Alibaba betting on long-term gain from eSports investment

Barcelona: The booming eSports industry may not yet attract the sponsors and television rights of real life sports, but Chinese e-commerce conglomerate Alibaba believes it is only a matter of time before its bet on competitive video gaming comes up big. Alibaba’s sports arm Alisports was opened in 2015 with the aim of cashing in on the rapidly growing world of electronic sports, where players square off in lucrative video game tournaments that draw millions of viewers online.
“We are prepared to lose money. We can accept the losses now as we hope to promote this sport,” Alisports CEO Zhang Dazhong said in an interview at the European final of the second edition of Alisports’ World Electronic Sports Games (WESG) in Barcelona, which wrapped up on Sunday.
“For a sport that has a lot of participation, it must have a bright future. Even if for now you don’t make a lot of money, in the future, you’ll definitely be rewarded. This is something we firmly believe in.”
In 2016, Alisports entered into an agreement with the International e-Sports Federation (IeSF) to create the WESG, a market-leading international tournament. The first edition of the WESG saw 63,000 participants from 125 countries battle for a share of the $5.5 million prize pot.
Yet the results weren’t so lucrative for Alisports, who lost 70 per cent of their investment. “We estimate that we will be losing money for the next five years,” admitted Zhang.
Alisports’ strategy, though, is a long-term one.
“We estimate that in five to ten years…the business model will be more complete. On top of the competitions, we have to bear in mind the electronics business and marketing related to eSports,” added Zhang.
Participation in eSports has soared as virtual games gain traction with a worldwide fan audience now estimated at 400 million people according to a study by Deloitte, more than that for baseball or American football’s National Football League.
The size of the eSports market will more than double to $696 million this year from $325 million in 2015, according to Deloitte’s study. It predicts the market will be worth $1.5 billion in 2020. — AFP