Monday, May 20

Tencent to Dominate China’s eSports Market Following $10 Billion Merger

eSports is one of the fastest-growing markets in the world. The most modern of entertainments, it has turned video gaming into a viewer sport one with a vast global audience. Due to its extensive size and reach, it has lately become a point of interest for tech companies from every corner of the globe.

While Amazon-owned Twitch is currently the world’s leading eSports platform, its crown is not secure, and Tencent and its subsidiaries have recently made some major moves to remove Twitch from its leading position most particularly, in Tencent’s home country, China.

A Lucrative Industry

For those who have followed eSports in recent years, it comes as no surprise to discover that this unique form of entertainment has a huge international audience. Especially popular among the younger generation, its viewership has been steadily increasing, with the greatest gains made over the last year.

With sales of the Nintendo Switch console more than doubling between 2019 and 2020, and other leading consoles such as the Xbox One and PlayStation 4 experiencing a notable surge in sales, the worldwide gaming market has transformed into a force to be reckoned with. Indeed, it’s now worth more than either the music or film industries, with an estimated value of $180 billion. Like its fellow entertainment sectors, however, it’s not content to rest on its laurels, continually embracing the latest innovations and newest technology.

Already, the most contemporary and groundbreaking inventions have been incorporated into its offerings, from virtual reality through to 5G. Promising to maintain the sense of excitement it currently generates, eSports is thus an area that is ever-evolving and which never stands still.

Naturally, one of the most important parts of this industry is the streaming of games, and when it comes to leading this charge, it’s Twitch who currently commands the field. Drawing huge audiences, it is known to and frequented by millions of gaming enthusiasts, giving it a large and rapidly growing viewership.

Soon to be rebranded as Prime Gaming, the platform boasts a 76 percent market share, meaning none are currently able to challenge its position.

Bought by Amazon in 2014, Twitch was already worth $1 billion, but its price tag has since risen to five times that amount. This increase in value has been catalyzed by a number of different factors primarily, a growing global eSports audience so that it now claims around 140 million regular users.

An Eye on the prize

While eSports are popular around the world, China currently has the largest gaming revenue and arguably dominates the global scene. With its industry estimated to be worth $908 million, it has a huge audience to tap into.

Indeed, there is so much interest within the country that an entire betting sector has grown up around it, with reputable directory sites listing dozens of different eSports betting sites. This popularity has naturally created opportunities ones that certain other tech giants are now keen to capitalize on. One of these is Tencent. While most of its rivals accept that Twitch already has the European market sewn up, it’s believed that its foothold in China is less secure. Tencent’s plan, then, is to create a video-streaming platform of the highest caliber, which is not only created in China but made with the Chinese market in mind.

Certainly, Tencent has impressive credentials that speak of its potential for success. Its gaming arm boasts several hugely popular titles, and it’s certainly not averse to putting its money where its mouth is.

To demonstrate this, Tencent has recently proposed a deal worth $10 billion, which would merge two local live-streaming rivals DouYu and Huya and use these as a foundation to create a gaming platform to rival Twitch.

Tencent already has its foot in the door, owning over a third of these two enterprises. With full control, it believes that it can take China’s live-streaming market – which is currently worth $3.4 billion and make it the biggest and best in the world.

Indeed, the current environment between the United States and China could open up some unique opportunities. With a large number of domestic tech companies increasingly interested to demonstrate their dominance at home and a closing of ranks against outsiders, Tencent may well be swimming in a pool where the tide has suddenly and momentously turned in its favor.

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