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  • Writer's pictureDenis Green

China Sports Business Weekly | 14th August

Welcome to the latest edition of the China Sports Business Weekly.

Here’s what’s been making the headlines this week: Paris Saint-Germain partners with Chinese mega-brand Hisense, Epic Games lands $1.78M funding, PP Sports withholds payments to the English Premier League, FIFA & AFC postpone Asia’s 2022 World Cup qualifiers, Tencent delivers with esports drama, while China’s esports industry revenue passes $10B for 2020 H1.

In this week’s From The Top, we spoke with Eddie Chen, Chinese esports industry expert, about the latest raft of deals & investments, where profit is being made, the impact of COVID-19, and the challenges facing brands who want to the sponsor teams.

Top Industry News

1) PSG Announces Global Partnership with Hisense The French Ligue 1 champions signed the multi-year sponsorship deal with Chinese consumer electronics and home appliances company Hisense, with the club actively strengthening its foothold in the Chinese market. PSG signed a partnership with China’s biggest insurance company PingAn last year, and now the Hisense tie-up emphasises their brand power even further in the country. Read more on SportBusiness (English) and China Daily (Chinese)

2) Epic Games Lands $1.78B in Funding The video game giant behind Fortnite stated its valuation has skyrocketed to $17.3B after a $1.78B funding injection, including some investors buying new shares while others bought stakes from existing shareholders. The investment includes a $250M strategic investment from Sony, announced last month. Read more on CNBC (English) and Sohu (Chinese) 3) PP Sports’ Owner Suning Withholds $209M Payment to EPL Reports are surfacing that Suning, the parent company of digital sports broadcaster PP Sports, has withheld a substantial payment to the English Premier League, citing the COVID-19 pandemic as the reason to withhold and re-negotiate. PP Sports has splashed out over $1B on top-level exclusive media rights in recent years, but is now starting to fall back on payments, a worrying sign for themselves and owner Suning Group. Read more on SportsPro (English) 4) Asia's 2022 World Cup Qualifiers Postponed Until 2021 The qualifying matches have been postponed again until 2021 due to COVID-19, according to world governing body FIFA and the Asian Football Confederation (AFC). The second round of Asian qualifiers was originally scheduled to take place during the international windows in October and November, but they will not go ahead due to the "COVID-19 situation in many countries." Read more on ESPN (English) and Lanxiong Sports (Chinese) 5) Beijing Marathon Given Go Ahead The Beijing Marathon is set to be held on October 17 according to the updated calendar published by World Athletics. This will be the 40th anniversary of the yearly race. Read more on Netease (Chinese) 6) Guangzhou Hockey Association Founded The establishment of the Guangzhou Province local ice hockey association, Guangzhou Hockey Association, will host exhibitions and play a supporting role in the development of ice hockey across the country. Ice Hockey has become an ever-growing sport across China, particularly with the Beijing Winter Olympics on the horizon. Read more on Xinhua (Chinese) In Other News Tencent Posts Strong Q2 Earnings April-June figures beat analyst expectations in one of the company’s fastest revenue-growing quarters in two years. Gaming and esports have helped boost overall revenue while its advertising business showed weaknesses as a result of weak brand advertising demand amid the challenging macro environment, as well as delayed content production and releases. Read more on CNBC (English) and Sina (Chinese) Chinese Companies Dominate Fortune 500 List A total of 133 Chinese companies were ranked among the Fortune Global 500 enterprises. In comparison, there were 121 from the U.S, 53 from Japan, 31 from France, 27 from Germany and 22 from the United Kingdom. The leading Chinese companies were: Sinopec Group, State Grid and China National Petroleum. Read more on Shine (English) and Huanqiu (Chinese) Tencent Esports Drama a Smash Hit CrossFire, a Chinese television series based on the South Korean video game, reached 980M views in less than four weeks. Crossfire tells a coming-of-age story about two young gamers – played by Chinese movie stars Lu Han and Leo Wu – trying to carve out a career in esports. Read more on SCMP (English) and Tencent (Chinese) Nick Young Becomes Most Popular NBA Athlete on Douyin Young collaborated with two Chinese KOLs as part of his first Douyin livestream to engage with fans, which topped both the Douyin livestream and hashtag trending lists, seeing Young become the most followed NBA player on the platform. Since the launch of his Douyin account on June 9, he’s posted 22 videos, generating 6.3M Likes, and gained over 1.96M followers. Check out Young’s Douyin page

Esports News Esports Industry Hits $10.3B in Revenue for 2020 H1 China Game Industry Research Institute’s latest report from January to June this year stated there were 484M esports users for the period, up 9.94% in the first half of 2020. The industry also generated $10.3B in revenue in the esports games market at this time, a huge increase of 55% Y-o-Y compared to the same period in 2019. Read more on Pandaily (English) and Sohu (Chinese) From The Top Eddie Chen, esports industry writer and expert. 1. A number of big esports deals, investments, and partnerships have been announced recently. What have been the main reasons behind this raft of deals? The industry of esports has introduced a number of new features recently that fit into the interests of investors. These include: 1) The users, consumers and audience of esports are relatively young, looking at a general demographic of 10 to 35. China has over 400M esports users, and for investors, you are not investing in esports, you are investing in the future of China, this is what I believe the logic is behind the big recent investment from the ever-growing Bilibili. 2) Everything to do with esports is based online, on the internet, there is no physical contact involved. Throughout COVID-19, there are huge limitations on how close people can get to each other. Esports doesn’t need that physical contact compared to traditional sports, therefore giving it license and flexibility to continue. 3) Mobile esports titles like PUBG MOBILE and Honor of Kings are incredibly popular and don't show any sign of slowing down. People like short-form content to stimulate their minds whether it’s in their commutes, lunch breaks, or weekends. In addition, we’re now in an era of 5G which will be indispensable to esports in terms of faster speeds and a better quality product. Investors truly trust the future of mobile esports and see big returns down the line. 2. Despite the big numbers, profit is still hard to come by. In simple terms, what's the most realistic way teams and sponsors can make money from esports? This is a good question. For teams and sponsors, the fastest way to make money is to win the tournaments and get your hands on the prize money. For example, winning $34M from Dota 2's The International is up there with the biggest prize money on offer, and catching up with traditional sports’ prize money. There are also two more realistic ways to make genuine profit from esports. Through the contract trading of the players with brands and sponsors, as well as franchising slot trading between different teams. 3. How much has COVID-19 accelerated the esports industry in China, and has it made it more important? Not too much to be honest. Actually, many esports events have been suspended or cancelled. China's esports industry is more mature than others, and therefore it was better placed during COVID-19 to survive and rely on its current consumer base. The League of Legends and Honor of Kings esports scenes are still operating and have kept a steady slow of interest and income during downtime for the majority of global industries. 4. What are the biggest challenges facing brands who want to partner with esports teams in China? The biggest challenges for brands who want to get a piece of this pie will always be to understand the esports communities, how they operate, what they want, and how they function on a day-to-day basis. Each esports title has a big difference in their culture, in their word, a "meme." It will be really hard to increase the commercial effects if the sponsors don't know or understand the community's cultures and nuances. --

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