THE ESPORTS ISSUE - CHINA SPORTS DIGITAL, DATA & INSIGHTS A REPORT BY - Mailman Group
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CHINA SPORTS DIGITAL, DATA & INSIGHTS A REPORT BY THE ESPORTS ISSUE NO03 NOV 2017
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 2017China’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
© MAILMANWhere 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: TwitchWHAT’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.
© MAILMANInvestment
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.
© MAILMANWHAT 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.
© MAILMANWHAT’S NEXT?
We hope that you have enjoyed reading The Esports Issue of the
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