This article is from WeChat official account:Reliable second element (ID: kpACGN) author: pigeon fire, drawing questions from the visual China

On March 29, VSPN announced the acquisition of a well-known e-sports company Logging Timber. This is VSPN’s third major capital move since 2021. According to Reliable Two Dimensions, at the beginning of this year, VSPN had a plan to lay out the vertical industry chain of e-sports and list overseas as soon as the first half of the year.

The acquisition of banana games and lumbering has allowed VSPN to increase its competitiveness at both ends of event operations and e-sports brokerage. It also means that VSPN is one step closer to being listed. However, VSPN’s barriers are not deep enough and may be affected by competing products, and it seems that it cannot solve the large-scale growth dilemma of e-sports business. There is still uncertainty in the prospect of Baotuan’s listing.

VSPN acquires Lulu Lie, and goes further in the market

On March 29th, VSPN announced the acquisition of E-sports brokerage company Lulu Tien. Lu Mu Tien was founded in 2014 by Zhou Hao, one of the founders of WE. Its main business is e-sports brokerage and e-sports community Score.

According to Reliable Two-dimensional understanding, as early as March, a VSPN insider revealed that the acquisition of Lumu Lei had been completed and Lumu Lei continued to operate independently. On March 22, the investors Douyu, Chenhai Capital, and Gimpo Cultural and Creative of Lumu Lei withdrew one after another, and the directors of the record were also changed from co-founder Pei Le, CFO Xie Fan, and CEO Zhou Hao to VSPN President Teng Jilin.

E-sports brokerage is a lucrative cash flow business. The main mode is the live broadcast and commercial acting brokerage of e-sports teams and e-sports artists.

Tired of loggingCooperate with e-sports teams such as WE, QGhappy, T1, Gen.G, DK, and Team Liquid. Generally, there will be information gaps and premiums during the introduction of live broadcast rights of overseas teams. The role of logging is more of a bridge between overseas and domestic platforms. The stream of live broadcast of team members is not much compared with that of head anchors.

The active/retired professional players signed by Lu Mu Lei, including Ruofeng, Strawberry, Smile, Doinb, GimGoon, Mayumi, Teacher Ma, 957, etc. Among them, Ruofeng, Strawberry, and Smile are members of the original WE team, considering logging Tire founder Zhou Hao is also the co-founder of the WE team. The old members of WE can be said to be a relatively deep-bound resource for logging Tire.

E-sports commentator/host is the main artist in the e-sports brokerage business. Lu Mu Lei signed Wang Duoduo and Luo Xin as LPL commentators and live hosts.

According to Xiao Hulu’s February 2021 MCN Institutional Valuation List, Lu Mu Lei ranked No. 6, the first being the Little Elephant and the Big Goose, and the third being Xuanshi Interactive Entertainment. In general, Lulu’s e-sports brokerage business has Doinb as a card, and there are also some teams and artists, but its share in the entire industry is not considered to be the leader.

Another business of Lumu Tired is the e-sports community product Score. This is an e-sports content platform that is media + community just like Rabbit E-sports and Play-Plus E-sports. It is difficult for a single business to make a profit.

The most appropriate understanding of VSPN’s acquisition of Lumu Lie is the integration of resources, which is also the third capital action of VSPN this year.

On January 15, 2021, VSPN acquired Banana Game Media, which was founded by Wang Sicong, and Wang Sicong served as the vice chairman of the VSPN Strategy Committee of Hero Sports. On January 22, 2021, VSPN received 60 million B+ round of financing.

Investors close to VSPN told Kaopu Two-dimensional Yuan, “VSPN has plans to go public at the beginning of 2021, and has been preparing for it, and plans to go public in the first half of the year.” The acquisition of banana games is only the VSPN industry.The first step of integration, “VSPN will extend the vertical industry chain of e-sports from the operation of the event, plus Tencent and Kuaishou as the capital, the investment background is good, most of the capital also hope to hold until the listing.”

Looking back now, VSPN has acquired Banana Games to integrate event operation resources. The acquisition of Lu Mu Lei, the aggregation of the e-sports brokerage resources of Banana, Lu Mu Lei, and VSPN, plus the Score e-sports content community, VSPN’s group listing is proceeding step by step, one step closer to ringing the bell.

Reliable Quadratic found that Quantum Group, which was established in Hong Kong in 2018, currently holds shares in Hero Sports Management Company and Shanghai Kuang Teng Sports.

Through Hero Sports Management Company, Quantum controls VSPN and Banana e-sports companies such as Lejing Culture, Banana Games, and Chengdu Quantum Interactive Entertainment. Through Shanghai Kuangteng Sports Holdings, three home appliances competition companies, including Shanghai Hohan Information Technology, the parent company of logging tired.

If it goes public, Quantum Group may be the main body of VSPN listing. Looking back at the present, how big can the e-sports cake of the VSPN Group, which has gathered three companies in the industry, be able to achieve?

What is the effect of VSPN’s game formation?

VSPN’s main business is divided into event operations, e-sports marketing business andE-sports brokerage.

Return the time to 2017. In the field of event operations, VSPN and banana games are fighting against each other. The organizers of large-scale e-sports are either VSPN or banana games. But in 2019, due to the resignation of core executives and industry changes, the industry resources of banana games are affected. Affected by the epidemic in 2020, Banana Games only paid basic salary to some employees for a period of time, and some employees left at that time.

The banana game in 2021 is no longer in the industry. On January 14, 2021, Wang Sicong withdrew from Banana Game’s shareholders and supervisors. On January 15, VSPN acquired the Banana Game Project, and Wang Sicong served as the vice chairman of the VSPN Strategy Committee of Hero Sports. According to Reliable Two Dimensions (ID: kpACGN), Pei Le, who was once the CEO of Banana Games, also joined VSPN as the head of a certain business department.

However, the transition at the employee level is not as smooth as that of executives. A former employee told Kaopu Two-dimensional: “There will be news of VSPN acquiring Banana at the end of 2020, but Banana’s employees are not 100% recruited by VSPN. You must first have a suitable position. You have to pass an interview to enter VSPN.”

In other words, even if VSPN does not acquire, there will be problems with the operation of Banana Games. Compared with talent recruitment and business reinforcement, the significance of capital management behind VSPN’s acquisition of bananas is more obvious. Today’s VSPN is already the first choice for manufacturers’ event operations, but event operations are hard work, with high costs and low profit margins, and there is no sign of significant growth in event demand year by year.

According to data released by VSPN, VSPN, established in 2016, has operated a total of 4,000 games as of 2017, and in 2020 this number has just exceeded 10,000 games. That is to say, the number of 4,000 events operated annually has not only failed to grow steadily, but has even shrunk. On average, for the three years 2017-2020, there will be 2,000 games per year.

According to the data recently released by KPL, from 2016 to 2020, the 9th KPL only held 1,000 games.

The sudden emergence of KPL has given VSPN a lot of room for event operation and e-sports sponsorship, but the two games behind the two major e-sports events of LPL and KPL have been operating for nearly 10 and 5 years, just like LPL and KPL The actual demand for hosting of high-value events is limited. The league of the PEL Peace Elite Tournament is officially launched this year. In addition, the frequency of national-level competitive games is not high. It is unknown whether the LOL mobile game national service and DNF mobile game that may be launched this year will increase the demand for e-sports events.

In terms of e-sports marketing, in recent years, the number of event sponsorships and bid prices have rarely changed significantly. At present, event operation and e-sports marketing are not businesses that can grow on a large scale.

Behind the acquisition of Lumu Li, VSPN naturally hopes to strengthen the e-sports brokerage business.

The so-called e-sports artists are mainly e-sports commentators, hosts, and e-sports team players. The monetization method of e-sports brokerage companies is live streaming + commercial performance. This business model has three problems.

  1. The style and income of e-sports host’s game live broadcast rarely exceeds that of professional game host, let alone as a show host. Commercial performances and advertisements are mainly sponsored by e-sports brands. Game advertisements only favor the top e-sports KOLs. The income of most commentators and hosts cannot continue to increase. Then the share income that the brokerage company can get is not much.

  2. The e-sports artists are not deeply bound to the brokerage company. The most valuable e-sports KOLs are actually e-sports star players, but the live broadcast rights and commercial performances of most active players are managed by the club. Doinb’s voice is so high that it skips the team. The brokerage company needs to make more concessions when signing a big-name kol. Compared with the team’s share, the brokerage company can get a lot less.

  3. Competition in the industry is fierce. In the past five years, the entire e-sports brokerage has left the team aside, and the core artist resources for the brokerage company to sign are less than 50. There are far more than 5 e-sports brokerage companies, plus e-sports KOLs. It’s difficult to sustain a substantial increase in revenue. This has resulted in no brokerage company that has become the industry’s first in volume for more than two years. A more common situation is that a company suddenly signed 20 e-sports KOLs in a certain year. Two years later, due to insufficient income, the artists disappeared, and its artists were scattered to various companies.

From the current point of view, in March and a half, Big Goose and Little Elephant are competing with VSPN+banana game+lumbering. Founded in March and a half of 2018, I have signed more than 10 well-known e-sports hosts and e-sports players such as Rita, Remember, and EDG coach Abu, and they are not lost to the lineup of VSPN + banana games + lumbering. It is worth mentioning that in 2017, Rita was still the top artist of VSPN.

In general, e-sports brokerage is a vertical track with few artists, limited income space, and fierce competition. If it is not linked with its other businesses, it is not suitable for entry. After VSPN integrates the e-sports brokerage resources of Lulu Lie + Banana Game, it does not have a leading edge in the entire industry. It can only be said that it has regained its competitiveness.

A true insider, anchors the truest industry value

VSPN’s event production and operation, e-sports brokerage, and e-sports content marketing are not worth investing in alone, nor can they grow on a large scale. Therefore, the only way to go public is to expand the business coverage of VSPN. .

However, VSPN is not the only one who can do and want to do the vertical industry chain of e-sports. Tencent and Riot formed by Tencent not only have a production and broadcast team, but also have a brokerage business. In the DOTA2 event system, Perfect World, as the domestic agent and event assisting party of Dota2, also acted as the event organizer in the Singapore Major in March, which can be said to be directly competing with other event operators for cakes.

Bilibili e-sports also uses the S game copyright to deploy teams + e-sports brokerage + event operations. Even if compared with VSPN at present, it does not have advantages in resources and server, but the layout will be strong. Kuaishou also has KPL copyright and YTG team.

In Newzoo’s “2021 Global E-sports Report” not long ago, it can be seen that e-sports revenue in 2020 will decrease month-on-month, and revenue growth in 2021 will only be 12.6%. Correspondingly, the revenue of the domestic game industry in 2020 has increased by 20.7% compared with 2019.

Previously, Newzoo believed that domestic e-sports revenue will account for 35% of global revenue in 2020, which is 331 million U.S. dollars(2.1 billion yuan). Among them, 59% of (1.2 billion yuan)’s revenue comes from sponsors. This 1.2 billion yuan sponsor’s revenue is sponsored by events, team sponsorships and E-sports artist marketing together to compete.

The income that VSPN can cut into includes event sponsorship, e-sports marketing, e-sports brokerage income and event operation service fees, of which the first three items can only get a part of the income. The revenue growth space of the e-sports ecosystem where VSPN is located is very limited.

In January, VSPN raised $60 million, which is enough to buy a seat fee for an LPL team. In accordance with the gameplay of the vertical industry chain of e-sports, VSPN may also acquire a team next. But the team is also a business that focuses on assets and operations, and it is difficult to recover costs and exit.

To some extent, VSPN’s current way of making big cakes is actually bound to the future growth rate of the e-sports industry that is not amazing.

The e-sports industry is mixed. At the dinner table of the e-sports circle, it is likely to be divided into two e-sports circles. On one side, people and companies who enter the game later come for “speculation”, and the other is a testimony of early entry into the e-sports industry. People who develop the industry. Standing behind VSPN is undoubtedly a group of e-sports “insiders”.

According to the company’s data, Loglei’s parent company, Hohan Information Technology, is held by Shanghai Kuangteng Sports for 98.6% and Shanghai Sigao holds 1.346%. In addition to Zhou Hao, former WE team captain “Ruofeng” Yu Jingxi, who holds shares in Shanghai Sigao, and another former member of WE, “Strawberry” Wei Handong, is a signed artist who is tired of logging.

Picture source: Newzoo

They may have gone through the era of the highest profitability of e-sports entrepreneurship. In this part of the industry chain that is similar to drumming and passing flowers, it is not uncommon for the team seat fee to double by 2-3 times. At the time, it seemed that it was helping Tencent to do coolies. The company is now also listed by Tencent Investment Group. Of course, more people are gradually moving away, and more capital is lost.

When Douyu Huya went public two years ago, it was dubbed the concept of “e-sports stocks” overseas. Today’s VSPN is a pure “e-sports stock”, anchoring the value and future of the e-sports ecology. It’s just that, at present, to see how big the cake made by this “inside person” can be, when it will be successfully listed, and the story and imagination after the listing, we must first put a question mark on it.

This article is from WeChat official account:Reliable second element (ID: kpACGN) , author: fly ACG Editorial Department