In 2015, the Chinese company Tencent finalized its takeover on Riot Games’ equity. This news had the effect of a bomb since it was the first entry of a Chinese giant into the video game market, which is more buying the studio of the most popular game at the time, and especially with the largest esports audience. But few people in the West had ever heard of this giant of the Middle Kingdom, and even today, if you have never been to China, it will be very difficult for you to imagine the power, the omnipresence of Tencent in the world’s largest economy. But don’t worry, we’re here for you.
In order to better picture what Tencent is, we are going to compare it with elements we have in the West. In Europe and especially in the United States, we talk about the four giants of the Internet and new technologies by the acronym GAFA: Google, Apple, Facebook, Amazon. In China, there is the same quartet, with an equivalent financial power, but of which very little is known, the BATS: Baidu (a search engine), Alibaba (an e-commerce platform), Tencent (a social network, among other things) and Sina (also a social network). In the same way, GAFAs and BATS have turned famous because of their prominence in a single sector of activity, but have now extended very widely to other fields: cloud computing, payment instruments, insurance, AI, Big data, etc.
This is exactly the case with Tencent. Tencent is the creator of China’s most widely used social network, called WeChat, with more than a billion users, while the second will reach 400 million within two years. This means that Tencent owns the data of all these users, and has control over what they see on their news feed. It is a huge power over an enormous audience.
But Tencent is not just like Facebook or a Chinese WhatsApp. Of course, it includes the basic features such as photo sharing, messaging, “moments” publications, etc. But it is also a search engine extremely similar to Google and the second most popular in China. WeChat is also the second most popular payment method in China, after cash payment. Indeed, since China does not like the concept of credit cards and overdrafts, cards exist, but only a few merchants are equipped with small card readers. On the other hand, they are all equipped with small QR Code readers on the phone, or conversely, offer a QR to scan and write the amount yourself and be debited, not to your bank account, but to your WeChat account. Imagine that a single company controls 50% of all credit cards of 1.4 billion people and has access to all the financial information related to this “card”.
WeChat is also an e-commerce platform. Indeed, each sponsored content on the network is immediately linked to a purchasing platform hosted by Tencent, no need to go to another site.
WeChat has also invaded the lives of Chinese people with the multitude of services the application offers: gps, translation, shared bike rental, payment of fines and bills, delivery of food or goods of all kinds…
Finally, it is also WeChat that provides the equivalent sites/applications for Youtube and Deezer/Spotify. Just that!
In short, WeChat is unavoidable in China. And Tencent intends to consolidate its position by making investments in sectors such as blockchain, artificial intelligence, but also by creating the Chinese health system from scratch. One of their subsidiaries opened 400 clinics across the country, and patients could book appointments, have remote consultations and pay for their expenses via… WeChat!
Of course, what really interests us are the investments that the Chinese giant intends to make in League of Legends and in esports in general. Well, you’re not going to be disappointed. Tencent plans to invest $15 billion in esport within five years. 15 billion! This involves the creation of multiple tournaments, the establishment of proleagues, but also the construction, in China, of real “Esports Parks”, stadiums dedicated to game competitions. This is not just about the League of Legends. The Chinese market is mainly linked to mobile games. Tencent owns Honor of Kings and Arena of Valor, the two most popular MOBAs in China, as well as Supercell, the Finnish developer of Clash Royale.
As you can see, Tencent is truly sprawling, with more than 1,000 subsidiaries, and has enormous power within China. The investment in esports and in LoL is a significant milestone in their empire’s strategy to expand worldwide, while contributing to China’s development.
Feel free to give us your opinion on Tencent’s arrival on the world esports scene. Will its contribution be beneficial or is it to be feared?