China is the world’s second-largest eSports market. It is expected to overtake the US as the highest-earning eSports country in 2019, aided by a society based on mobile
China has the largest mobile gaming market and it has become one of the biggest hubs for eSports in the world, whose market size in the country is expected to grow at an unprecedented rate by 2020.
Now, for some years, Chinese society is totally based online. Commercial relations, financial transactions, the information industry, as well as, recreational activities, they are all carried out through the internet.
As the widespread of live-streaming and recreational apps revealed, Chinese people commonly turn to the online world for leisure in their free time. Therefore, industries like online gaming leverage this internet-run society to boom in the country.
Tencent published a report stating that the eSports sector in the PRC would reach 350 million users by 2020, and would generate around $1.5 billion in revenues annually resulting in China to account for around 59% of all users from around the world.
Currently, the Asian country is the second-largest eSports market behind the United States. Already in 2017, it generated around $104 million in revenue from eSports while the US generated $258 million.
Videogames such as ‘Fortnite: The Battle Royale‘, ‘Call of Duty‘, and ‘FIFA 18‘ are just some of the leading eSports games that reached an extraordinary success among worldwide gamers, especially in China.
From first-person shooter games to the multiplayer online battle arena (MOBA), the electronic sports – also known as eSports – are a form of competition using video games that involve both professional players and amateurs.
As the world’s second largest market, China is also home to one of the largest gamer-bases in the world. More than 170 million eSports viewers and players attend tournaments across the country, way more than every other sporting discipline, while professional gamers have total career earnings of up to 5 million dollars from sponsorships and tournaments’ prizes.
© YouTube. In 2017, the grand finale of the League of Legends World Championship held at the National Stadium in Beijing attracted an audience of more than 40,000 people.
The industry is obviously growing fast. So who is dominating the online gaming in the Dragon?
The telecommunication giant Tencent is at the top of the list with its Tencent Games, the Interactive Entertainment Division.
Within the company’s strategy to diversify its investments with the mission to attract global users to its entertainment ecosystem, in 2015, Tencent acquired Riot Games, the developer of the most popular online game ‘League of Legends‘, which is played by more than 100 million people, making it the most played MOBA in the world.
Tencent Games is also the company behind the distribution in China of the legendary title ‘Fortnite‘ thanks to a partnership between the US developer Epic Games and the Chinese titan, which acquired approximately 48.4% of the game’s developer.
With a portfolio of over 147 mobile games, Tencent also holds the rights of Fortnite’s biggest competitor in China, ‘Battlegrounds‘.
According to iResearch, at the beginning of 2018, Pony Ma’s company held more than half the mobile gaming market in the country, followed by the internet tech enterprise NetEase.
NetEase is another Chinese company shifting its focus towards the mobile game market and it is one of the largest internet and video game companies in the world.
This enterprise is the one behind the distribution of the smash hit ‘Cookie Jam‘ and it also partners with Blizzard Entertainment to operate local versions of ‘World of Warcraft’, ‘Overwatch’, and many other popular games in China.
The Dragon’s eSports industry also managed to reach the Academy Awards bringing home some golden statuettes. Indeed, last year, the Chinese video game developer Perfect World co-produced ‘Darkest Hour‘ and ‘Phantom Thread‘, which together won three Oscars.
Although Perfect World generates a large portion of its revenue in the PRC, its games have also been successful in Europe, Japan, and North America. Plus, it is the Chinese distributor of several global successful titles, including ‘Dota 2’ and ‘Counter-Strike: Global Offensive’.
© Unsplash. Thanks to video-gaming platforms like Twitch, Chinese and US markets generate 50% of eSports revenue worldwide.
For what concerns video gaming platforms, instead, at the moment, there are two dominant players in China, called Douyu and Huya.
Douyu 斗鱼, that literally means “fighting fish”, is an online live-streaming platform where users can share and engage with videos mainly focused on gaming. Headquartered in Hubei, the company was founded by Zhang Wenming and Chen Shaojie in 2014 and it now records 6.7 million daily active users with a market penetration rate of 4.1%, according to Jiguang.
Douyu’s direct competitor, Huya 虎牙直播 – “tiger’s teeth” in English – is a subsidiary of YY Live, one of the top Chinese live-streaming platforms with a market penetration of 3.5%. Founded in 2011 by Li Xueling, the Guangzhou-based company only established in 2014 becoming one of the strongest players focusing on video games streaming.
Tencent invested in both Douyu and Huya, which actually represent an important part of the company’s strategy to control the Chinese eSports market.
Tencent’s report about China’s eSports industry reveals that the users base is not only composed by the younger male generation but 20% is rather made of females and parents. This popularity among Chinese of all ages is due to strong support from investors and government initiatives that led to exciting games innovations over the years.
The professional eSports subculture, in fact, started spreading with the rise in popularity of live-streaming in the 2010s and the industry is now expanding beyond the PC or console with gaming companies bringing eSports tournaments to the mobile. Indeed, according to reports, already in 2017, 42% of the gaming market belonged to the mobile industry, which is expected to claim more than 50% of the market by 2020.
The penetration of smartphones plays a key role in the success of the eSports industry in the country influencing the way gamers consume eSports content so that the government felt the urge to set up a group of studies to analyze the ethics of video games in order to protect young people from addiction and myopia.
© Unsplash. Consoles have been overtaken by mobiles, whose eSports market in China is now the same size as PC and console play combined.
A sign that the industry is booming in the PRC is the recent announcement to include eSports as an official medal sport at the Asian Games 2022. It was already included for the first time as an official medal-winning event alongside other traditional sports during the 2007 Asian Indoor Games in Macau. But now, it will also be included as a medal event in the top-level multi-sport competition in Asia, which will be celebrated in Hangzhou.
In January, China’s Ministry of Human Resources and Social Security also announced to recognize two eSports roles as official professions for the first time: eSports operator and eSports professional.
Today, the huge growth in investments for electronic sports infrastructure together with the increasing penetration of mobile devices are boosting the eSports industry in China.
Thanks to a growing per capita disposable income and well-developed online payment methods, Chinese players are expected to spend increasingly more time and money on online games.
Internet cafes and eSports centers have become an important part of the video games ecosystem in China. And while major cities such as Shanghai and Chengdu have organized several large-scale eSports tournaments and Hangzhou is investing in becoming the eSports capital of the world, Zhongxian – a small city in southwest China – announced plans to construct a $220 million online gaming complex.
Therefore, given the growing popularity of eSports in the country and the extraordinary increase in the number of users over the last few years, many companies are now striving to enter the market. Consequently, eSports competitions and events are popping up across the country and the industry is getting more and more recognition.
One thing is for sure, although the eSports market’s growth in China has been huge, it is still in its infancy. It is likely to grow even more over the next several years with no signs of a slowdown anytime soon.
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