Video games, way to go?

Local gaming operators recently laid their bets on e-sports as a new non-gaming offering for the younger demographic – but it remains to be seen whether these competitive video games can be real game-changers.

By Tony Lai

Despite the fact that Macau is often referred to as China’s answer to the Las Vegas Strip, the city’s tourism boss recently acknowledged that Macau might not reach the heights of Uncle Sam’s most famous gaming enclave in terms of non-gaming revenue contribution.

Speaking to industry executives and insiders at a conference in May, Maria Helena de Senna Fernandes, Director of Macao Government Tourism Office, remarked that the city’s gaming operators might not achieve a 60 per cent contribution of non-gaming revenue in sector-wide revenue, but rather a possible 40 per cent.

“We don’t only focus on gaming…but the development of non-gaming elements [in Macau],” she said at the time.

Her remarks were no surprise to the gaming operators, as the Administration has been actively manoeuvring the city’s economy to be less reliant upon casinos, which still account for 90 per cent of revenue in the gaming sector. Despite years of promoting non-gaming offerings, which have yet proven to be substantial, local gaming operators have put money on their latest bet – that of e-sports.

In late July – in collaboration with Hong Kong and Macao parties Kowloon E-Stadium Ltd. and ALL-IN E-Sports Ltd. – casino operator Melco Resorts & Entertainment Ltd. launched the Macau EStadium in Studio City, an integrated gaming resort in which Melco owns a 60 per cent stake.

Describing the venue as the ‘first ever e-sports venue’ in Macau, which could seat up to 274 guests in a floor area occupying some 10,000 square feet (929 square metres), the gaming operator said in a statement that the venue will host various e-sports tournaments and virtual gaming leagues throughout the year, as well as live-streaming e-sport events from other parts of the world.

‘E-sports has become a global phenomenon which particularly appeals to younger players, with the majority of players being below 30 years old,’ the operator noted, adding that the main patrons of the city’s casinos, Mainland Chinese, account for over half of the global e-sports audience.

China’s rise

‘This EStadium will attract this younger generation of players and fans to Macau, further promoting Macau as a diversified entertainment destination for tourists in Asia and globally,’ Melco claimed regarding the perceived advantages of the venue.

Prior to launching the e-sports venue, Melco organised a number of e-sports events, including a partnership with Asian-based Internet platform provider Garena to host the 2018 League of Legends Master Series (LMS) Spring Finalin Studio City earlier this year, attracting over 3,000 people. The casino company said at the time it was always looking for ‘fresh ideas to diversify the entertainment experience offered to our guests’.

E-sports, a form of video game competition, has gained popularity and become more professionalised in recent years, in particular in the Asian and Greater China region. According to Newzoo, a global intelligence firm specialising in e-sports and games, the industry will generate some US$905.6 million (MOP7.31 billion) this year, representing growth of 38 per cent from a year ago, with revenues possibly cresting US$1.5 billion in 2020.

China was the second largest source of revenue in the sector last year, accounting for 16 per cent of the total take, trailing the 36 per cent contribution from North America, according to Newzoo data. The 2018 China E-Sports Sector Report co-published by Chinese entertainment-cum-Internet conglomerate Tencent earlier this year highlighted that the number of e-sports users in China totalled 250 million last year, accounting for nearly two-thirds of the number of global users, currently standing at 390 million.

Besides lucrative revenues, last year the Olympic Council of Asia announced a partnership with Alisports, a sporting arm of Chinese e-commerce giant Alibaba, ahead of the e-sports events for the 2018 and 2022 Asian Games, with e-sports elevated to a medal event in the latter edition.

Fast-growing industry

The e-sports industry is expected to generate a whopping US$905.6 million (MOP7.31 billion) this year with a major proportion coming from sponsorship and advertising, according to Newzoo, a specialised global intelligence firm in e-sports and games.

Sponsorship alone, which accounts for about 40 per cent of total industry revenue, will help the industry create US$359.4 billion this year, growing 53.2 per cent from a year earlier, the data show. Advertising is the next biggest source of revenue, raking in US$173.8 million this year, representing a growth of 23.8 per cent-year-on-year.

Media rights and content licences, game publishers’ fees, and consumer spending on merchandise and tickets will generate US$160.7 million, US$116.3 million, and US$95.5 million, respectively, for the segment.

Besides the lucrative revenue, the e-sports audience is expected to grow more than 13 per cent to 380 million this year, comprising 165 million e-sports enthusiasts and 215 million occasional viewers, Newzoo said, with projections of 557 million two years later.