Author / Li Nan

In August 2015, a hot question appeared on Zhihu: is it feasible to use mobile games as E-sports projects?

At that time, E-sports had been budding and developing in China for 15 years, but related events were mainly end games running on computers. There were differences between hand games and end games, and the competitive viewing was far inferior to end games. Although game manufacturers vigorously promote mobile e-sports, the outside world is not optimistic.

Ying Shuling, who just founded hero mutual entertainment, participated in the discussion. He made a clear statement: Hero mutual entertainment has bet on its own future in mobile E-sports. Unfortunately, I know that netizens do not respect the views of the industry insiders. Ying Shuling’s opinions only got more than 100 likes and were trampled under the answers of at least 60 netizens.

Facts have proved that mobile E-sports is indeed promising, but the industry focus is not on the game of “national gun battle” in which heroes entertain each other, but a novice game - “glory of the king”, which will be put into public beta three months later.

After the heroes’ mutual entertainment, yingshuling founded the hero sports VSPN focusing on the operation of E-sports events, catching up with the super outlet of mobile E-sports events. In 2021, on Hurun’s self-made rich list of post-80s, yingshuling was listed with a wealth of 9.3 billion yuan.

At present, as the only operator of the “glory of the king” professional league (KPL), hero sports VSPN is rushing to list Hong Kong stocks and submitted a prospectus to the Hong Kong Stock Exchange on January 31. Behind it stands a well-known investment institution such as Tencent, Tian Kwai capital, fast hand, Morgan Stanley Asia Private Equity Fund and so on.

Industry first, still losing money

If successfully landed on the Hong Kong stock exchange, hero sports VSPN will become the first share of China’s E-sports event operation.

Hero sports VSPN was founded by Ying Shuling in May 2016. Officials say its vision is to promote E-sports as the next generation of sports and entertainment. At the beginning of its establishment, VSPN cooperated with Tencent. The cooperation content revolves around Tencent’s E-sports games, involving event operation and commercialization of E-sports games.

2016 is a very important year for the development of E-sports in China.

In April of that year, the notice on printing and distributing the action plan to promote consumption driven transformation and upgrading was issued, which clearly stated that “on the premise of doing a good job in intellectual property protection and guidance to teenagers, enterprises should be the main body to hold national or international E-sports games and entertainment events”. In September, the catalogue of Higher Vocational Education (junior college) majors in Colleges and universities was published, adding the major of “E-sports and management”.

In terms of the development of mobile e-sports, the most important competition so far has been put into operation. In August of the same year, the highest number of active users per day of “glory of the king” exceeded 100 million. In September, KPL was officially launched.

E-sports events have boosted the popularity of the game “glory of the king”, and the popularity of the game has brought more attention to E-sports events. Tencent is the biggest promoter of mobile E-sports events, and hero sports VSPN divides a piece of cake from it.

Since 2017, hero sports VSPN has become the only event operator of KPL. E-sports event operation is the most important business of VSPN.

Specifically, the event operation services of hero sports VSPN involve event strategy, planning and management, live content shooting, production and direct broadcasting, visual design and innovation, offline E-sports comprehensive center and arena, from which service fees are charged.

From the perspective of ecology, the whole e-tourism operator is in the middle of the competition.

In 2019, 2020 and the first three quarters of 2021, the revenue of hero sports VSPN E-sports event operation service was 624 million yuan, 492 million yuan and 466 million yuan respectively, accounting for 67.3%, 55.1% and 35.3% of the overall revenue respectively.

In addition, the current main business of hero sports VSPN also involves the commercialization of E-sports and community operation. In the first three quarters of 2021, the revenues of these two businesses were RMB 451 million and RMB 343 million respectively, accounting for 34.1% and 25.9% of the overall revenue respectively.

In terms of E-sports commercialization, hero sports VSPN mainly obtains revenue by providing sponsorship and marketing solutions to brands and sponsors.

In 2020, the epidemic broke out, traditional sports events were damaged, online activities such as video games and E-sports competitions attracted a lot of attention, and more brands began to put advertisements in the field of E-sports. The commercialization of sports heroes vs PN has increased significantly.

Unlike online games, which are often surrounded by negative public opinion, E-sports are included in the Asian Games, and the overall perception to the outside world is more positive. According to Zhang Yi, chief analyst of AI media consulting, E-sports events meet the needs of transformation and upgrading for game companies and will be favored by all parties in the game industry.

Further, the vigorous development of E-sports events also gives brands a channel to reach E-sports fans.

As for community operation, it is related to the acquisition together.

In March 2021, hero sports VSPN acquired the control of Shanghai houhan to strengthen the training and management of talent and anchor. The latter mainly provides e-sports, game related talent and anchor content for live broadcast and other online entertainment platforms, and commercializes them.

The operating income of the community is driven by the number of active people and anchors. As of September 2021, according to the benchmark after the comprehensive acquisition of Shanghai houhan, the number of active talents and anchors of hero sports VSPN is 5589.

All businesses of hero sports VSPN focus on E-sports and focus on mobile E-sports for a long time. According to the frost Sullivan report, in terms of revenue in 2020, hero sports VSPN accounts for 64% of the market share of China’s e-sports industry and is the industry leader. Since then, VSPN has acquired banana media co founded by Wang Sicong, and its position in the industry has been further consolidated.

With the expansion of M & A, the overall revenue of hero sports VSPN maintained growth, but the loss increased at the same time.

From 2019 to the first three quarters of 2021, the revenue of hero sports VSPN was 927 million yuan, 892 million yuan and 1322 million yuan respectively, and the net profit was 31 million yuan, - 596 million yuan and - 1364 million yuan. The adjusted net profit (excluding share-based compensation expenses, losses from the sale of subsidiaries, changes in the fair value of convertible redeemable preferred shares, etc.) was 39 million yuan, - 88 million yuan and - 317 million yuan.

Huge cost of sales