Bloomberg
Tencent bets billions on players with more fans than NBA stars
(Bloomberg) – At the height of the global pandemic in October, more than 6,000 people packed into a new 25-acre stadium in Shanghai to watch one of the biggest sports matches in the world. Another 45 million were set online, about as many as the six games of the 2020 NBA Finals watched on TV. The match was the League of Legends World Championship – a watershed moment for competitive games and the organizer, Tencent Holdings Ltd.’s most valuable company in Asia, focused on a billion dollar sports arena that is more frequent than the National Basketball Association boast. or the National Soccer League. Tencent places pro games at the heart of its ambition to dominate online entertainment, from mobile games and video streaming to social media. It bets that esports will attract and retain the internet audiences they need and eventually grow into something approaching the NBA of more than $ 10 billion. Important to realize that the vision is Tencent’s standout League of Legends fight title and TJ Sports, the outfit it set up. in 2019 to organize and promote the competitive game in China. While TJ’s total revenue in the first two years exceeded just over 1 billion yuan ($ 152 million), the prospective company plans to create original content such as reality shows and live channels around its star players and teams, and to sell merchandise. “Esports is like the Super Bowl, which is not only a sporting event, but also a vehicle of art and entertainment,” said TJ Lin CEO Leo Lin. “We’re moving in the direction of connecting esports with our games and broader entertainment industry.” Esports shows how Tencent thinks about its long-term future. The world’s largest game publisher has invested billions of dollars in talent agencies, streaming sites and tournament organizers to create the necessary infrastructure to turn pro games from a niche into an instrumental part of its growth strategy. TJ expects overseas viewers to double this year and aims to do the same with revenue from media rights outside China. “Tencent is investing in esports for the long term, because it breaks the boundaries between different businesses, from licenses to sponsorships and ticket sales. , ”Said Chundi Zhang, a game analyst at Ampere Analysis. “Especially with the competition to increase attention and increase the acquisition costs of users in the gambling market itself, esports still has a great untapped potential.” Tencent, based in Shenzhen, which operates some of China’s largest Netflix-style and e-book services, as well as manufacturing tent poles. movies and games, already know how to make money from monetary content. What Bloomberg Intelligence says: Tencent’s investments not only have significant value – $ 185 billion on December 31, compared to $ 131 billion on September 30 – but many offer strategic ratios that help increase revenue. Collaborating with content providers in video (NBA, NFL, HBO), video games (FIFA, PUBG, Fortnite) and music (Universal, Warner, Sony) enhances service offerings and expands Tencent’s target audiences. – Robert Schiffman and Suborna Panja, analysts Click. here for the full research Competitive games in Tencent-published games like Honor of Kings and PUBG Mobile increase the lifespan of the firm’s largest cash cows and feed the content divisions. This in turn helps portfolio companies like Huya Inc. and Bilibili Inc. Aside from reality shows and music festivals, Tencent last year released a drama series called CrossFire, which tells the story of a wheelchair-bound teenager trying to make it as a pro player. in the online shoot-up with the name. But esports is also a major gateway to using foreign audiences for Tencent, which has yet to hit gold on any app, just like ByteDance Ltd. ‘s video sensation TikTok. The company reaches most people outside of China with games such as PUBG Mobile – one of the most popular mobile sports titles in Southeast Asia – and League of Legends, which is regularly played by tens of millions worldwide. Under the helm of TJ, the League of Legends Pro League (LPL) in China has become the largest sports league in the world due to its size: 17 teams compete in hundreds of matches annually, with the 2020 season reaching 100 billion times through live broadcasts and social content. The main sponsor for the new season is Mercedes-Benz. Every person who attended the Shanghai spectacle was the winner of a 1-in-500 lottery. Preparing for the event took months of planning and TJ provided players with 100-page textbooks on virus prevention. When the clatter of digital swords did not fill the air, Chinese rapper Lexie Liu and the League of Legends virtual K-Pop orchestra shook the stage in front of socially distant participants. A 26-foot-tall dragon statue is illuminated below the Oriental Pearl TV Tower landmark. Read more: Shopping Moving Online. Broadcasting rights for events like these in Shanghai now bring in about 60% of TJ’s revenue, while the rest comes largely from bail offers, said Lin, who also heads the China wing of the Tencent-owned League or Legends maker. Riot Games Inc. Just like Twitch from Amazon.com Inc. live pro contests offer a revenue opportunity through virtual gift sales, and the goal is to also expand revenue from licensed merchandise, he added. Ecommerce giant JD.com Inc. and Suning.com Co., both competing teams competing in the LPL, think the same. Beijing has so far shown a favorable attitude towards pro games, provided the games themselves have been approved. and related content is free from excessive violence or political messages. Tencent and its peers have allowed it to explore various business considerations – also abroad. In 2020, LPL’s simultaneous viewership outside China reached a peak of 310,000 on sites including YouTube and Twitch, which want to double TJ by 2022. The help of the goal is the multilingual web shows it delivers to capture the game’s memes and highlights, along with Tencent’s internal streaming unit Trovo Live for the US market. Just like in real sports, all the action is visual and Tencent only needs to swap the comments to locate League of Legends content. TJ wants to look further, and plans to organize the China League for other games in the same fantasy universe, Lin said. In February, the franchise’s mobile edition Wild Rift received the license for a commercial launch in China and the highly anticipated title recently became available for US players to test. With most games now taking place on mobile devices, it can be the next big step to catalyze interest and engagement. “As a gamer myself, I’m always inspired when I see someone grow from nobody to a big star,” Lin said. . “I believe many fans love sports for the same reason.” For more articles like this, please visit us at bloomberg.com. Sign up now to stay ahead of the most trusted business resource. © 2021 Bloomberg LP