Thriving Chinese e-sports need touch of regulation

By Chris Dalby Source:Global Times Published: 2017/8/9 22:13:39

Illustration: Peter C. Espina/GT

E-sports is big business. South Korea, Japan, the US and more have dedicated leagues, receiving huge sponsors, attracting millions of viewers and making millions for top players. China certainly has a scene of its own, with a market worth more than any other in the world. But quantity does not equate to quality.

A rundown of the facts seems to show a very healthy backdrop. A report by gaming data provider Niko Partners has estimated that e-sports will grow to a $1.26 billion market by the end of 2017, with payouts of $64 million for players at Chinese tournaments.

Even the fandom seems to be keeping up. Five of the world's top 10 players are Chinese, with Niko Partners quoted by media reports as saying that "Chinese professional gaming teams have earned cult-like status among millions of domestic gamers."

From a fan's perspective, it certainly seems the Chinese market is flourishing. In May, an IHS Markit report said that in 2016, 6 billion hours of e-sports gaming content was viewed worldwide. China accounted for 57 percent of this.

This will only continue to increase, because 285.3 million Chinese are expected to participate in mobile gaming in 2017, with a passion for leading games such as Honor of Kings or League of Legends fuelling this growth.

In 2016, the Chinese government issued its first guidelines covering e-sports, which encouraged young people to choose a career in e-sports.

However, this does not give the industry the sustainability it deserves and requires.

In April, Xiao Hong, CEO of gaming company Perfect World, said that China was lagging behind other countries due to a lack of regulation, facilities and encouragement.

Private parties have been trying to fill the gap. Gaming teams have received major sponsorships, providing lives of luxury for their competitors. The 2017 League of Legends World Championship, to be held in China from September to November, can count on the sponsorship of Mercedes-Benz, Intel, L'Oreal and Yili.

Tencent has also been trying to plug the gap. Online gaming is worth 50 percent of the giant's revenue and it is planning to pour some of this cash into an "e-sports city," including a dedicated university, creative center and animation facilities.

However, profits can be hard to generate. Alibaba is preparing the second edition of its World Electronic Sports Games (WESG) but it has yet to break even. The first WESG, which took in 120 countries and regions, cost Alibaba 150 million yuan ($22.4 million).

Stopgap measures may not be enough, however, no matter how ambitious.

To be clear, e-sports are not going to crumble anytime soon. But a coordinated effort is needed from the top down to give talented Chinese gamers something to truly aim for.

For example, in June, the US-based National Basketball Association (NBA) revealed that it was looking to create an e-sports league specifically for the Chinese market. This comes on the heels of the NBA starting its US league in February. The marketability of the NBA in China has been colossal, since the days of Yao Ming.

However, it is not ideal to let one professional league trump all others. This situation can be addressed by a professional body overseeing and coordinating different tournaments. Such oversight will allow the likes of Tencent or Alibaba to expand their reach in a controlled manner. Teams can gain visibility in an organic way, attracting sponsors more easily. A regulated training sphere will also help to avoid some of the pitfalls facing young players, who can fall prey to scams or sign unfavorable contracts.

The author is a Mexico-based analyst of Chinese economics and politics.


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