[SCMP Column] Soaring to New Heights

June 25, 2016

Last week, I offered a glass of champagne at the FCC bar for anyone who can tell me the sport, and the nationality, of Fabian Diepstraten. Nobody won, because they were not allowed to Google it. But I can bet with some confidence that you will not know him either without a little bit of smart-phone help.

And yet Fabian Diepstraten - “Febiven” as he is known to his millions of fans - is huge. He was just on the cover of the Dutch edition of Vogue. I got to thinking about him because with the Brexit debate out of our hair at last, the world (or at least the male chauvinist part) will at last turn to a summer of sport, with Euro2016 filling Wanchai sports bars to the July 7 final, and the Olympics then taking over – provided of course that the Brazilian government can pay for them.

As an Englishman, I expect very little to get excited about in either the Euro or the Olympics. As one colleague noted last week, the only sports that the UK seems good at nowadays are sports in which you can sit down – think cycling, rowing, motor racing or equestrianism. If there were a couch potato Olympics, England would be right up there in the medals. Millions down at every local English pub would be roaring England on, a pint of bitter in hand.

And from this couch potato vantage point, there could be no more quintessentially sitting down sport than video games. That is where Holland’s Febiven leaps to mind. That is Febiven’s game. He and his team Fnatic are to the world of video-gamers’ what Ronaldo or Messi are to football, or Yao Ming to basketball.

But video gaming a sport, you ask? Good question. I would probably have said no until Tencent this week paid $8.6billion for a 190-strong Finnish company called Supercell. Plunge into the world of Supercell, and you discover a sporting universe to match some of the biggest sports in the world. But for invisibility, video gaming ranks alongside that other huge, but slightly sleazy and disreputable super-sport – darts (ironically, one of the few standing-up games in which the UK excels).

Supercell so far has just four products – or “titles” – Clash of Clans, Hay Day, Boom Beach and Clash Royale. But on the foundations of these four games it has in the world of mobile gaming, become a global leader. These are the elite of games, attracting millions of fans and gamers worldwide. They earned profits last year for Supercell’s 190 staff of Euros 848m on sales of Euros 2.1bn. Mobile apps like Clash of Clans may not yet rank alongside League of Legends in the universe of professional video gaming, but now as part of the Tencent stable of companies who knows where we will be within the next decade.

For dinosaurs like me, who ended my video-gaming career with Supermario with my six year old daughter a quarter of a century ago, discovering the universe of video-gaming is a revelation. The climax of the world video-gaming calendar, the Intel Extreme Masters professional gaming championships in Katowice in Poland every March, is the gaming world’s “haj”. In March this year over 113,000 watched gamer teams like Febiven’s Fnatic pulverize each other on mega-screens. In key games, over 2 million watched on-line. Prizes amounted to more than $5.6m. Is it a coincidence that that Tencent’s president Martin Lau was once ranked in the top 100 players worldwide of Supercell’s Clash Royale?

With my dinosauric myopia, the global gaming market has always been invisible. But put some spectacles on – or even better some Virtual Reality gear – and the market is massive, and growing apace. This year the world’s gaming market alone is expected to generate revenues close to US$100bn – almost half of that in the Asia-Pacific, and a quarter of it in China alone. China last year became the world’s biggest gaming market, overtaking the US. 

Exciting for Tencent, this is a business that is migrating at speed to mobile platforms as the processing power of smart-phones continues to explode. This year, 27% of the global gaming market sat on mobile platforms – equal to TV and Console games, and equal to PCs. But by 2019, the mobile share is expected to rise to 34%. So Supercell can expect a double boost as part of Tencent. First, it is well placed to ride the transitional wave to mobile gaming. But second, and more important, it will for the first time win access to the China gaming market. With over 560m Chinese over the age of 18 owning or having access to a smart-phone or tablet, it is estimated that China already has in the region of 400m active mobile gamers. Tencent already dominates this Chinese gaming market, with revenues three times those of Netease, the market number two. Imagine the boost Tencent can give to Supercell’s business. Combine the gaming revenues of Tencent and Supercell last year, and they were already twice the revenues of Microsoft’s gaming business.

Spice these developments with Virtual Reality (VR), and we can expect for the global gaming business to transform in the coming decade. The global virtual gaming market is predicted to reach US$9.5bn by 2022, and massive investments are being made worldwide. Alongside investments from leaders like Microsoft’s Xbox, and Sony’s Playstation, we have companies across Asia pouring big money into VR, including Huawai in China and HTC in Taiwan. China’s Hangzhou Lianluo Interactive Technology in February invested $75m the California-based Razer, which makes gaming devices.

I can hear some of you groaning at the thought of video gaming, the ultimate couch-potato pastime, being dignified by calling it a sport. But pause and read the latest edition of Scientific American before you get too hot under the collar. Reputable research from academics in Geneva and at the University of Wisconsin-Madison have discovered that computer gaming – action games in particular – are big brain boosters: “Players who immerse themselves in the fast-paced events of digital fantasy worlds derive significant cognitive benefits,” they conclude. Suddenly I feel anxious that I never graduated beyond Supermario.
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