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Bilibili aims to fulfil esports potential in China with League of Legends deal

INCHEON, SOUTH KOREA - NOVEMBER 03: Team Invictus Gaming of China celebrates their winning Finals match of 2018 The League of Legends World Championship against Team Fnatic at Incheon Munhak Stadium on November 3, 2018 in Incheon, South Korea. (Photo by Chung Sung-Jun/Getty Images)

  • Platform pays CNY 800m for three World Championships from 2020 to 2022
  • Deal is result of first formal esports media rights tender in China
  • Bilibili fought off competition from larger players in tender

Mobile gaming and streaming company Bilibili is hoping its deal for rights to the next three League of Legends World Championships will demonstrate the strategic power of top-tier esports content in China.

Bilibili will pay a total of  CNY 800m (€102.5m/$113.6m) for exclusive media rights in the country to the 2020, 2021 and 2022 editions of the ‘Worlds’.

The inventory does not include rights to regular season play, which for now are streamed non-exclusively around the world.

It agreed the deal with League of Legends publisher Riot Games after what was reported to be the first formal bidding process for esports media rights in China.

The agreement is thought to be the biggest exclusive media-rights deal ever seen in esports, beating streaming platform Twitch’s acquisition of Overwatch League rights covering 2018 and 2019. That deal was worth up to $90m over the two years, and extended further than media rights, to include intellectual property rights and the estimated worth of the in-game items viewers would claim over the duration.

Bilibili’s investment demonstrates the importance of League of Legends esports in China, as well as the growing competition between streaming sites in the country. Exclusive media-rights deals are incredibly rare in esports – even in China – and the success of Bilibili’s deal will be crucial to whether the trend grows.

The platform’s deal has sparked excitement in the esports industry, but it must be kept in perspective. The annual outlay for each tournament — equivalent to about $37.9m — still is not close to the biggest traditional sports deals in the country.

Four-way fight

Bilibili beat competition from video-sharing platform Kuaishou and video game streaming giants Douyu and Huya. All four companies are partially owned by Chinese technology giant Tencent. Riot Games, the company that ran the bidding process, is wholly owned by Tencent.

Bilibili is the smallest of the companies that bid, in terms of annual revenue, but it is perhaps China’s most influential and culturally significant streaming platform. It is understood that over 80 per cent of its user base is under the age of 25. The site is solely dedicated to the ACG sector (anime, comics and gaming).

The platform is currently better known for its commitment to anime and comics, as opposed to video game streaming. By acquiring exclusive rights to the biggest esports property in China, experts believe Bilibili will increase its credibility in this sector and could be able to attract peak viewership of over 50m during the final of next year’s World Championships.

Despite the high viewership, experts say Bilibili will be lucky to earn back half its League of Legends expenditure in direct revenue, which it derives by taking a cut of user donations to the streamers it hosts. The company has stuck to its commitment to keep video content on its site ad-free. Should Bilibili renege on this, experts say it would lose a large percentage of its unusually loyal userbase.

Instead of directly monetising its fans, Bilibili is betting on LoL World Championships content boosting its user base by tens of millions, potentially rocketing its market valuation. The company posted a net loss about $60m over the last four financial quarters but has a monthly active userbase of 128m accounts across its businesses.

It will also help the site ward off competition from other, larger streaming sites that have adopted its ACG-focused business model and copied its once-unique danmu live chat system, which displays comments in real time across the video being streamed.

The acquisition comes shortly after the conclusion of the 2019 World Championships, won by Chinese team FunPlus Phoenix. Chinese teams have won the past two League of Legends World Championships, and its popularity is peaking just before the 2020 edition, which will be held in multiple cities across China, with the final itself in Shanghai.

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