One chilly Saturday evening late last year, 33,000 people gathered at the Beijing Workers’ Stadium to watch two of China’s top professional video gaming teams face off in the annual championship for the Honor of Kings smartphone game.
They were the lucky ones. Tickets for the King Pro League Grand Finals, priced at RMB 288–1,688 (USD 40.3–236.3), sold out in 11 minutes.
For four hours, those who made it in oohed and aahed as they watched heroes controlled by the five young men on each team battle on giant video screens that normally showcase soccer plays as they listened to commentary from former star gamers and at halftime, a live performance by pop star Zhou Shen. Another 100 million people watched live streams of the event, with some purchasing virtual gifts for their favorite players and debating their performance via an on-screen comment section.
After team AG Super Play from the southwestern city of Chengdu won the match four games to two, capturing the RMB 22 million (USD 3.1 million) prize for first place, squad member Liu Ming told the crowd, “It feels too good!”
For Tencent Holdings, China’s most valuable listed company, it was a big night, too. A studio owned by Tencent developed Honor of Kings, while another arm of the company organized the tournament, collecting sponsorship fees from companies like phone brand Vivo and chipmaker Qualcomm. Tencent is also a top shareholder in many of the online platforms where spectators watched the event remotely, including Douyu, Bilibili, and Huya.
Indeed, as China’s biggest gaming company, Tencent is the leading esports force in the country, the world’s largest market for professional video gaming, according to Niko Partners, a research company focused on Asian gaming. The popularity of esports in China is also reflected in the winnings of the country’s top esports players, who take home far more in prize money than rivals from any other nation.
Tencent’s esports crown is hardly uncontested. Several other Chinese gaming companies are also prioritizing esports. At the same time, uncertainty hovers over the sector due to Beijing’s ambiguous position on gaming following several years of tighter restrictions on youth play and criticism of Honor of Kings and other games, slowing economic momentum and signs the domestic market may be saturated.
Audience and revenue growth for Chinese esports companies have stagnated in recent years. The industry generated RMB 27.57 billion (USD 3.9 billion) in revenue in 2024, 1% less than in the peak year of 2021. At gaming-focused streaming service Huya, live stream revenues declined 29.1% over the first nine months of 2024 from a year earlier, far overshadowing growth in other game-related offerings. Rival Douyu reported a similar drop.
“The macroeconomic and industry environment continued to weigh on our livestreaming revenues,” said Raymond Peng Lei, acting co-CEO and CFO of Huya, when the company released its quarterly results in November 2024.
As a result of such pressures, Tencent and other Chinese game publishers are increasingly looking to overseas markets for growth.
Honor of Kings, which according to digital economy market intelligence platform Sensor Tower is the highest-grossing mobile app ever, just ahead of TikTok, is playing an important role in this strategy for Tencent.
Last June, Tencent launched a new international version of Honor of Kings, which quickly topped download charts in key Southeast Asian markets, according to Sensor Tower. The data analytics company also highlighted the game’s success at making a quick splash in Brazil, Germany, and South Korea, while noting that the US became Honor of King’s second largest market in revenue terms after China. For 2024 as a whole, overseas downloads of the game topped domestic downloads.
Tencent previously put out an overseas adaptation of Honor of Kings in 2016, known as Arena of Valor in most countries. It was not a big hit beyond Southeast Asia despite a move to replace game characters linked to Chinese cultural history. But Arena of Valor did set the stage for esports league play in markets including Taiwan, Vietnam, Thailand, and South Korea, and was incorporated into the demonstration esports event at the 2018 Asian Games in Indonesia and the medal event at the 2019 Southeast Asian Games held in the Philippines.
“It has indeed been difficult for Chinese developers to export the success of some local games, such as Honor of Kings or Identity V (by NetEase), in a way that matches domestic success,” said Xiaofeng Zeng, Niko Partners’ Shanghai-based vice president. “To succeed, Chinese firms need to understand that gamers are different by region, and also different from Chinese gamers. Esports operations need huge support from local partners and governments.”
Notwithstanding Zeng’s advice, the new international version of Honor of Kings features the same folk heroes familiar to Chinese players as the domestic edition. Nevertheless, since Tencent’s announcement a year ago that it would put USD 15 million into supporting international Honor of Kings events, new leagues and tournaments using the game have been organized in markets including Malaysia, Brazil, Saudi Arabia, and Turkey.
Tencent’s esports strategy extends well beyond Honor of Kings. Hero Esports, a Shanghai-based esports tournament organizer part owned by Tencent and previously known as VSPO, is preparing to launch the Asian Champions League in the coming months as the first regional multigame tournament series. Teams will play Honor of Kings as well as non-Tencent games.
While Honor of Kings was the third biggest esports game title in terms of prize money in 2024, according to data analytics company Esports Charts, gaming studios in the US, South Korea, and France fully or partly owned by Tencent accounted for most of the rest of the top 10 titles, including Fortnite, League of Legends, and PUBG: Battlegrounds.
Deng Xu, a 32-year old teacher in the central Chinese city of Luoyang, is a loyal viewer of League of Legends championship events. “My favorite team is T1” he said, referring to a South Korean squad backed by SK Telecom that won the 2024 finals.
Streaming service Bilibili has its own League of Legends team, which lost to T1 in last year’s finals, and a fast-growing fledging mobile game publishing business. “Esports videos are popular among Bilibili users, and related content can enhance the influence of our brand,” Qin Jie, operations director for Bilibili Gaming, told Nikkei Asia.
In Tencent’s last quarterly earnings call with analysts, chief strategy officer James Mitchell said the success of Chinese team EDward Gaming in winning the global championship for Valorant, a game developed by US subsidiary Riot Games, was “attracting new players and boosting sales of esports-themed items.” This swelled gross receipts and daily active users for the game, released in 2020, to a record level, he said.
In stepping up its push into Southeast Asia, where esports revenues were only one-sixth the size of China’s in 2022 by Niko Partners’ calculations, Tencent will be taking on Shanghai Moonton Technology. This studio is owned by TikTok operator ByteDance and was co-founded by a former Tencent gaming employee.
Due in part to those origins, Tencent and Riot Games have brawled with Moonton in the courts for years. The trio, though, account for the two games at the center of all five of the most streamed esports tournaments in 2024: Riot’s League of Legends and Moonton’s Mobile Legends: Bang Bang.
The two top Mobile Legends events of 2024 were both held in Southeast Asia, the top market for the game which was designed to run on the less advanced smartphones prevalent in the region.
“I can go shopping now for whatever I want,” gamer Duane “Kelra” Pillas told Philippine reporters in December 2024 after his team Fnatic ONIC PH won the USD 320,000 top prize in the Mobile Legends: Bang Bang World Championship in Kuala Lumpur. “I have no plans yet on where to spend my money, but if I could buy land, that’s what I would do.”
Team Vitality, a French esports group, recently acquired ownership of a team of Indonesian female Mobile Legends players. Amelie Canet, the group’s fan activities director, said it was “like entering a new business.”
“It’s not the same way to play,” she said. “It’s not the same fan base. Everything is different,” Canet added, stressing that social media followers are far more numerous than in Europe.
Though originally published in 2016, Mobile Legends was still the top grossing gaming app in Southeast Asia over the first eight months of 2024, according to Sensor Tower. This coming December, it will be featured in the Southeast Asian Games in Thailand. Recently, seeking to widen its player base, Moonton released the game in China after racking up more than ten million preorders.
Like Tencent, top Chinese gaming rival NetEase has enjoyed particular esports success domestically, which it plans to mark with a RMB 5 billion (USD 700 million) esports complex nearing completion in Shanghai. Esports tournaments based on NetEase titles are also spreading internationally.
In terms of prize money, the most lucrative event it organized in 2024, the Naraka: Bladepoint World Championship, featured teams from Europe, North America, and Southeast Asia, alongside Chinese squads. Another, the Call of the Abyss series for Identity V, has caught on with teams from Japan and South Korea. Mihoyo, the Shanghai-based startup developer of the game Genshin Impact, has been working to build esports events overseas around its flagship title as well.
At the same time, foreign game publishers are striking back by bringing their own esports events to China. In December 2024, Valve, the US publisher of the top two esports games by prize money in 2024, held a major tournament for its Counter-Strike 2 game in Shanghai in cooperation with Chinese gaming company Perfect World, drawing 70,000 spectators.
“The audiences in China are very good, and we always felt supported,” Sergey Shavayev, coach of tournament winners Team Spirit, told reporters. “We were warmly greeted. So thanks, China.”
While esports events undoubtedly reinforce interest in featured games, it is unclear just how much of a financial boost Chinese game companies are getting from their involvement in professional tournaments. In Tencent’s last annual report, there was only one passing mention of esports across 280 pages, in a discussion about Huya.
A major challenge for the esports industry is getting the games’ young, social media-savvy fans to spend more. Chinese fans could stream the Honor of Kings Championship Grand Finals in Beijing, for example, free of charge.
Around 261 million people worldwide watched esports multiple times a month in 2022, according to Dutch research company Newzoo. But each spent only USD 5.30, on average, on their passion over the course of the year.
Such numbers likely played into the calculus of Alibaba Group, Tencent’s biggest overall rival, in pulling back from esports. At the peak of its enthusiasm, Alibaba pledged to put RMB 1 billion (USD 140 million) into professional gaming, launched its own annual global tournament (the World Electronic Sports Games) and succeeded in getting esports upgraded to a medal event in the plans for the Asian Games, originally to be held in 2022 in its hometown, Hangzhou.
No World Electronic Sports Games (WESG) events, however, have been held since the cancelation of the league’s Asia Pacific and global finals in early 2020 due to Covid-19. Alibaba’s esports unit has all but disappeared. An Alibaba spokesperson declined to comment on whether the company-backed tournament will ever be held again.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.