China's esports ambitions

• Alibaba invested $2 billion in building Hangzhou, a Chinese city with an economy that revolves around esports events, gaming and culture.
• Tencent struck a deal with the Chinese city of Wuhu in 2017 to build an esports industrial park, which will include an esports theme park and an esports university. Tencent is the world's largest gaming company by revenue.

Be smart: Chinese tech giants bill the majority of its revenue as "value-added services" (like free games and chat features), not ad revenue.

• Even though this is done mostly to avoid regulatory scrutiny around mobile gaming, it incentivizes those firms to grow broader cultures and lifestyles that bolster esports engagement beyond video views.

The big picture: Alibaba and Tencent use unparalleled reach across e-commerce, logistics, entertainment and tech to change the way its users consume, interact with and participate in sports.

• This allows them to collect an enormous amount of user data to use for cross-platform promotions for games.

Chinese esports have taken off for a couple of reasons:

1. Culturally, esports allows users to express individuality, through customized "skins" or digital costumes, that is often repressed by Chinese society.
2. Economically, esports are mostly mobile in China, so users are loyal to gaming franchises, like "Army of Valor," or "Clash of Kings" instead of hardware platforms like PlayStations or X-boxes. Because of this, "gaming in China is for everybody," says Humphrey Ho, managing partner at Hylink, China's largest independent ad agency.

Between the lines: Ho notes that because Chinese gamers are mostly mobile, they tend to play different games throughout the day with different friends. U.S. gamers tend to binge game, and thus spend less money incrementally.

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