We feel that an in­dus­try with such large-scale growth of ac­tive and en­gaged fans as e-sports is al­ways a good place to in­vest.”

China Daily (USA) - - ANALYSIS - For China Daily

The United States may have its Na­tional Bas­ket­ball As­so­ci­a­tion and Na­tional Foot­ball League but Asia has e-sports, which is at­tract­ing bil­lions of dol­lars in in­vest­ment, even though lu­cra­tive re­turns have yet to ma­te­ri­al­ize.

E-sports, short­hand for elec­tronic sports, is com­prised of or­ga­nized tour­na­ments in which par­tic­i­pants singly or as a team com­pete against each other at video games.

The largest con­tests are like any other ma­jor sport­ing event, with spec­ta­tors buy­ing tick­ets to watch in per­son or pay­ing to see it broad­cast on tele­vi­sion or over the in­ter­net. Both the spon­sor­ship deals from ma­jor com­pa­nies and the prize money for win­ners can be worth mil­lions of dol­lars.

On Aug 11, Al­lied eS­ports, a joint ven­ture of the largest e-sports, sports and en­ter­tain­ment com­pa­nies in China, an­nounced a strate­gic in­vest­ment part­ner­ship with Es­ports Arena from the US. The part­ner­ship will in­clude in­vest­ment to­ward new Es­ports Arena lo­ca­tions.

It’s just the lat­est ex­am­ple of a flood of in­vest­ments.

In July, Chi­nese out­door ad­ver­tis­ing firm Fo­cus Me­dia led an $81 mil­lion ven­ture cap­i­tal round of in­vest­ment in a three-month-old e-sports startup, Sport of the Heroes.

But while at­tract­ing in­vestors, they are fail­ing to gen­er­ate any kind of sig­nif­i­cant re­turn. For the time be­ing, ven­ture cap­i­tal firms are just look­ing to break even.

“If you’ve even made $1 mil­lion (as a ven­ture cap­i­tal­is­tist in e-sports), I would say you’re do­ing ex­cep­tion­ally well,” says Alex Lim, sec­re­tary-gen­eral of the In­ter­na­tional e-sports Fed­er­a­tion, a gov­ern­ing body for e-Sports founded in South Korea in 2008.

Last year, ac­cord­ing to a stock ex­change fil­ing, Yinchuan In­ter­na­tional Game In­vest­ment, op­er­a­tor of the World Cy­ber Arena se­ries, one of the larger global tour­na­ments, lost 65.4 mil­lion yuan ($10 mil­lion).

Hero En­ter­tain­ment, a com­pet­i­tive video game de­vel­oper, lost 7.58 mil­lion yuan in the first half of this year, ac­cord­ing to a com­pany fil­ing.

“You can’t ex­pect re­turns right away from an early stage. You have to be pa­tient. They are try­ing to es­tab­lish a strong brand with strong loy­alty from the e-sports com­mu­nity. Only af­ter maybe three to five years, they will start mak­ing more money,” says Lim.

The global e-sports mar­ket gen­er­ated $325 mil­lion in rev­enue last year and it is ex­pected to hit $463 mil­lion this year, ac­cord­ing to New­zoo, a mar­ket in­tel­li­gence firm spe­cial­iz­ing in the dig­i­tal games mar­ket.

In 2014, ven­ture cap­i­tal pumped $2.43 bil­lion into 217 game com­pa­nies. The fol­low­ing year, in­vest­ments in 216 game com­pa­nies halved to $1.02 bil­lion. Paul Chan,

Kong Es­ports chief mar­ket­ing of­fi­cer at Hong


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