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One of the questions that my colleagues and I at The Esports Observer heard the most in 2019 was “what is the biggest esports developments in China?”
It was hard to answer the question objectively, especially in the middle of the year when there’s no clear picture of what the future will hold.
Since The Esports Observer started the China Esports Business Recap series at the end of 2018, we’ve seen a significant increase in the region’s sponsorships and media rights values, as well as the increasing social identity of esports – with massive funding and allowances from several of China’s city governments.
Now, it’s about time to answer the question: Here are the bottom five entries in the top 10 esports business stories of 2019 in China.
#10 – Victory Five Raises Over $14M in Series A Funding, Announces Venue
On Oct. 14, Chinese esports organization Victory Five (V5) announced that the company raised over ¥100M RMB ($14.12M USD) in Series A funding from undisclosed investors, and signed a partnership deal with Shenzhen Media Group. The two organizations said at the time that they would focus on developing the esports ecosystem in the Guangdong-Hong Kong-Macao Great Bay Area, and V5 would co-build its home venue in the area.
Compared to 2018, the Chinese esports industry saw less disclosed esports capital raised in 2019. In China, 2019 has been described as a “cold winter” on the internet due to many investors in the technology sector significantly scaling down their investments. Tencent Holdings, one of the most active investors in the world, invested in 108 deals in 2019 compared to 162 in 2018, according to the South China Morning Post. The “cold winter” environment makes V5’s $14M founding on the list important.
#9 – NetEase Plans $710M Esports Park in Shanghai
On August 7, Chinese game publisher NetEase announced it would invest over ¥5B ($710M) to build the “NetEase Esports Park” in the Shanghai Qingpu District. The park will include multiple esports projects related to product design, venue, team development, and talent construction. In addition, the park will potentially be used for its own Overwatch League team – Shanghai Dragons’ homestand event, and become the team’s permanent home venue in 2021.
Next to Tencent, NetEase is the second-largest game publisher in China. In esports, NetEase is the exclusive Chinese distributor of Blizzard titles including Overwatch, Warcraft III, Starcraft II, and Hearthstone. The company also hosted multiple esports tournaments based on those titles, including the NetEase Golden Series and NetEase Esports X Tournament (NeXT).
#8 – FunPlus Phoenix Wins the 2019 League of Legends World Championship
Generally, The Esports Observer does not report news about teams winning esports tournaments, instead focusing on business insights related to any given team victory. As we’ve seen before, however, winning the League of Legends World Championship can lead to massive partnerships and developments in the home region of the champion.
This year, League of Legends Pro League (LPL) team FunPlus Phoenix (FPX) won the 2019 World Championships in Paris. As a young esports organization founded in 2017, FPX is now the second team from mainland China to take the global trophy. Before the grand final, FPX signed sponsorship deals with Chinese potato chip brand Oishi, hardware brand SteelSeries, and streaming platform Kuaishou, and signed a global partnership deal with Chinese smartphone brand OPPO. OPPO also lit up the Shanghai Global Harbor Twin Towers for the team. After the victory, global food brand KFC also partnered with two FPX League of Legends players to promote KFC’s new coffee brand “K Coffee” in the region.
This victory was a positive signal to the young esports teams and investors in China that “a two-year-old esports team could win one of the biggest esports tournaments in the world.” In addition, Riot Games revealed that the 2020 World Championship finals will take place in Shanghai, the first time that the event has been hosted in China since 2017. The expectations from LPL fans and local brands is already incredibly high.
No. 7 – Bilibili to Pay $113M for League of Legends World Championships Media Rights in China
On Dec. 3, The Beijing News reported Chinese video and streaming company Bilibili (Nasdaq: BILI) wanted to pay ¥800M ($113M) to TJ Sports as part of a three-year exclusive broadcasting deal for the League of Legends World Championships, beating out other live streaming companies Douyu, Huya, and Kuaishou.
Bilibili has not officially revealed the details of the deal at the time of writing, but its Overwatch League team Hangzhou Spark reposted a relevant Weibo post from People Esports with comments: “Bilibili Cheers,” indirectly acknowledging the deal.
This deal is already considered one of the biggest esports media rights deals in the world. For comparison, Twitch signed a $90M media rights deal with the Overwatch League for two-year seasons in 2018. Despite the fact that many outlets have discussed whether this $113M deal is worthwhile or not for Bilibili, the Chinese technology company has named its price for not only League of Legends but also esports as a whole.
No. 6 – Chinese Government Confirms Two Esports Professions, Earmarks Millions for Esports Development
On April 3, China’s Ministry of Human Resource and Social Security (CMHRSS) announced that “esports professional” and “esports operator” had been officially defined as two new professions in the country.
The government has always played a major role in the Chinese esports industry. The rapid development of Chinese esports can not be achieved without the support of the government. In June, the Chinese province of Hainan announced a ¥1B ($145.6M) for esports development in the region, including support for esports companies and Hainan-based tournaments.
The Chinese cities of Chengdu, Guangzhou, Beijing-Haidian, and multiple Shanghai districts released their policies to support the esports industry as well. On Nov. 9, Germany-based tournament organizer ESL hosted its first-ever standalone event in China: the $250K Intel Extreme Masters (IEM) Beijing-Haidian, and the Beijing-Haidian government played an important role in the event.
Be sure to check back soon for the top 5 esports business stories from China of 2019.
