OPINION: Hong Kong must promote e-sports

Gaming and e-sports is one of the best ways for advertisers to reach today’s youth market

“Don’t waste your Master Ball” is an expression most Pokémon players know all too well. It means: “Don't squander a unique chance”—because the rare Master Ball is the most powerful piece in any Pokémon game.

Hong Kong must preserve its “Master Ball” as it charts its way through the opportunities e-sports represents. The HKSAR’s innovative IT culture, deep financial resources, forward-thinking and technologically savvy government, all give it leverage in the global e-sports boom. But it must play this particular game skillfully or others will shut it out.

Hong Kong's “gateway to China” status is an ace up the sleeve. According to Newzoo.com, China is the number one gaming market in the world, with annual spend of $27.5 billion. Newzoo, which provides e-sports market intelligence, believes e-sports will grow by 41% in 2017 to $696 million and reach $1.49 billion by 2020. China is building a world-class e-sports infrastructure, with new e-sports arenas planned, well funded leagues being set up, and governmental support.

“Asia-Pacific will make up over half of the 165 million estimated e-sports enthusiasts in 2018, and China alone should drive 18% of 2018’s revenue, or about $164 million,” wrote Matt Perez in Forbes Magazine. Perez added that Riot Games held its 2017 World Championships in China and “it was the most watched e-sports event in 2017, totaling 49.5 million hours.”

Cosplay and chaos
For newbies, e-sports seems like a strange mix of video gaming and cosplay carnival, but this is no passing fad. E-sports tournaments sell out stadiums worldwide as thousands of fans watch young men and women play video games on giant screens for massive prize pools. Millions more watch from home online, and (where it's legal) betting odds are offered on teams and tournaments.

The characters of e-sports games are virtual, but the profits are real. As with most early-adopter situations, those who get in on the ground floor and fully understand the scene enjoy pole-position for the profits flag.

Skin in the game
The e-sports ecosystem includes a network of companies including game publishers like Tencent, Riot Games, and Valve, and competitions run by e-sports leagues like ESL, PGL, and the E League. Hardware manufacturers including Intel, AMD, Nvidia, BenQ, and ASUS are clearly in the mix. Razer—a game-centric hardware firm with dual headquarters in San Francisco and Singapore—listed in the Hong Kong Stock Exchange November 2017 and became the 2nd most successful IPO of 2017. Telcos like Hong Kong’s 3 and Macau’s CTM recognize the branding opportunities inherent in the space, as does Chinese cloud provider Alicloud.

Like any sport, fans are an integral part of the ecosystem, but e-sports fans can also directly connect with their heroes beyond what normal sports fans can do. They can even directly monetize their favorite players through live streaming subscription platforms including Chinese sites like YouKu, Quanmin, Huya, PandaTV, yy.com, and IQIYI. These live streaming channels are direct competitors to standard cable channels like ESPN and Turner, which jumped aboard the e-sports bandwagon a decade ago.

Gaming and e-sports is one of the best ways for advertisers to reach today’s youth market—no longer keen on standard advertising channels like television, print, radio, or Google ads. Early e-sports advertisers like Coke, Red Bull, Intel, and Audi are being joined by the likes of Hong Kong- and Malaysia-listed companies Razer, Kaisun Energy, Galaxy Entertainment, Melco International Development, and Genting. China's Harbin Beer jumped onto the e-sports sponsorship bandwagon in 2016, running advertisements and events as well as creating the Harbin Beer Esports Legion.

Ready, steady, go Hong Kong
For Hong Kong, profit opportunities in game publishing can't compare to opportunities in the entire e-sports ecosystem, which includes event tickets, merchandising, game-strategy training, F&B at venues, sponsorships, advertising, hardware manufacturing, and software development. Hong Kong is investing in machine learning and analytics technology—another area whose skills are valuable to social game developers and which fit well within the e-sports ecosystem.

An e-sports revolution is happening in countries throughout ASEAN. Elsewhere in Asia: South Korea, China, Malaysia, the Philippines, Australia, and India are actively fostering a pan-Asian e-sports scene, including hosting and funding large international tournaments. Hong Kong is uniquely positioned to build a lucrative e-sports ecosystem and produce e-sports athletes who can compete in worldwide tournaments. Let's make it happen

Andrew Pearson is president of Intelligencia, a Hong Kong-based analytics company.

 

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