"The most authentic esports stock, the purest industry dilemma"
Author / Cannon Pigeon
On March 29, VSPN announced the acquisition of a well-known e-sports company Logging, which is the third capital move of VSPN since 2021. According to the understanding of reliable two-dimensional yuan, at the beginning of this year, VSPN had a plan to lay out the vertical industrial chain of e-sports and list overseas as soon as the first half of the year.
The acquisition of Banana Games and Logging has increased VSPN's competitiveness at both ends of the tournament operations and esports brokerage, and it also means that VSPN is one step closer to going public. However, the barriers to VSPN are not deep enough to be affected by competitors, and it seems that it cannot solve the dilemma of large-scale growth of the e-sports business, and there is still uncertainty about the prospect of group listing.
<h1 class="pgc-h-arrow-right" data-track="47" > VSPN acquired logging tired, and the listing was further</h1>
On March 29, VSPN announced the acquisition of esports brokerage Loggers. Founded in 2014 by Zhou Hao, one of the founders of WE, Logging Islet mainly engaged in esports brokerage and esports community Score.
According to the understanding of reliable two-dimensional yuan, as early as early March, VSPN insiders revealed that the transaction of acquiring logging tired has been completed, and logging tired continues to maintain independent operation. On March 22, the investors Douyu, Chenhai Capital and Gimpo Cultural Creation withdrew one after another, and the filing directors were also changed from co-founder Pei Le, CFO Xie Fan and CEO Zhou Hao to VSPN President Teng Linji.
Esports brokerage is a logging-tired cash flow business. The main model is to represent e-sports teams and e-sports artists in live broadcast and commercial performance brokerage.
Logger works with esports teams such as WE, QGhappy, T1, Gen.G, DK, Team Liquid and more. Usually there will be information differences and premiums in the introduction of live broadcast rights and interests of overseas teams, and the role of logging fatigue is more as a bridge between overseas and domestic platforms, and the flow of live broadcast by team members is not much compared with the head anchor.
The active/retired professional players signed by the logging tired, including Wakakaze, Strawberry, Smile, Doinb, GimGoon, Mayumi, Ma Teacher, 957, etc., of which Wakakaze, Strawberry, smile are the members of the original WE team, considering that the founder of the logging team, Zhou Hao, is also the co-founder of the WE team, we's veteran team members can be said to be the relatively deeply bound resources of the logging team.
The e-sports commentator/host is the main artist in the e-sports brokerage business, and Logging Lei signed Wang Duoduo and Luo Xin, two LPL commentators and live hosts.
According to Xiao Hulu's February 2021 MCN Institutional Valuation List, logging ranked 6th, the first is the small elephant goose, and the third is Xuanshi Mutual Entertainment. Overall, the logging-tired esports agency has Doinb as a deck, and there are some teams and artists, but the share of the entire industry is not leading.
Another business of logging tired is the e-sports community product Score, which is an e-sports content platform that is media + community like rabbit play e-sports and play plus e-sports, and it is difficult for a single business to make a profit.
The most appropriate understanding of VSPN's acquisition of logging is resource integration, and it is also VSPN's third capital move this year.
On January 15, 2021, VSPN acquired Banana Game Media, founded by Wang Sicong, who served as the vice chairman of the strategy committee of Hero Sports VSPN. On January 22, 2021, VSPN raised $60 million in Series B+ funding.
Investors close to VSPN told Reliable Second Dimension, "At the beginning of 2021, VSPN has plans to list overseas, and has been in preparation, planning to list as soon as the first half of the year." "The acquisition of Banana Game is only the first step in the integration of the VSPN industry," VSPN will cover the vertical industry chain of e-sports from the extension of event operation, plus Tencent and Kuaishou as the capital, the investment background is good, and most investors also hope to hold until the listing. ”
Looking back now, VSPN's acquisition of Banana Games integrates the event's operational resources. The acquisition of logging tired, the aggregation of bananas, logging tired, VSPN three e-sports brokerage resources, coupled with the Score e-sports content community, VSPN's group listing is moving forward step by step, one step closer to ringing the bell.
Founded in 18 years, Quantum Group, which was founded in Hong Kong, currently holds shares in Hero Sports Management and Shanghai KuangTeng Sports.
Through Hero Sports Management, Quantum holds VSPN and banana e-sports companies such as Lejing Culture, Banana Games, and Chengdu Quantum Interactive Entertainment. Through Shanghai Kuangteng Sports Holdings Logging's parent company Shanghai Houhan Information Technology, 3 e-sports companies including.
If the listing is successful, Quantum Group may be the main participant of THE VSPN listing. Looking back at the present, how big can the esports cake of the VSPN Group, which is now home to three companies in the industry, be?
<h1 class="pgc-h-arrow-right" Data-track="47" > how effective is the vsPN? </h1>
VSPN's main businesses are divided into event operations, esports marketing businesses and esports brokerage.
Turning the clock back to 2017, in the field of event operations, VSPN and Banana Games competed, and the organizers of large-scale esports events were either VSPN or Banana Games. But in 2019, due to the departure of core executives and changes in the industry, the industry resources of Banana Games have been affected. Affected by the epidemic in 2020, Banana Games only paid basic wages to some employees for a period of time, and some employees left at that time.
The banana game of 2021 is no longer the size of the industry. On January 14, 2021, Wang Sicong withdrew as a shareholder and supervisor of Banana Games. On January 15, VSPN acquired banana game plans, and Wang Sicong became the vice chairman of the strategy committee of Hero Sports VSPN. According to the reliable two-dimensional understanding, Pei Le, who was the CEO of Banana Games, then entered VSPN as the head of a business unit.
However, the transition at the employee level is not as smooth as that of executives, and a departing employee told Reliable Second Dimension: "At the end of 2020, there was news that VSPN acquired bananas, but banana employees entered VSPN not 100%, and they had to have suitable positions before passing interviews to enter VSPN." ”
In other words, even if VSPN doesn't buy it, banana games will have problems operating. Compared with talent recruitment and business reinforcement, the significance of the capital behind VSPN's acquisition of bananas is more obvious. Today's VSPN has become the first choice for manufacturers to operate events, but event operations are a hard job, with high costs and low profit margins, and event demand shows no signs of growing significantly year by year.
According to data released by VSPN, VSPN, founded in 2016, has operated a total of 4,000 matches as of 2017, and the number in 2020 is just over 10,000. In other words, the number of 4,000 events per year has not only failed to grow steadily, but has even shrunk. On average, in the three years from 2017 to 2020, it is 2,000 per year.
According to the KPL's recently released data, from 2016 to 2020, the 9 KPL also held only 1,000 games.
The emergence of the KPL has given VSPN a lot of room for event operation and esports sponsorship, but the two games behind the LPL and KPL have been operating for nearly 10 and 5 years, and the actual needs of high-value events like the LPL and KPL are limited. The league of the PEL Peace Elite Tournament has only officially started this year, in addition, the frequency of competitive games at the national level is not high. Whether the LOL mobile game National Service and DNF mobile game that may be launched this year can make the demand for e-sports events surge is still unknown.
In terms of e-sports marketing, the number of event sponsorships and price have rarely changed significantly in recent years, and at present, event operation and e-sports marketing are not businesses that can grow on a large scale.
Behind the acquisition of logging, VSPN naturally hopes to strengthen the esports brokerage business.
The so-called e-sports artists are mainly e-sports commentators, hosts, and e-sports team players. The monetization method of e-sports brokerage companies is live broadcast sharing + commercial performances, and this business model has 3 problems.
The style and income of e-sports host game live broadcast rarely exceeds that of professional game anchors, let alone as show anchors. Commercial performances and advertisements are mainly sponsored by e-sports brands, and game advertisements only favor the head e-sports KOLs, and most of the commentaries and hosts' income cannot be continuously improved. Then the brokerage company can get not much share of the income.
E-sports artists and agencies do not have a deep binding, the most valuable e-sports KOLs are actually e-sports star players, but the vast majority of active team members' live broadcast rights and commercial performances are unified management by the club. Doinb such a voice is so high that skip the team is only an example, the agency to sign such a big-name kol need to make more concessions, relative to the share of the team, the brokerage company can get a much smaller proportion.
The industry is fiercely competitive, in the past 5 years, the entire e-sports brokerage team has abandoned the team, the core artist resources for the agency to sign are less than 50 people, and there are far more than 5 e-sports brokerage companies, plus the income of e-sports KOLs is difficult to continue to grow significantly. As a result, no brokerage company has been the first in the industry in terms of volume for more than 2 years. More commonly, a company suddenly signed 20 e-sports KOLs in a certain year, and after 2 years, because it could not make ends meet, its artists were scattered to various companies.
At present, the three-and-a-half moon and the big goose and the baby elephant compete with VSPN + banana game + logging tired. Founded in 2018, March 15 has signed more than 10 well-known esports hosts and esports players such as Rita, Remember, EDG coach Abu, and is not losing to the VSPN + Banana Game + Logging Tired lineup. It is worth mentioning that in 2017, Rita was still the top artist of VSPN.
In general, e-sports agency is a vertical track with few artists, limited income space, and fierce competition, and it is not suitable for entering the game if it is not linked with its other businesses. After VSPN integrated the e-sports brokerage resources of the logging + banana game, it did not have a leading edge in the entire industry, and could only be said to have regained its competitiveness.
<h1 class="pgc-h-arrow-right" data-track="47" > real insiders and anchor the truest industry value</h1>
VSPN's event production and operation, e-sports brokerage and e-sports content marketing, these businesses alone are not worth investing, nor can they grow on a large scale, so holding a group to expand business coverage has become the only way to go public.
But there is not only VSPN that can do and wants to do the vertical industry chain of e-sports, Tencent and Fist composed of Tengjing not only has a production and broadcasting team, but also has a brokerage business. In the event system of DOTA2, Perfect World as the domestic agent and event assistant of Dota2, and the Singapore Major in March also served as the event organizer, which can be said to be directly competing with other event operators.
Bilibili e-sports also uses the S tournament copyright to lay out the team + e-sports brokerage + event operation. Even if it does not have advantages in resources and services compared with VSPN at present, it has a strong willingness to layout. Kuaishou also has KPL copyright and YTG team.
In Newzoo's 2021 Global Esports Report not long ago, it can be seen that esports revenue in 2020 is decreasing month-on-month, and revenue growth in 2021 is only 12.6% month-on-month. Correspondingly, the revenue of the domestic game industry in 2020 increased by 20.7% compared with 2019.
Previously, Newzoo believed that domestic e-sports revenue in 2020 accounted for 35% of global revenue, that is, 331 million US dollars (2.1 billion yuan). Of that, 59% (1.2 billion yuan) of the revenue comes from sponsors, and the 1.2 billion yuan of sponsor revenue is competed for by event sponsorship, team sponsorship and e-sports artist marketing.
THE INCOME THAT VSPN CAN CUT INTO INCLUDE EVENT SPONSORSHIP, E-SPORTS MARKETING, E-SPORTS BROKERAGE INCOME AND EVENT OPERATION SERVICE FEES, the first three of which can only get a part of the revenue. The space for revenue growth in the e-sports ecosystem where VSPN is located is very limited.
In January, VSPN raised $60 million, which is enough to buy a seat for an LPL team. According to the way of playing the vertical industry chain of e-sports, VSPN may also acquire a team next. But the team is also an equally asset-heavy, operational-heavy business that is difficult to return and exit.
To some extent, VSPN's current cake is actually bound to the future growth rate of the e-sports industry that is not amazing.
The e-sports industry is mixed, and at the dinner table of an e-sports circle, it is likely to be divided into 2 e-sports circles, on the one hand, the people and companies who enter the game later come for "speculation", and on the other hand, the early people who enter the e-sports industry to witness the development of the industry. Behind VSPN is undoubtedly a group of e-sports "insiders".
According to the data of enterprise investigation, Houhan Information Technology, the parent company of logging, is 98.6% owned by Shanghai Kuangteng Sports and 1.346% by Shanghai Sigao. In addition to Zhou Hao, who holds the shares of Shanghai Sigao, there is also former WE captain "Ruofeng" Yu Jingxi, while another former team member of WE, "Strawberry" Wei Handong, is a signed artist with heavy logging.
Behind VSPN's 63.5% stake in Banana Games (Shanghai Banana Plan Video Game Co., Ltd.), Qi Rui Tiancheng is behind 360 Capital, which has invested in Panda Live with Wang Sicong. The fourth largest shareholder, Jingyuan Capital, is an e-sports industry investment fund under the OMG team's parent company "Pig First Share" Chick Ying Agriculture and Animal Husbandry, which has invested in live broadcasting for the whole people. In addition, there is also a new capital that has invested in the QG Club.
As a result, the WE system represented by Ruofeng, Strawberry and Zhou Hao; the banana system represented by Wang Sicong and Pei Le; the VSPN system represented by Ying Shuling, Teng Linji, Zheng Zhuo, etc.; and the capital that has participated in the field of e-sports, such as Jingyuan Capital, Xinfan Capital, and 360. Basically, through VSPN, people who have been connected to the esports industry and money are brought together.
They correspond to the development process of e-sports in the past 10 years: Wang Sicong, who tried to integrate e-sports in the chaotic era in 2011, IG and WE, the two major teams equivalent to "Godzilla and King Kong" in the period of rapid development in 2012-2016, entered the professional era in 2016-2020, and was responsible for the banana game and VSPN of the event operation for the industry's "hard labor", as well as the e-sports brokerage and e-sports community products derived in the middle.
Image source: Newzoo
They may have walked through the era of the largest profitability of e-sports entrepreneurship, in this part of the industrial chain similar to drumming, it is not uncommon for the team seat fee to double 2-3 times, and the company that seemed to help Tencent do coolies at the time is now listed by Tencent investment group. Of course, more people are gradually moving away, and more capital is drifting.
When Douyu Huya was listed in the past two years, it was titled "e-sports stocks" overseas, and today's VSPN is a pure "e-sports stock", anchoring the value and future of the e-sports ecology. However, at present, to see how big the cake made by this "insider" can be, when it will be successfully listed, and the story and imagination space after the listing, it must be marked with a question mark first.