HONG KONG (Reuters Breakingviews) - The global $1 billion competitive video-game market will reach a new level in 2019. Viewership for e-sports tournaments already surpasses that of the Major League Baseball in the United States. China’s gaming titan Tencent will emerge victorious in the People’s Republic – a key e-sports battleground of some 450 million gamers. This will propel the company’s overseas expansion.
The market is still a niche, but that is set to change. Prize pools for tournaments, for one, are getting bigger. Tencent-backed Epic Games is putting up a record-breaking $100 million for the next “Fortnite” World Cup, in which professional gamers will compete in the survival-themed hit that pits 100 avatars against each other until one is left. The wildly popular title, which boasts a whopping 200 million players worldwide, has even caught the eye of billionaire Henry Kravis, whose private-equity firm KKR took part in a $1 billion-plus investment into Epic Games in October.
As e-sports leagues take off, audiences will too. Viewership is on track to hit 276 million by 2022, on par with the U.S. National Football League today, Goldman Sachs estimates. Brands from Coca-Cola to Toyota are piling in. Revenue, primarily from media rights and sponsorships, will more than triple over the same period, up from under $900 million in 2018, the investment bank says.
Tencent boss Pony Ma stands unrivalled in China. His $378 billion behemoth, the country’s dominant video-games company, is investing huge sums in domestic e-sports streaming sites, games, teams, and leagues. Ma is also well-positioned overseas thanks to its ownership of titles like “League of Legends”, which drew out a peak of 200 million online spectators during the November World Championship in South Korea. The tournament organisers say it was the most watched e-sports game in history. Moreover, Tencent has quietly built up minority stakes in global peers, including California-based Activision Blizzard, the $35 billion outfit behind the wildly successful “Call of Duty” franchise.
Regulators in Beijing are cracking down on the country’s video-games industry, which will add to uncertainty in the nascent e-sports sector. But that makes overseas expansion all the more attractive. Even so, as more gamers, audiences, advertisers and investors enter the arena, Tencent will emerge the undisputed world champion.
- This is a Breakingviews prediction for 2019. To see more of our predictions, click reut.rs/2R6H5pG
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