Rapid growth driven by more smartphones, availability of broadband internet, and popularity of internet cafes which encourage team-based game playing.
China has long been a powerhouse in the Olympic Games, with a centralised system of sports academies and provincial teams feeding top talent to its gold medal-winning national team.
Now the country is eyeing leadership in competitive gaming, or electronic sports, with Beijing’s powerful sports administrator exploring ways to regulate and promote development of an e-sports industry that could replicate its Olympics success.
“E-sports has grown organically to a ‘wild west’ growth stage,” Tang Hua, director of electronic sports under the State General Administration of Sports, said in an interview in Shenzhen.
“For the next step we need to put regulation and sustainability of e-sports on the agenda.”
Although officially recognised as a sport in China as far back as 2003, its rapid growth has only come in recent years thanks to widespread ownership of smartphones, the availability of broadband internet, and the popularity of internet cafes which encourage team-based game playing. Recent e-sports tournaments have drawn more than 40 million online viewers, though that is still one third of the live audience for the American Super Bowl.
Exactly how e-sports will be regulated and to what extent the government will dedicate resources to develop the industry are topics still open for discussion, according to Tang, who said authorities are open to consultations with companies operating in the sector.
However, the central government’s support so far is clear as it was even the lead sponsor of China Top 2017, an international competition held late November featuring teams from China, the Philippines, US, Poland, and Russia, competing in popular PC and mobile titles such as Dota 2 and Honour of Kings.
The growth of gaming has boosted investments in related businesses, creating an eco-system that includes tournament organisers, online video companies that live-cast and replay competitions, purpose-built e-sports stadiums, smartphone makers and digital games developers.
So far, the growth has been largely driven by private companies without much interference from the government, according to Lisa Hanson, founder and managing director of Niko Partners, a US-based research firm that tracks gaming in Asia.
“It is unclear to me what type of industry standard could be drawn up for all those sectors. The private companies from each of them are building the e-sports industry,” said Hanson.
For the time being, China’s existing regulations governing video gaming also cover e-sports.
The global e-sports market will grow 41 per cent year on year to US$696 million in 2017, according to a forecast from Newzoo, an information provider covering global games, e-sports, and mobile markets.
China and North America will generate US$362 million, accounting for more than half of global revenue in e-sports. Investments are forecast to double by 2020, pushing the total market to US$1.5 billion, according to Newzoo.
Unlike professional sports leagues like the NBA or English Premier League, e-sports does not yet have a comprehensive and standardised business model.
By funding an international competition, China’s government is taking steps to enhance the country’s soft power, in line with President Xi Jinping’s vision that China should become a nation with pioneering global influence after 2035.
Last year, there were more people watching the world championship League Of Legends, a multiplayer online battle arena video game owned by Chinese social media and gaming firm Tencent, than the National Basketball Association (NBA) Finals.
The online viewership continues to grow. This year’s Intel Extreme Masters (IEM), in which a prize pool of US $650,000 was up for grabs in three of the top e-sports titles – Counter Strike: Global Offensive (CS:GO), League of Legends, and StarCraft – set a record for the number of unique online viewers with more than 46 million. IEM said that the event, which took place in March in the Polish city of Katowice, was the most broadcasted event in its 11-year history, with 70 partners worldwide distributing the content in 19 languages.
That compares with an audience of 112 million for the National Football League’s Super Bowl in February and more than 1 billion for the 2014 Fifa World Cup final between Germany and Argentina. Meanwhile, at the recent China Top event in Shenzhen, the organiser said more than 40 million watched the competition via live-streaming platforms in China.
Hanson at Niko Partners believes China has a lead over the US in e-sports and a strong following of gamers.
“There are 150,000 internet cafes and many are perfectly designed to be the venues for amateur play of games used in e-sports, such as team-based games,” Hanson said. “This helps to promote these games as pastimes and builds momentum and enthusiasm for them.”
E-sports has strong revenue potential, with sales of content rights to broadcasters, payments from live streaming platforms and advertising revenues from the games industry, and the broader lucrative product placement opportunities.
China’s local governments are investing in e-sports, led by more developed cities such as Shanghai and Shenzhen. The rest of the country is playing catch up, with some cities developing so-called “e-sports towns” to try and stand out from the crowd.
Chongqing, in southwest China, said early this year it would invest 4 to 5 billion yuan to work with tech firms such as Datang Network to finance projects including gaming platforms and construction of a new arena, while also establishing a venture capital fund that focuses on software design, live broadcasts and hardware production.
Meanwhile, Tencent, the world’s largest mobile gaming developer and the owner of Riot Games, which publishes the popular League of Legends, announced in June that it would create a 100 billion yuan industry in China, complete with new leagues, tournaments, associations and its previously announced e-sports-themed parks in Wuhu, in China’s eastern Anhui province.
Tencent vice-president Cheng Wu said at a press event in June that “China’s e-sports is at an important juncture” and that the “next five years would be the golden age for China e-sports”.
To exploit the revenue potential in e-sports, Tencent last year set up the professional King Pro League featuring the hit mobile game honour of Kings. The Shenzhen-based tech giant, founded by Pony Ma Huateng, followed the practice of the NBA in the US by infusing its e-sports league with a player transfer system, salary caps and vocational training.
Tencent isn’t the only tech giant in China that wants to seize opportunities in e-sports. Alibaba Group, China’s biggest e-commerce company and owner of the South China Morning Post, invested around 150 million yuan in the World Electronic Sports Games tournament, which aspires to become the Olympic Games for e-sports. However, the firm lost 60 to 70 per cent of that investment, the company’s e-sports general manager Wang Guan said in an interview in July. However, Alibaba said it was looking at the longer term and expects the gaming industry would require a lot of investment up front.
With money pumping into the competitive gaming, there’s no shortage of interests from aspiring players as E-sports is now promoted at schools and colleges in China. The Shandong Lanxiang Vocational School invested more than 10 million yuan to establish a three-year programme on the industry where graduates are qualified to become professional gamers, judges or marketing specialists.
Professionals usually begin by joining an e-sports club where entry level pay can start at 6,000 yuan per month, which is 50 per cent higher than the national average of 4,000 yuan for fresh college graduates. On top of the regular salary there is the bonus of prize money from winning games.
Compared to other pro leagues such as the League of Legends 2017 World Championship which attracted a sell-out crowd at Beijing’s National Stadium earlier in November, the China Top 2017 event at the Shenzhen Nanshan Cultural Centre drew only a few dozen cheering fans to the vineyard-style concert hall on its launch day.
However, the Shenzhen show offered some cultural flavour, opening with a group of dancers dressed in Chinese opera costumes, moving to traditional folk music on a stage lit with laser light displays and LED panels.
Established and up and coming players from all over the world including China, the US, the Philippines and Russia competed against each other. The team from the Philippines walked away with the biggest prize money of 1 million yuan after defeating China in Dota 2.
The remainder of the prize money was split between teams from Russia, the US and China, which had the most players taking part in the competition.
Gao Xing, a 24-year-old college graduate who turned professional last year after joining a club, said e-sports was a good career option for him. A champion at China Top 2017 in the personal computer game Hearthstone, he is encouraged by the government’s support of the industry. “In China, there aren’t that many big comprehensive gaming competitions,” said Gao, who took away 300,000 yuan in prize money. “It’s good to take part in an event like this.”
What’s more, Gao is not concerned about the risk of unemployment. “It’s like playing tennis, as long as you are good at it, you’ll find something.”