China Sports Business Weekly | 26th February
Hello Industry Friends,
Welcome to the latest edition of the China Sports Business Weekly.
Making headlines this week: UFC and Migu announce landmark partnership, Fanatics and Hillhouse Capital to set up Joint Venture, Suning boss switches focus to retail, NBA set to return to CCTV, NBA partners with Hennessy, an opinion piece on opportunities for global sports brands on Kuaishou, and a tech vlogger’s Q&A with Tim Cook goes viral.
In this week’s must-read From The Top, we spoke with Kevin Chang, SVP APAC at UFC, about the scope & depth of the Migu partnership, how he expects this relationship to evolve, the process of identifying the right media partner, and what’s accelerated the growth of local talent in recent years.
Top Industry News
1. UFC & Migu Announce Landmark Multi-Year Partnership China Mobile-owned Migu has become the official media platform in China for all UFC events and programmes. The multi-year agreement includes exclusive UFC content on Migu fitness platform and collaborations on production technology and original programming. Read more on SportBusiness (English) and Sports Money (Chinese) Mailman Take: This is the most comprehensive and forward-thinking media partnership ever done in China. The UFC has spent 10+ years in the region building a business, growing a fan base, investing in talent & best-in-class facilities, and establishing local partnerships. For any global sports organisation looking to ‘crack’ China, this is what it takes.
2. Fanatics and Hillhouse Capital to Set Up Joint Venture in China The sports ecommerce company is partnering with private equity firm Hillhouse Capital on a 50-50 JV (joint venture) to expand its presence in China. Fanatics China will handle both brick-and-mortar stores and ecommerce for the company’s 300+ partners. Hillhouse, founded by Chinese billionaire Zhang Lei, will provide operational and market expertise. Read more on CNBC (English) and Lanxiong Sports (China)
3. Suning Changes Focus, Raises Doubts Over Sports Investments The Chinese conglomerate’s owner Zhang Jindong stated Suning will focus entirely on its retail business going forward, saying: “We will focus on retail business resolutely, close and cut down our business irrelevant to retail business without hesitation”. Read more on SportBusiness (English) and Titan (Chinese)
Mailman Take: The early warning signs were there for Suning once the inflated China media rights market started to burst, and COVID-19 only accelerated that trend. We don’t expect to see another LeSports / PP Sports enter the market any time soon. Now there's a gap for the short form video platforms to make a play.
4. NBA Set to Return to CCTV5 The Chinese state broadcaster is set to resume its coverage of the NBA from next month, it has been reported. The broadcaster will show the upcoming All-Star game on March 8, and is expected to air the remainder of the regular season and the season-ending playoffs, according to Chinese news outlet Global Times. Read more Sportcal (English) and NetEase Sports (Chinese)
5. NBA Agrees Worldwide Partnership with Hennessy
Hennessy has become the "Official Spirit of the NBA'' worldwide, with the multiyear agreement marking the league's first-ever global partnership with a spirits brand. The deal expands on the current North American partnership, and will cover Africa, Asia-Pacific, Europe and South America too. Read more on PR Newswire (English) and Ecosports (Chinese)
Opportunities for Global Sports Brands on Kuaishou The short-form video platform has become one of the hottest new media platforms in China in recent years. Mailman’s Associate Director Dominic Lytwyn takes a look at the opportunities awaiting global sports organisations and athletes in China. Read the Blog here (English)
Tencent-Backed VSPN Considering U.S. IPO Chinese esports firm VSPN is considering an initial public offering in the U.S., according to reports. Deliberations are said to be at a very early stage, while a company representative said they don’t have an IPO plan at this stage. Read more on Caixin (English) and Sina (Chinese)
Mailman in Asia
Duncan Pointer Appointed Managing Director of Mailman APEC In line with Mailman Group's continued global expansion, Duncan, based out of Singapore, will drive business growth and client services across the APEC region, leading an experienced team of 50+ across Singapore, Thailand, India, Vietnam, Japan, South Korea, Indonesia, Malaysia, and the Philippines. Read more on Marketing-Interactive (English) and Ecosports (Chinese)
In Other News
Tech Vlogger’s Q&A with Tim Cook Goes Viral Apple CEO Tim Cook staged a virtual Q&A with a 22-year-old Chinese influencer. The 18-minute video between Cook and the young Chinese student, He Shijie, who has six million fans on Bilibili, has been viewed by hundreds of millions of viewers across different Chinese internet platforms. At least 250 million users on the microblogging site Weibo read posts about the dialogue since the video was uploaded on February 18.. Read more on SCMP (English) and Sohu (Chinese) Huawei Unveils Foldable Smartphone for China Market
Huawei unveiled a folding smartphone with an 8-inch (20-centimeter) widescreen display on Monday, to show off its tech prowess - but said it will be sold only in China. The Mate X2 highlights the challenges for Huawei Technologies Ltd. after Washington cut off access to U.S. processor chips and Google services. Last year, Huawei fell from the top-selling global smartphone brand to sixth place. Read more on AP (English) and The Paper (Chinese)
From The Top
Kevin Chang, SVP APAC, UFC
1. This is more than simply a media rights deal. Can you explain the scope & depth of the Migu partnership?
When we first started these discussions, it was clear that Migu is not just a content or live streaming platform, but rather an ecosystem of connected companies including MIGU Music, MIGU Video, MIGU Digital Media, MIGU Interactive Entertainment and MIGU Animation. As a subsidiary of China Mobile, the largest provider of communication services in Mainland China, Migu’s role is to make a positive impact on society with their “culture + technology” approach. We realized that the right partnership would give us the opportunity to take the UFC far beyond the general sports fan, and help us diversify the UFC’s mainstream brand value.
Our vision for the UFC is to be an iconic global sports brand inspiring all to break barriers, push limits, and make the impossible possible. At our core, we’re promoters of human potential and you can see that every time the lights go on and the Octagon gate closes. This groundbreaking Migu partnership will help us expand in new ways outside the Octagon including Health and Fitness, Production Technology, Fan Activations and Original Programming.
We’ve been monitoring sports reform in China ever since Article 46 was released in 2014. It’s taken some time, but now the directive is very clear: sports and fitness are to be a top priority and there will be systematic changes in youth education curricula to drive this initiative. With our recent investment in the UFC Performance Institute Shanghai and team of world class experts we’ve assembled, along with our partnership with the Chinese Olympic Committee to serve as the “Official High Performance Advisor and Accredited Training Facility of the COC”, we have firmly established ourselves as the leader in the elite performance industry. Our plan with Migu is to take this knowledge and expertise from “Military grade” to “Civilian grade” and utilize their massive network to make it accessible for everybody. We also have UFC FIT expansion in China starting with the grand opening of the flagship location in Lujiazui, that will give people an even closer touchpoint to our approach and philosophy.
Migu is a tech company at its core, and innovators in the space. We will together explore various production technologies to enhance the viewer experience and give our fans the most cutting edge ways to consume our content, including 5G, VR, 4K, 8k/higher standards, and Migu’s revolutionary bullet time free view function. Our locally hosted events around the country, as well as UFC Performance Institute in Shanghai, will serve as the platform for Migu’s innovative new production technologies they will use to showcase China Mobile’s 5G network.
Fans can also expect many more off-line fan activations including UFC Experience and road shows across the country, as well as viewing parties and masterclasses we will host at the UFC Performance Institute. We always seek to expand the number of authentic touch points for our fans in China to give more of them the opportunity to truly experience the UFC and meet our biggest stars.
All said, our biggest initiative will be to host and produce Dana White’s Contender Series Asia live from our arena inside the UFC Performance Institute Shanghai. It’s the final stage of the UFC Academy, of which we are so proud to announce that 4 of our top prospects have recently graduated to the UFC, with several others right behind them.
We have such a unique opportunity to chart the entire journey of these athletes: from getting invited to the UFC Combine, to being evaluated and selected for a full ride scholarship, to the challenges of showing up day in and day out for the opportunity to participate in the world’s toughest job interview, to the elation of finally being awarded a UFC contract and fulfilling a lifelong dream. These fighters have already had success as champions in other local and regional promotions, and are listed as the pound for pound best fighters in China, but the journey of making it to the big show is a very special moment that we want to share through our partnership with Migu.
2. A multi-year deal represents a long-term strategy and vision. How do you expect this partnership to evolve over that period?
We are fortunate to have a solid foundation that is set up for long term mutual benefit. I expect us to build on our partnership each year by collaborating on new things like licensing, mass participation events and event promotion. I also expect us to become increasingly prominent on the platform, be it amongst sports programming on Migu Video, or Health and Fitness content on Migu Fitness.
3. China's media rights market has been hit hard by COVID-19. How tough was the process of identifying the right partner?
The media rights landscape was in the process of correction well before COVID-19 hit in 2020. Several years ago, as the China digital revolution was really taking off, there were media platforms who were not built on strong foundations, but rather investment vehicles telling stories to improve their market position and chasing quick returns. This was not only in sports, but across the entire entertainment industry. Content of varying quality and value was in high demand to the delight of rights holders around the world.
We went through the process of identifying the right partner in a very different landscape than the last time, and knew right away that Migu was where we wanted the new home of the UFC in China to be. It wasn’t a tough decision. Today, only media platforms built on sound business practices and long term principles remain, and only premium content that is locally relevant is in demand. Rights holders need to take China seriously and invest in building their fanbase and brand value like never before. China is our most important market to develop internationally and we made a real commitment with our ongoing multimillion dollar investment in the UFC Performance Institute and developing the next generation of Chinese stars at the UFC Academy, and hosting events and countless other marketing activations on a regular basis.
4. China Power has had an incredible 18 months, with the likes of Zhang Weili, Li Jingliang, Song Yadong, Su Mudaerji, and Yan Xiaonan all claiming big victories. What do you put this increase in quality of local talent down to?
When I first started with the UFC 10 years ago, I did not anticipate the rise of “China Power” would be so dramatic. There were so many misconceptions about MMA and the UFC, piracy and misrepresentative content was rampant, and we only had a handful of core fans. I remember talking to our matchmakers about local talent prospects and we had a long way to go before China would be a source of UFC calibre talent. One of the first SWOTs we did for China indicated “lack of talent” as a threat.
Zhang Tiequan was the pioneer who started it all off, and then his pupil Li Jingliang “Leech” carried the torch by himself for a few years after that. These guys fought so hard for us not only in the Octagon, but also to grow awareness and educate people about the UFC as brand ambassadors. We are forever grateful for their contributions. Leech actually coined the phrase when he started to chant “中国力量!” after his TKO victory capping off 5 straight wins by his China compatriots in front of a sell-out crowd at Mercedes Benz Arena. The moment is still so clear: when the entire audience joined in to chant with him, I knew we were on our way.
The increase in the quality of local talent over the past 2 years can be attributed to a variety of things - including the fact that the level of training and resources in top clubs around the country have improved so much in such a short time, as well as our direct involvement to bridge the gap between UFC calibre, and the level of talent in local and regional promotions. Dana recently said in an interview that “There has never been more talent, more fans, and more energy and momentum for UFC in China than right now” and in my opinion, that is what truly drives the increase in the quality of local talent. Zhang Weili proved to every fighter in the country that anything is possible and that Chinese martial arts like Sanda are right there at the centre of the MMA universe. Fans have now come to expect great things from the likes of Yan Xiaonan, Song Yadong, Sumudaerji and of course Leech, who are all climbing in the rankings. As in all sports, achievements beget progress and evolution and that is precisely what this generation of local talent is doing: paving the way for barriers to be broken, limits to be pushed, and for human potential in China to shine. --
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