Asia redefining growth: ESports become big in China
By CGTN's Global Business
People may have to start thinking of video games as a promising industry with skyrocketing popularity rather than contributing to an unhealthy lifestyle. This change in perception has already happened in China when video games were classified as a real sport in 2003 and China won the first-ever gold medals at eSports demonstration events during the 18th Asian Games in August.
ESports features two teams playing video games against each other in front of an audience, which can reach hundreds of people, with many more viewers watching live online during the competition.
The industry saw global revenues jump to around 900 million U.S. dollars in 2018, an almost 30-percent rise from the year before, according to global accounting firm PricewaterhouseCoopers. It also predicts that eSports has higher global growth potential than football.
The thriving gaming industry may have started in South Korea, but it has spread to China at a fast pace and has now surpassed the U.S. market.
China's eSports industry was worth 65 billion yuan (9.3 billion U.S. dollars), while consoles and mobile games have an almost equal market share. Consoles created 4.39 billion dollars' worth of revenues back in 2017 while mobile games earned 4.42 billion dollars, according to iResearch.
In 2015, China was the largest eSports country in the world with an audience of 82 million and now there are nearly 135 million people who watch eSports in China, according to game research firm Newzoo. Last year, the final match of the League of Legends World Championship held in Beijing's Bird's Nest stadium attracted more than 40,000 people.
Chinese team' first-ever gold medals from eSports demonstration events at the 18th Asian Games this August has revved up enthusiasts' expectations for the country to dominate the world gaming stage, while experts remain prudent.
“In a short period, we believe that the Chinese will continue their good play. But for a long time, since eSports games are always changing, in this version, they (Chinese team) may have a better outcome, but in the next version, other teams may be more adaptable. That is why we can't see an eSports club who dominates the world gaming stage,” said Li Yiyang, analyst manager from iResearch.
ESports was classified as a sport in 2003, showing that the Chinese government has acknowledged this activity. Since then, cities and organization have been devoted to this area. In July of 2016, the General Administration of Sport in China announced the very first Chinese Mobile ESport Game Event (CMEG) in Guizhou. Last year, China's tourism hotspot Hangzhou announced its desire to become an eSport city by planning to build 14 eSports facilities before 2022 and will invest up to 15.45 billion yuan.
But China's gaming industry has been riding a roller coaster in 2018, as the government froze the approval process for new games earlier this year. That resulted in industry giant Tencent's first profit drop in at least a decade. Days before, China approved 80 new video game titles in the first batch of licenses granted by the media regulator after the end of a nine-month freeze.
Regulation is not the only factor to blame for the loss of money in this industry. Game companies' aging products also make it hard to attract new users. But there is still a profitable future since the average revenue per user is increasing, which means that even though the number of users is decreasing, the overall revenue from the game is still increasing. And the huge viewership numbers for eSports has made the industry promising by attracting sponsorships and advertising.
As for the clubs, those who are usually backing the hardcore, high spending, hyperactive gamers also have a new way to make profits. According to iResearch, capital typically enters this niche market through eSport club sponsorships, and those clubs then form different alliances and compete across the country.
“The game companies can organize all the clubs to build a new alliance to share the revenue of selling copyright from the tournaments and to make sure that every club will earn from it,” said Li.