In the past two days, two major events have happened in the esports industry.
First, the e-sports working committee issued an industry report, which showed that the revenue of the domestic e-sports industry fell for the first time in 2022, a year-on-year decrease of about 14%.
Looking closer, more than 81% of the so-called 144.5 billion market is earned by e-sports games, 15% is earned by live broadcasting, and the real income of events, clubs and other events in what we often call "e-sports" accounts for less than 4%, about 4.6 billion yuan.
Another is that esports service provider Hero Sports completed a total of $265 million in Series C financing.
At best, this is called the head company to obtain a large amount of financing, and the capital is still optimistic about the e-sports industry. In the past, some practitioners believe that this financing also roughly means that Hero Sports has basically abandoned the IPO plan and continues to bury its head in burning money. This is still the case with "unicorns", let alone whether enterprises in other echelons make money or not.
From the perspective of data and e-sports practitioners in the past year, the "golden 5 years of e-sports" shouted by Tencent Chengwu in 2017 seems to have ended in 2020 ahead of schedule, and since the fourth year, the industry has entered an inflection point where opportunities are still the same, but new problems are frequently emerging.
First, change: the category is solidified, and women in small towns are the main force
Judging from the industry data in 2022, there are three main changes in the domestic e-sports industry.
First, the decline in overall revenue and user scale, the big plate seems to be over.
From the data of the past six years, the three years from 2018 to 2020 are indeed quite "golden", with three-year growth rates of 19.32%, 19.53% and 43.79% respectively, increasing year by year. However, from 2021, the growth rate has declined, only 6%, and by 2022, there is a direct negative growth, and as high as 14%.
Directly proportional to the change in revenue is the change in esports users. Also from 2021, the growth rate of esports users slowed down to 0.27%, and by 2022, there was negative growth for the first time, with more than 1 million fewer people.
The second point is the change of user attributes, and a new main force has emerged.
Compared with the data released by Tencent, iResearch and other companies and institutions, this edition of the E-sports Working Committee shows that in 2022, the number of "middle-aged" users aged 25~44 in the e-sports industry will increase, accounting for about 64% at present, of which users between 35~44 years old account for more than 25%, which is basically the same as the post-zero group.
Second, gender change, the proportion of female users continues to increase to 43.6%, according to the current mobile e-sports brand gradually entertainment operation form, this proportion may continue to increase.
Third, is the user's region, the "sinking market" of fourth-tier cities and below has become the highest proportion, accounting for about 35.9% in 2022, and first-tier cities are already the smallest market, accounting for the lowest proportion, only 13.6%.
Finally, the change of the event, the terminal, category and organizational form are different.
In 2022, a total of 108 e-sports events were held in China, a decrease of about 14% compared to 2021.
In the event category, or game category, the proportion of mobile games has exceeded that of mobile games, accounting for more than 50%, and the proportion of mobile game dual-version projects has increased to 10%. The top three in the gameplay category are shooting, MOBA and sports, accounting for 26%, 17% and 10% respectively, while the proportion of racing and fighting has declined.
In addition, in the form of competitions, online has become the main force, accounting for about 69%, and pure offline competitions account for 31%.
With these changes, there are more new problems in today's esports industry.
Second, the difficulty: space and cost
For an industry, when the growth rate declines and negative growth occurs, space must be the first question to be raised.
Here, the good news is that the contraction of the past two years can be explained by the reduction of offline competitions, increased labor costs, declining efficiency and economic downturn users due to the epidemic.
The bad news is that from the practitioner's point of view, in addition to bad luck, there are more problems in this line that limit the height of the ceiling.
First of all, everyone knows that there are few games and the content of the event is solidified.
From 2010 to 2022, only 2,704 editions have been reviewed in China, of which there are very few categories suitable for e-sports.
According to NetEase NeXT practitioners, it takes at least three to six months for a game to start operating e-sports events, in order to improve the possibility of gaining users in a market almost monopolized by a giant, new e-sports products are usually based on shooting, MOBA, racing, fighting, sports simulation and other categories.
Like leisure, chess and cards, mostly to add "healthy life" or spinach nature to do, MMORPG, only big brands such as "Fantasy Westward Journey" and "Sword Network 3" have the ability to try, but the main purpose is also to maintain the popularity of the game.
Therefore, at present, domestic e-sports is almost the exclusive business of a few categories of games and a very small number of manufacturers, "because the game is not much different, so the content of the event tends to be the same".
There are few projects, the content that can be done is still similar, and the space is like that.
Secondly, the income structure of various industrial chain links in this industry has not been healthy.
A former professional club manager said that in his opinion, from the financing wave in 2015 and 2016 to today, China's e-sports industry has never had a healthy period, on the one hand, the business model of this industry has never been successful, and the voice and income scale of the industry chain are extremely unreasonable.
"It stands to reason that the esports industry should be an industry that relies on e-sports content to make independent blood, and the main revenue force in this industry should be event brands, operators, broadcasters, and clubs." But in reality, more than 80% of the revenue is the income of the game itself, "When did you see that the football game ecology mainly makes money by selling football?" ”
Although "League of Legends" has long been able to sell 100 million yuan of broadcast rights, and the KPL now has 13 event sponsors, there are only two, only these two roads.
According to Hero Sports and a third-party event brand operator, in recent years, only top brands and games in the e-sports industry have been making money, and those who should have become the main force and do more work have always been trapped in a cost circle.
Taking Hero Sports as an example, it just raised 1.8 billion in the first two days, and in addition to Tencent, Kuaishou, etc., Savvy, which has invested in Nintendo, EA and other big manufacturers, has also become their shareholders.
What about the scenery?
In 2019~2021, the cost of sales of Hero Sports was 791 million yuan, 878 million yuan and 1.358 billion yuan, accounting for 85.3%, 98.5% and 102.8% of the revenue. In terms of net profit, the profit in 2019 was 30 million yuan, the loss in 2020 was 596 million yuan, and the loss in the first nine months of 2021 was 1.364 billion yuan, and the growth rate of cost and loss far exceeded the growth rate of revenue.
"After 7 years, we are still losing money, and the more we lose, the more we lose."
Because there are not many games that can do esports events, there are fewer customers of service providers.
Because user needs and customer requirements are increasing, service providers have to invest in new research and development and labor costs.
Because fewer orders and revenue cannot be profitable, and it is not good to tell a bigger story, the company must continue to expand its business, do MCN, live broadcast technical services, etc. outside of event operations, which is a new round of cost input that is difficult to generate profitability.
Finally, because of the efforts and investment in previous years, the company has been "first", in order to keep existing customers and market share, it can only continue to burn money.
When the most profitable in the esports industry is the game, the more the company in the event part loses money, and the space in this industry is locked.
Third, the way out: going to sea, digital and real integration and sports
Unfortunately, there is no good way to "reduce costs and increase efficiency" in the e-sports industry, and the direction is still those few, all of which are premised on continuing to invest costs.
For example, in the past two years, mobile e-sports has been the most fun entertainment operation, packaging players and clubs with the ideas of traffic stars, embracing rice circles, and earning money from fan economy. According to relevant club news, it is "obvious", but it is not healthy in the long run.
In addition to this, Hou Miao, general manager of Tencent E-sports, Zhao Mingyi of NetEase E-sports, Xiao Hong, CEO of Perfect World, and other senior practitioners also said some big directions.
1. Close to policies and do IP and scenario integration
Hou Miao said that one of the main directions of Tencent's e-sports in the future is to introduce more e-sports derivative content for urban business scenarios. Use e-sports IP to cooperate with new consumption, real economy and other scenarios that are favored by policies to make money.
This includes opening and machining existing IP, customizing new esports IP, and integrating it with hotels, cafes, cinemas, bars, and more.
2. Continue to be sports, improve the event system, and absorb sports users
Xiao Hong's view is that the main direction of e-sports is still sports. At present, the company has set up a relevant R&D team and data team, and made a complete set of data systems applied to the live broadcast of the event, so that more outsiders can understand the game.
At the same time, with the help of traditional sports events such as the Asian Games, Perfect is also learning traditional sports methods, such as the establishment of referee committees, event organization, event broadcasting, club management, team training, commercial operation, etc.
3. Technology improves the quality of content and goes overseas to find new customers and viewers
According to Zhao Mingyi, the current main direction of NetEase e-sports is technology empowerment and going overseas.
On the one hand, the company can already rely on AR, VR and other technologies to produce new types of e-sports content that can be viewed in different scenarios.
On the other hand, in recent years, NetEase has established three e-sports production centers in Shanghai, Guangzhou and Tokyo, Japan, to expand its remote production capabilities at home and abroad with relevant teams in the United States, Europe, Vietnam and Singapore. Related events in China can be transmitted through production centers and can currently be transmitted to overseas platforms such as Facebook.