Illuminated by fluorescent lights and geometric decor, the esports center looks modeled after the science fiction franchise Tron. Clusters of professional gamers sit around circular tables clicking furiously. At the back, an enormous screen shows a live stream of King Pro League, Tencent’s tournament for its mobile game Honor of Kings.
Welcome to the next generation of internet cafes in China. Called esports centers, these venues are better equipped, more professional, and enthusiastically supported – surprisingly – by the Chinese government. Despite their wariness towards game addiction, Chinese officials are warming up to esports.
“The government isn’t stupid – they might criticize [gaming], but the industry’s track record speaks for itself,” says Ren Li, president and CEO of Pengta Network Technology, a Shanghai-based startup that runs Amazing Center, a chain of esports centers in China.
Ren’s business has been able to expand quickly thanks to interest from local governments, some of which are creating their own “esports towns“, complete with esports stadiums and incubators for gaming startups. In exchange for esports expertise, officials are willing to provide the real estate, explains Ren.
“One center used to cost [US$160 million] to open – now it costs half that,” he says. “In some cases, the government pays us to open a center.”
It’s not difficult to see why. China is the largest gaming market in the world, with a thriving esports scene that brought over US$100 million in revenue last year, according to market research firm Newzoo. At the same time, the industry is still nascent and lacks infrastructure when it comes to events, community building, training, and fan engagement. Like the movement offline in “new retail” and ecommerce, brick-and-mortar hubs like Amazing Center could have a symbiotic relationship with the esports industry, helping it grow and become more professional.
China’s internet cafes, for instance, have benefited enormously from competitive gaming. According to a 2016 report by Asian games-market researcher Niko Partners, China had 146,000 internet cafes with 20 million daily users in 2015. Both numbers are increasing year-on-year, as internet cafes have turned into social spaces for gamers and esports fans.
See: China’s internet cafes are coming back, thanks in large part to Tencent
“Internet cafes have become an important part of the esports ecosystem in China to promote esports to a larger audience. In return, the local events help increase the exposure of these cafes,” explains Tianyi Gu, China market analyst at Newzoo. Esports centers are seen as an upgraded version of internet cafes, which attract more professional players and hold higher-level tournaments, she says.
“The entry barrier to become an esports player in China is, overall, lower than other countries,” Gu adds.
The esports supply chain
Esports centers hint at the wider ecosystem growing around esports. Some have livestreaming booths complete with green screens, catering to the growing professionalism of streamers – an effort that has seen multi-million dollar investments from gaming companies, such as NetEase, Tencent’s domestic archrival.
Unlike internet cafes, which offer high-end computers to consumers on a pay-per-hour basis, esports centers can also serve businesses interested in the competitive gaming space, especially those that see esports as a way to appeal to young consumers. China Eastern Airlines and Shanghai Metro, for instance, have both outsourced gaming competitions and events to Amazing Center.
You don’t have to worry about crazy fans.
Esports hubs are also eyeing the entertainment side of gaming, which includes variety shows and TV series about esports and gaming celebrities. Some are even offering training programs to cultivate esports commentators, livestreamers, and gaming celebrities. This year, an esports show starring the Killer Angels, an all-women’s league in Shanghai, will be filmed at Amazing Center.
“If I was traveling outside of Shanghai and had to choose between [training in] an esports center and an internet cafe, I would definitely choose an esports center,” says Zhou Jie, an ex-esports player and manager of the Killer Angels. “There’s more privacy. You don’t have to worry about crazy fans.”
The Killer Angels train out of Amazing Center, which also hosts traveling esports teams and domestic stars like LGD, a well-known Chinese group that competes in Defense of the Ancients 2 tournaments. If LGD was at an internet cafe, the entrance would be packed with fans, says Zhou. “The door would practically come down – there would be people everywhere.”
The launch of esports hubs also rides on the efforts of large gaming companies, such as Tencent and NetEase, both of which are pushing their own leagues and local competitions. Esports center VSPN, for example, helps Tencent operate and run its King Pro League tournaments in Shanghai and Chengdu. According to Chinese media, the 2017 spring season of King Pro League saw 15 million daily viewers.
This year, VSPN will also organize competitions for CrossFire, a first-person shooter game released in China by Tencent.
“Offline esports events – viewed live, in person, in an [internet cafe] or at a stadium – bring high energy, proximity of fans and players, and greater fan engagement,” says Lisa Hanson, managing director of Niko Partners. “Tencent and Alibaba are prioritizing the promotion of esports held in [internet cafes], universities, cities, and other locations to keep up the excitement level.”
To be sure, the esports center model is still in development. Some facilities are open to consumers and everyday gamers, while others rely on event revenue to get by. Other venues, such as Amazing Center, also offer esports training courses, which teach students, fresh graduates, and gamers how to organize and run gaming events, from lighting to setting up the stage.
“To be honest, everyone is still trying to figure out [the business model],” observes Zhou. “Most are doing internet cafes because they don’t know how to profit from an esports center – which requires a lot more investment than an internet cafe.”
To be honest, everyone is still trying to figure out the business model.
And while major cities such as Shanghai and Chengdu have organized several large-scale esports tournaments, it remains to be seen whether smaller locales can draw enough attention via competitive gaming – or if government-funded spaces will sit empty. Last year, Zhongxian, a small city in southwest China, announced plans to construct a US$220 million online gaming complex, after scrapping construction plans to reinvent itself as an “eco city.”
However, other opportunities are emerging in the esports industry, some of which could be paired with the offline esports model. Finding the right esports coach or trainer is still difficult, as the pool of experienced and renowned ex-esports players is much smaller than traditional sports. The industry also lacks standards – some new teams assume that any ex-player from a successful or well-known esports team qualifies as a good coach, contends Zhou.
“The need for esports coaching in the classic sense of player motivation and development is high. It’s going to be a field that develops very fast,” notes Johnathan Wendel, chief gaming officer of esports team management platform ReadyUp. Also known as Fatal1ty, Wendel is one of the first esports players to become a full-time professional.
“Coaching can save players and teams tens if not hundreds of hours, so skilled coaches are going to become very valuable,” he says.
Converted from Chinese yuan. Rate: US$1 = RMB 6.29.
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