Earlier this month, McKinsey & Company released their latest esports report to assist brands in making better decisions. They mention China a handful of times, and we thought it would be a good idea to clarify a few of their comments.
1 - "European and North American sponsors will find that at least 30 percent of esports viewers are from outside the team’s home country, particularly in China, Japan, and South Korea..."
Firstly, this is not the case for every team or influencer. It is important to know your audience segments in order to understand your true value.
That said, this is the case for many teams and influencers. That is why it is important to have global operations and not neglect key market segments. Just because you are unfamiliar with a market does not give you an excuse to neglect it. China happens to be a more lucrative market for non-Chinese teams due to a thriving gaming and esports ecosystem and a hunger for "foreign" entertainment.
This is equally important for advertisers to understand as they engage with teams and influencers to help promote their brand/product. Proper vetting of the team/influencer's resources is required in order to understand what value they can actually bring your company.
2. "Chinese fans are more likely to play and watch esports, follow a favorite player, and follow an esports team than their US peers."
It comes down to one word: accessibility.
Mobile esports such as 王者荣耀 (Honor of Kings) and PUBg dominate in China. Traditional consoles are mostly banned in China (if you want to purchase a Nintendo Switch, you must go to Hong Kong or Macao), and digital services are completely integrated via mobile solutions.
Everyone has a mobile phone. Ride the subway to work and everyone is on their phone. Look around the office at lunch time - on the phone. Look across the dinner table to your friends - phones. Turn to your partner in bed - phone. Everything you could possibly want is accessible from your phone. From social media (WeChat and Weibo), to video and live streaming (Douyin, Douyu, Huya, etc.), to mobile payments and shopping (WeChat, Taobao, JD, etc.). Your phone is a one-stop-shop for all your daily needs.
This combined with intense fandom that Chinese culture perpetuates, and you have a perfect storm for phenomena such as esports, and gaming influencers. There are also cost considerations, media restrictions, and other factors that combine to affect success.
3. "China is an attractive but vertically integrated market."
Tencent and Netease dominate Chinese gaming. There are a few players underneath them that do well in their own respective niche', but Tencent and Netease are the ones leading the way.
Tencent is by far the largest and most in control of China. They control each element of a person's digital life in China to some degree or another.
This list is not exhaustive and is a little outdated, but it does a good job at illustrating just how far Tencent's reach goes. They also have ownership stakes in various live-streaming platforms, and hundreds of other companies around the world.
It should also be pointed out that Alibaba is Tencent's rival when it comes to digitally integrated solutions. Alibaba also has a keen interest in esports and gaming equitable to Tencent.
This kind of integrated ecosystem offers a lot of opportunity to grow within its confines - just don't go poking the bear.
PLAYNECT Bridging The Gap To China
At PLAYNECT we are dedicated to working with brands looking to succeed in China. Specifically, we help brands with:
Through these efforts brands are able to promote their brand locally to acquire Chinese users, create top-of-mind brand awareness, and gain access to new revenue streams in a rapidly growing and evolving market in the world of gaming and esports.
If you are interested in learning more about China or are eager about expanding to China - contact us today to see how PLAYNECT can help you.