esports Week In Review | League of Legends Viewership, Tencent and NBA 2K League Brand Innovation

ESPORTS WEEK IN REVIEW | LEAGUE OF LEGENDS VIEWERSHIP, TENCENT AND NBA 2K LEAGUE BRAND INNOVATION

Cover.jpg

TNL Take: This week we took a deeper look into the 2017 League of Legends World Championship Viewership numbers, how NBA 2K League sponsors can innovate and Tencent briefly bigger than Facebook and what's next for the gaming giant.

 

MONDAY 11/27

How Many Viewers Watched The League Of Legends 2017 Championship? Not 60M

Math.png
1.jpg
1.png

 

Have a great weekend!

Tencent Bigger Than Facebook? Here's What's Next

TENCENT BIGGER THAN FACEBOOK? HERE'S WHAT'S NEXT

Tencent Video (Photo: Tencent)

Tencent Video (Photo: Tencent)

Industry Guest Post 012: Joost is co-founder and CEO of SuperData Research.  As one of the first academics to study video games, Joost has over fifteen years of commercial research experience in interactive entertainment and creative industries. Today SuperData is a leading games industry researcher with clients such as Activision Blizzard, Apple, Electronic Arts, Google and Nexon.

In addition to his business adventures, Joost teaches video games economics at the NYU Stern School of Business. He lives in Brooklyn with his wife Janelle and son Maximus and can be reached at joost@superdataresearch.com


Tencent's Q3 earnings report certainly was impressive: the company earned $2.72B for the quarter, up 69%.

The big news is twofold: (1) Tencent the dominant Chinese social media platform broke through the symbolic barrier of $500B market cap, and (2) that made it more valuable than Facebook for a brief period.

But why stop there?

For one, Tencent currently controls the top of the global games market with a handful of incredibly successful titles. Last quarter, its online gaming revenue was $4.05B (+48% y/y). The acquisition of Riot Games and Supercell has been instrumental in this success, and the release of Honour of Kings has proven to be an equally explosive blockbuster.

2.png

Its marquee game titles — League of LegendsClash RoyaleHonour of Kings — make an absolute mint: over the last 12 months these three titles alone have generated $4.68B in revenues (year-to-date).

Critics have argued that the latter has yet to prove itself outside of the Chinese market. To that end, Tencent recently appointed former Take-Two Interactive’s CEO, Ben Feder, as the lead for its corp dev operations in New York. At the same time as it seeks to localize content to build out its market power in North America, it is also keeping its finger on the pulse for games to bring back to China.

Second, Tencent has been building a few key partnerships around the world. Staying with games for a moment, the firm has hitched onto Nintendo’s successful Switch release. With the Japanese console manufacturer pushing its device globally — selling around 8M units so far and expecting to sell ~12M by end of fiscal — Tencent is along for the ride with some of its key titles.

The firm knows that money talks. It’s made several key investments in Tesla, Snap, and Ola (India’s rival to Uber). And providing access to its 963m monthly active users on WeChat is an important part of its leverage in its dealing with outside content firms.

But the biggest growth opportunity says Tencent is user created videos and live streaming. Earnings from online advertising were up last quarter at $1.6B (+48% y/y) and contain an important clue for the firm’s future.

To grow its community’s effort behind making and sharing videos, Tencent is investing a sloppy $3 billion to cultivate what it calls ‘open media’ (user-generated content).

The growing popularity of gaming video content on YouTube and Twitch has undoubtely raised the obvious questions internally (“Why aren’t we doing this?”). Globally, around 666 million people watch gaming video content. In March last year Tencent invested $61M in Douyu, which pushed the company’s valuation north of $1B or more than the price Amazon paid for Twitch two years earlier. Today Tencent Video, the firm’s fee-based subscription service, counts 43 million users.

“Watching people playing games was boring, but now people like to see how people play games.” — Lin Songtao, Tencent’s vice-president.

Interestingly, this comes at a time when western video platforms Twitch and YouTube are transitioning from purely amateur videos of cats to more professionalize, and re-intermediated multi-channel networks. For many the realization has set in by now that Twitch and YouTube are get-rich-quick schemes no more. As the audience for live streaming and gaming video content has continued to grow, content creation has begun to necessarily professionalize. Tencent is looking to build on its success.

Despite its relative obscurity among western investors and media firms, at its current pace Tencent will soon be a household name globally.


Edit: Last week, I went on China Global Television Network to talk about Tencent and Facebook:

Asia Ahead of the US in Collegiate eSports

ASIA AHEAD OF THE US IN COLLEGIATE ESPORTS

Promotional Image for Tencent's 2015 Campus Series (Photo: Tencent)

Promotional Image for Tencent's 2015 Campus Series (Photo: Tencent)

Collegiate Feature Writer: James Kozachuk

Well, here’s that headline again.

Is it because Haikou College of Economics won the League of Legends International Collegiate Championship last Sunday? Or maybe that more and more Chinese universities are offering scholarships? Or perhaps that Tencent has begun to work directly with MIT to fund their research into collegiate eSports?

Those are all part of this narrative but it’s not the point I want to focus on today. The level of engagement in collegiate eSports in Asia, specifically China, is incredible. Before heading to China, let’s look at how other regions compare to established a baseline.

 

NORTH AMERICA

Teams Participating in the 2015 North American Championship Series (Photo: Riot Games)

Teams Participating in the 2015 North American Championship Series (Photo: Riot Games)

The United States is the undisputed leader in collegiate eSports, with competitions ranging back to at least 2009, 40+ schools giving scholarships worth millions of dollars, and one university crowned queen among the rest. 

  • American Video Game League (AVGL): AVGL published that their competitions attracted students from 1,100 different institutions. After running some math on the tournaments they ran, we can estimate around 5,000 students took part this season.
  • Collegiate Starleague (+ULOL qualifiers): CSL reports that 30,000 students from over 900 institutions took part in their competitions. The number of institutions taking part is lower for CSL as they have a strict “all players must attend the same institution” policy, whereas AVGL is more lax.
  • Tespa: Tespa doesn’t report their individual player or team counts, but a cursory estimate from their tournament portal is 25,000 students this year.

North America: 30,000 (CSL) + 25,000 (Tespa) + 5,000 (AVGL) = 60,000 students. There’s definitely a lot of overlap between the tournaments and within the tournaments themselves, however we have a target size for the current US market size.

 

EUROPE

University eSports Masters in 2017 (Photo: UEMasters)

University eSports Masters in 2017 (Photo: UEMasters)

Europe is known for their incredible collaboration between organizers. The University eSports Masters grew from six to eight organizers/nations almost immediately after the first article in this series. Each of these organizers have their own tournaments, and connect with a lot of local students:

 

 

Europe: 3,000 (UK) + 132 (Ireland) + 312 (Germany) + 264 (Netherlands) + 3,861 (Portugal) + 900 (France) + 1440 (Italy) = 9,909 students. With an educated guess to include Spain, that brings us to about 10,500 students. 

 

OCEANIA

Riot Oceania University Championship (Photo: Riot Games)

Riot Oceania University Championship (Photo: Riot Games)

There's eSports development happening in this region - PE firms buying teams, Australian Rules Football team buying teams and major CPG brands sponsoring teams - it's not fully there yet; but the groundwork is being laid. As mentioned in the first article in this series, the Australian Sports Commission has announced that League of Legends will be a sanctioned game at their Unigames competition.

 

Oceania: 150 (Australia) + 6,000 (Malaysia) = 6,150 students. The Australian Unigames national qualifier ended yesterday (July 17) and Queensland University of Technology will face the University of Canterbury at the official UniGames sometime between September 24-29. There’s also a Singapore Collegiate League, but it’s difficult to find data about the raw number of students they have participating and it's not nearly as big as it's Malaysian counterpart. 

 

CHINA AND TAIWAN

~6M Chinese Students Participate in Collegiate eSports (Tencent).

~6M Chinese Students Participate in Collegiate eSports (Tencent).

And now where's we get to some serious numbers.

 

“But James, China has a huge population compared to any of the other regions!”

 

Sure, but a higher percentage of the China and Taiwan population are engaged in competitive collegiate eSports.

So why is this?

It’s actually a really simple reason: Tencent and Garena use a different competitive and community-building system; they have created competitive ladders for collegiate eSports. Their methodology gets incredibly invasive, requiring every student to send Tencent (China) or Garena (Taiwan) a scanned copy of their student ID card, their major, and proof of enrollment. But in return students will be linked up with students from their school, and matches they play will be recorded as points for their institution.

That last point shouldn't be taken lightly. 

There’s a huge sense of national pride and the two Chinese eSports loving students I’ve talked to have said that they enjoy the collegiate ladder, although they recognize that their own schools will never win given that other universities like Minjiang University will more than likely consistently win.

For an unfortunate sports analogy, it's like still caring about the NCAA Tournament event though you go to a Division II school that has 0 chance of making the big dance.

This ladder system is a way to easily affiliate with one’s school and feel like your part of the community while contributing to your school’s competitive identify. You don’t have to be the best player, but you have to be an A player.

Such a system hasn’t been tested in North America or Europe, but could very well be a way to help grow collegiate eSports. The closest we’ve come is the Clubs system in League of Legends, but there are issues with that as well that I'll cover in a future article.

After University of Toronto got taken down 2-0 by China's Haikou College of Economics last week we're certainly going to need a boost in order to win next year. Whether that be a direct community integration into the game client, improvements in collegiate recruiting, or the creation and expansion of the best collegiate eSports programs in the world- we'll need something.

 

SO WHAT NOW?

 

Asia clearly has a dominant lead AND with Asian eSports investment easily exceeding $1B+ this year, the US has a lot of catching to do. With the rapid growth of US schools providing eSports scholarships and other initiatives, hopefully these are all good signs of starting, let alone improving the infrastructure.

eSports Week In Review | Brand Investment On Pace To Double, US Investment Hits ~$100M, Tencent's Kids Gaming Limits

ESPORTS WEEK IN REVIEW | BRAND INVESTMENT ON PACE TO DOUBLE, US INVESTMENT HITS ~$100M, TENCENT'S KIDS GAMING LIMITS

eSports Week In Review. That's A Xbox Controller (Photo: Xbox)

eSports Week In Review. That's A Xbox Controller (Photo: Xbox)

TNL Take: What a week for eSports. The biggest news being finally some release of information on Activision-Blizzard's upcoming Overwatch League which The Next Level will cover next week and look at two areas that I don't believe have been fully analyzed yet.

This week, 2017 US eSports investment is almost $100M, 60+ brands sponsored eSports in the first of 2017 - which is on pace to double 2016 and China's Tencent's limitations on kids mobile gaming.

 

 

MONDAY 07/10

2017 US ESPORTS INVESTMENT HITS ~$100M
 

TNL eSports Startups 010: Super League Gaming Gets $15M From Media, Sports And Entertainment

TNL eSports Startups 010: Super League Gaming (Graphic: The Next Level)

TNL eSports Startups 010: Super League Gaming (Graphic: The Next Level)

AEG Invests In eSports Team Immortals (Graphic: The Next Level)

AEG Invests In eSports Team Immortals (Graphic: The Next Level)

Matcherino Raises $1.5M (Photo: Matcherino)

Matcherino Raises $1.5M (Photo: Matcherino)

TNL Infographic 050: 2017 eSports Brand Investment (Graphic: Jordan Fragen)

TNL Infographic 050: 2017 eSports Brand Investment (Graphic: Jordan Fragen)

Note: CenturyLink and SFR will be moved to Telco

 

THURSDAY 07/13

China's Tencent Imposes Limits On Kid's Mobile Gaming

Talking Tencent On China Global Television Network (Photo: CGTN)

Talking Tencent On China Global Television Network (Photo: CGTN)

 

Have a great weekend!