Tencent is making a huge play for eSports in what might be its biggest market
Chinese internet giant Tencent is throwing a billion yuan a year at eSports in a bid to become the country’s number-one player. It’s a logical fit: who better to dominate the nascent industry than China’s largest gaming and social media company? Tencent is in a unique position: it owns popular online games like Honour of Kings and Fortnite, as well as a powerful distribution channel in WeChat. That might explain why Tencent, along with Activision Blizzard, has become one of the biggest promoters of pro-gaming in the world.
China plays host to over 400 million gamers – this pool of potential eSportsmen-and-women are fuelling viewership numbers that are on a par with U.S. pro sports. eSports is a global phenomenon – but nowhere is it taking off as fast and furiously as China. Last year, the King Pro League tournament saw as many as 240 million daily views – that’s twice as many as the Super Bowl. And professional players in it were commanding multi-million dollar transfer fees.
According to Cheng Wu, the Tencent vice president responsible for overseeing the company’s efforts in the industry, and a Google veteran: “Esports is entering a golden age in China and globally. It’s one of those few areas where China has a real chance of coming out on top to compete with developed countries.”
But Tencent, for all that it’s in a fantastic position to dominate eSports, has some stiff competition worldwide. Big names in tech and gaming – from Electronic Arts to Amazon and more – are all jostling to carve out a slice of the pie before it hits the big time.
Until that point, eSports is not likely to feature prominently in Tencet’s financials. Given that the industry as a whole is predicted to be worth almost $3 billion worldwide by 2022, whereas Tencent’s revenue last quarter came in at $11.5 billion, you might wonder why the Chinese internet giant is even bothering with eSports.
The answer is that Tencent, along with a number of other observers, thinks that eSports is the future – and who knows how big it can get eventually? That’s why the company is plowing money into it, and it’s why its pursuing deals with companies like Under Armour and the NBA (National Basketball Association).
What’s the appeal? According to Celia Hodent, author of “The Gamer’s Brain” and a user-experience consultant for Fortnite: “It’s the same as watching soccer. We root for our teams, because humans need to feel that they belong to a group and we relate to the other members of this group. We also invest emotions through the narrative out of the game, just like when we watch a suspenseful movie.”
Dominion holds Tencent in its Global Trends Managed Fund.
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