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19 June


Cybersport - new business trend in China

At the moment, the market is developing very actively

Game Photo: Nikkei

/NOVOSTIVL/ China's 500m gamers drive growth at Tencent and other IT giants. This article appeared in the Nikkei Asian Review.

One year ago, Ceng Guohao traveled some 1,000 km to Shanghai from his home in Hubei Province in central China in pursuit of a dream: playing video games.

Ceng, who was 18 at the time, moved into a two-story, mortar-coated building about 15 km from the city center. He became one of dozens of pro gamers living in the building - a gaming house operated by Chinese video-streaming startup Bilibili.

He specializes in League of Legends, one of the world's biggest online games. It is made by Riot Games, a division of Chinese internet conglomerate Tencent Holdings, and played by tens of millions of people around the world.

His father, who once vehemently opposed his decision to become a pro gamer, has come around. "Now, all he says is, 'You've gained weight. Pay more attention to what you eat,'" - Ceng said with a smile.

China now boasts a gaming population of over 500 million, and competitive gaming has become big business. Esports-related sales in China hit 51.3 billion yuan ($7.3 billion) during the first six months of 2019 and are on track to top 100 billion yuan for the year, according to Gamma Data, a Chinese research company specializing in video games, movies and TV programs.

There are more than 5,000 gaming teams operating in an industry that now employs 440,000 people.

That means competition is intense. Ceng and the roughly 60 other gamers in the Bilibili house practice for hours every day. They are divided into three groups: the first team, the second team and trainees.

Depending on their contracts, trainees are paid about 10,000 yuan per month, while mid- to upper-ranking gamers earn around $50,000 annually, according to Li Xinyuan, the team manager. Top-tier gamers like Ceng earn over $91,000.

Those rates mean even trainees make more than average factory workers in Shanghai, whose initial monthly take-home pay is typically around 4,000-5,000 yuan per month.

Video gaming was officially recognized as a sport by the Chinese government in 2003. When gaming was deemed a profession by the Ministry of Education in 2016, Chinese gamers began to hit the road to play for money.

Pro-circuit video gaming is the driving force of the rapid growth of the game market, which the government views as a potential breeding ground for more IT giants like Tencent, the powerhouse behind League of Legends.

The company is a financial behemoth with a market capitalization of $411 billion. Its gaming business is the company's main cash cow, racking up $18 billion in annual sales, about 40% of its total revenue.

As video gaming has evolved from an eight-bit hobby to a multibillion-dollar industry, it now receives steady streams of investment from businesses.

Many companies sponsor teams, like Bilibili. They often have players live together to build chemistry with teammates.

Top Sports, another sponsor, operates more than 8,000 sporting goods shops across China, selling products from global brands like Nike and Adidas. It plans to spend $18 million in the next five years to develop its own gaming team, and it has set up a gaming house in eastern Shanghai.

But gaming is a challenging industry. Operating a high-class League of Legends team costs 20 million to 40 million yuan per year.

The lifestyle is hard on gamers, too. Bilibili's Li, the team manager, says 20% to 30% of the company's esports team is replaced every year. Some players get jobs as coaches, play-by-play announcers or managers after retiring as pros, but most have to return to college or move to other industries.

Many pro gamers develop physical or mental problems. Both Bilibili and Top Sports offer regular psychological counseling at their gaming houses.