be Stadium following a series of Brands that do not have a direct key to success over the next other events held around China. link to Chinese esports must 10 years. play a longer game. The aim 3 Esports is an example of a must be to become synonymous Gamers and esports events developing platform where with a game, thereby building a have a lot in common with marketers can reach their much deeper relationship with premier athletes and most-coveted audience: the esports community. Jeep, for traditional sports. High millennials and generation Z. example, are a major sponsor of recognition of esports will However, the current landscape the 2017 LPL tournament. Given give sponsors huge in China is far from a the demographics of Chinese brand awareness. sponsorship paradise. esports audiences, they cannot 4 The biggest opportunities, be expecting to make many There is still risk. Esports clearly, are afforded to tech and direct sales of their Renegade is a very new area to gaming companies that provide SUV as a result of the marketers. Brands that have products related to esports. To partnership. However, their already engaged with the this end, the majority of the big presence has begun to build esports community are still events in China are run by recognition with all who interact trying to figure out how companies like Tencent and are with this year’s tournament, to leverage attention designed as a powerful many of whom will soon become from esports. marketing tool for their games. members of China’s ever growing middle class and, as One sector that does not have a such, Jeep’s target market © MAILMAN direct link to esports, but can in China.
Licensing WHY LICENSING MATTERS Very similar to sports licensing, FOR EXAMPLE: esports licensing is a contractual 1 agreement by which an esports Merchant Bank - LoL Credit Cards Sprite - Honor of Kings edition drink Esports licensing has the club or organisation gives a potential to generate huge company a license to use its levels of income for clubs, name, logo, image or trademark events and operators. It also on the company’s products. offers another way to grow Licensing an esports product awareness of esports and gives your business an engage with fans. opportunity to reach a market of 2 sports fans that could be local, Anything can be licensed: national or global, depending on from conventional the game or team and its merchandise all the way to popularity. traditional Chinese mooncakes, ever more Licensing provides an important Tencent - Häagen-Dazs LoL Mooncakes vivo - Honor of Kings edition smartphone creative licensing ideas and source of revenue for both crossover products can, and esports bodies and licensees. are, being produced. Teams or organisations gain a 3 new revenue stream and the There is an estimated $1 licensor receives a royalty for billion of counterfeit each licensed product that they products produced each sell. Meanwhile teams or year. This huge figure shows organisations use esports both the appetite for licensing to build relationships branded goods and a major with their supporters. challenge to be considered when looking to establish licensing deals. © MAILMAN
Investment The esports industry is investors have chosen them to the lack of regulations in. An ownership stake in one estimated to be worth $696 over traditional sporting arenas. involved compared to venue ‘sub-team’, as opposed to the million and shows no sign of ownership. This trend is taking umbrella entity, represents a way slowing. Indeed, research firm The current rate of development off in all esports markets and into the market without the risk Newzoo have predicted it to of Chinese esports facilities is several major sports teams have and expense associated with surpass $1.5 billion by 2020 as well ahead of the global trend. already invested. PSG, Schalke owning an entire team. brand investment doubles. There are relatively few esports ’04, Lyon, and Manchester City Sub-teams will also reap the specific venues outside of all own professional esports benefits of the parent According to Lanxiong Sports, China. As such, the likelihood of teams and both the NBA organisation’s global success between Jan 2016 and Feb many of the major tournaments and NFL are in the process and so this sort of investment 2017, esports received RMB 5.3 choosing China as a regular host of creating leagues for can offer a major upside. billion investment in China, is further increased, thereby their games. Money making in Chinese making it the most heavily solidifying China’s status as esports is also distinctive invested-in sport over that industry leaders. because of the period. Tencent, OFC, IDG teams-within-a-team structure. Capital and Sequoia Capital WHAT YOU NEED TO KNOW Team organisation is premised have all been very active in ABOUT CHINESE ESPORTS on different games that, esports investment. Two areas unsurprisingly, have different of esports investment in China ¥ 5.3 BILLION - ESPORTS TEAMS revenue generation potential. that are particularly popular are ¥ 886 MILLION - FITNESS Esports teams can be organised facility construction and team The more popular and ownership. ¥ 665 MILLION - FOOTBALL as domestic companies, well-established competitive ¥ 36 MILLION - MMA international companies, or as a scenes, such as LoL, CS:GO, and China has a shortage of sporting group of individuals playing Dota 2, offer bigger prize pay ¥ 32 MILLION - CYCLING together under a common team facilities, which has been outs, wider marketing appeal recognised by the government. Source: Lanxiong name. Many esports “teams” and far more substantial, Part of their approach to fixing actually consist of multiple teams dedicated fan bases. These this has been to encourage that play different games, games also typically involve investment by offering incentives compete in different players who benefit from such as tax breaks, discounted tournaments and as a result, individual success on streaming leases and capital to companies Investment into esports teams enjoy varied revenue platforms, such as Twitch. The looking to build new facilities. has also become a popular streams – all whilst coexisting esports organisation model can Esports arenas are very much route to involvement in the under a single banner. offer investors built-in included in this scheme and market. This is an opportunity diversification, with teams given their trajectory, many that is open to a much wider Depending on a team’s competing on multiple range of potential investors due structure, there are different platforms, an investor’s bet is ways in which investors can buy automatically hedged. © MAILMAN
WHAT WILL HAPPEN NEXT? More facilities, TV more events broadcasting China is well positioned to Esports gaming grew up with become the leading nation to online media. Now TV networks host esports events. With the will try to catch up. ESPN and construction of more esports BBC were the first to start airing specific venues it is esports tournaments, and Turner strengthening its hand. It is also has created its own CS:GO a very safe place to host events tournament to air on TBS and its which, in the current climate, is a other channels. In China more attractive prospect than Guangdong TV started to ever. Gaming giants Tencent are broadcast esports games in clearly aware of this opportunity August. For years streaming was and are going all in to solidify the only way to follow esports themselves as the defacto remotely, now the numbers are leaders in esports events by big enough to attract the big creating an entire town network television organisation. dedicated to esports. It is of little wonder that Tencent is willing to invest so heavily in the industry. Over 47% of Tencent's 2016 Esports for social revenue came from games, with Tencent's gaming unit posting revenues of nearly 70.84 billion yuan ($10.2 billion) last year, dwarfing that of rival NetEase, which posted revenues of 28 billion yuan ($4 billion). People now play and watch esports on mobile anytime and anywhere. Mobile esports will drive growth through to the proliferation of smartphones, enabling games to be played and streamed on-the-go. Meanwhile, the reason people play esports is changing. Originally, people played for fun, however, there is an increasing community surrounding esports that will continue to provide the © MAILMAN backbone to it’s growth.
OTHER WAYS TO GET INVOLVED IN ESPORTS Engaging KOLs Playing Esports Social Campaigns Key Opinion Leader marketing is Sports stars and icons engaging All sports fans enjoy a well established method of with the interests and traditions competition, however, many engaging fans in China. The of Chinese fans is generally very traditional physical challenges development and integration of popular. This tactic is widely are both hard to implement and esports into social media and used by football teams, will only appeal to a small live streaming make leading particularly when touring China, number of fans. As such, esports players very well positioned to and has included activities such can offer a perfect way to command large fan bases. as trying out traditional martial engage much larger numbers of Ensuring an authentic arts to making popular Chinese fans, both established and new. connection between KOL and foods. In the case of expanding Esports spans numerous interest project is crucial to success and into esports fan bases, demographics thereby opening in the case of esports, it is often producing content around up well designed campaign to easy. For example, famous players playing League larger audiences. One example mini-tournaments are easy to of Legends online would both of how to leverage this interest arrange and stream to large give fans a chance to play would be to run a campaign to audiences whilst also inviting a against their favourite players find an account’s best gamer. small number of well selected and also allow clubs and players This can be easily publicised fans to attend live. Four show their appreciation for their and the addition of competition mid-level esports players and a fan. Best practise for such among the fans will boost handful of fans of both the brand events would be to partner with engagement. Campaigns such and the players/game can make a network or game operator in as this, although focussed on for a very engaging entrance China so as to ensure current fans, are likely to create into the esports space and will maximum exposure and a well buzz in esports communities and feel authentic to the wider fans. produced broadcast. so will begin to introduce brand recognition among new audiences too. © MAILMAN
WHAT’S NEXT? We hope that you have enjoyed reading The Esports Issue of the RED CARD+. If you have any questions about any of our reports, or would like to join the RED CARD+ mailing list, please reach out. The next edition of the RED CARD+ will be The Ecommerce Issue and will be released in January. The report will provide a comprehensive comparison of the Chinese and Western ecommerce landscapes, a look at the top 3 Chinese ecommerce platforms, an analysis of ecommerce consumer behaviour and a best practise guide on how to start in China. For English Tom Streatfeild-James firstname.lastname@example.org For Chinese Ruoyang Wu email@example.com For Business Enquiries David Hornby firstname.lastname@example.org About RED CARD+ The RED CARD+ report is produced by Mailman. It offers a bimonthly inspection of digital trends and fan insights from China's sports and marketing industries. About Mailman Founded in 1999, Mailman is China’s leading sports digital consultancy and marketing platform. We help global rights holders, athletes, and organisations build a successful business in China. © MAILMAN
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