China is currently the world’s largest e-sports market by revenue, after surpassing the United States and South Korea in 2019, according to accounting and consulting firm PwC, which estimates the sector will reach USD 410 million in revenue in 2020. What’s more, the e-sports market is expected to grow at a 13.1% compound annual growth rate in the next five years, with e-sports sponsorship and media rights as the main growth driver.
Founded in 2016 in Shanghai, Versus Programming Network (VSPN), has stood out as a key player in the e-sports market by organizing about 70% of the major e-sports events in China, according to Wang Chenfan, vice president of VSPN.
The firm bagged USD 100 million in its Series B round in October from investors including gaming giant Tencent, as well as short-video and livestreaming platform Kuaishou. The fresh cash will be used to extend the reach of the company’s business, including building e-sports cultural parks, rolling out short-video e-sports content, continuing to expand overseas, and developing derivative consumer goods, KrASIA reported.
Wang is not shy about his company’s lofty ambitions to bring e-sports content to global audiences. “The ultimate goal is to conquer the world,” he told KrASIA.
Stemming from gaming and venturing to be a sport company
Ying Shuling, also known as Dino Ying, founded Hero Entertainment in 2015 to publish mobile games. He later set up VSPN one year later focusing on e-sports. He attributed the second upstart move to his prediction that e-sports development seemed like the obvious next step for gaming, due to the increasingly competitive element, according to a TechCrunch report.
VSPN started in 2016 by hosting large tournaments for professional video game players. For example, the company hosted the King Pro League autumn contest in 2016, gathering 12 teams to play Tencent’s Honor of Kings, a relatively new title back then, while it also put augmented reality technologies into use, offering an immersive experience for audiences both present and watching via livestream, Wang said.
The firm, besides getting revenue from game publishing companies, also commercializes these competitions by offering sponsorship and advertising opportunities to other firms. The company’s clients include firms such as phone makers Vivo and Oppo, automaker SAIC Volkswagen, and beverage firm Tsingtao Beer, among others.
The company launched its first physical arena, the Shanghai Quantum Community, in July 2017, and opened another similar complex in Chengdu in March 2018, bringing a new monetization channel for the firm. However, the promising offline model was interrupted by the COVID-19 pandemic, and so VSPN had to leverage fully on online channels such as livestreaming platforms Huya and Douyu to reach its audiences.
VSPN has also been providing training to aspiring e-sports commentators and livestreamers. The firm also organized a variety of talk shows for companies including Tencent and NetEase, helping these firms to further promote their games. The shows also serve as a channel for high-profile gamers to engage with their fans.
“There is no other company in China like us, which has been building an entire e-sports ecosystem,” said Wang, adding that the company has been profitable for the past couple of years.
VSPN established its first overseas office in Seoul, South Korea, in 2018, an expansion choice that was not entirely based on market size, Wang explained. “South Korea still has the best e-sports infrastructure, including talents for execution and production. We want to learn from the best.”
The company’s Korean team, composed of 90% Korean natives, has supported the company’s global business while growing the firm’s presence in the country, Wang said, adding that VSPN has grown into a top-three e-sports event organizer in South Korea by revenue and by the number of events organized.
Following South Korea, VSPN later entered countries including India and Indonesia. With Tencent as its key investor, the company plans to follow the Chinese tech giant’s footprint in the global gaming market.
“Right now, we’re focusing more on the bigger Asian markets, including the Middle East, South Asia, and Southeast Asia,” Wang said, adding that “in the next three to five years, we’ll be looking into new markets like Latin America, Europe, and the US, and maybe even other territories like Africa.”
However, despite this ambition, the company and the sector still need to get wider acceptance from the public. VSPN managed to host a demonstrative event in the 2018 Asian Games in Jakarta, Indonesia, but e-sports have not been included as an official sporting event for the 2022 Asian Games to be held in Hangzhou, China. The exclusion might also be considered as a sign that e-sports won’t be an Olympic sport anytime soon, contrary to the desire of many fans.
Wang, however, remains hopeful. “It may be easier for the younger generations to acknowledge e-sports as a real sport. But it may be harder for people with a more traditional sports background to accept it,” he said.
Wang’s main source of optimism lies in e-sports’ notably young fanbase. “We can see the growing popularity of e-sports for those considered Generation Z (born between 1995 and 2000). In five or ten years, they will be the core consumers for entertainment content. So, I do not doubt that e-sports will become one of the major entertainment sectors, even the most popular one.”
This article is part of KrASIA’s “Inside China’s Startups” series, where the writers of KrASIA speak with founders of tech companies in the country.