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Wen / Li Kangping

With the retirement of the Uzi of yyds and the closure of the pressure bar, e-sports, an industry full of young people’s blood and hormones, seems to have quickly ushered in its sunset.

The second generation of rich people continue to give up their clubs, and pevc also began to withdraw from the track of E-sports. The news of sky high transfer fees disappeared. The whole industry is like the end of the Three Kingdoms, and there is no story of five tigers.

At this time, it is either a reflection or the beginning of a new dynasty. As the absolute leader of the e-sports industry, VSPN hero E-sports submitted its own prospectus at the Hong Kong Stock Exchange on January 31, 2022.

This is an event management company focusing on event operation and taking into account commercialization and community operation. At present, it is in the first tier of domestic E-sports event operators, with a market share of more than 75%.

According to the prospectus, the gross profit in 2020 and the net profit in 2020 were 39.89 billion yuan and 39.85 billion yuan respectively, which were adjusted to 19.95 billion yuan and 19.9 billion yuan respectively. The reason for the huge losses was officially explained by COVID-19’s influence. However, even though COVID-19 was better in 2021, the previous nine menstrual period lost 317 million yuan after adjustment.

In 2021, the company acquired more than 5000 E-sports artists, including professional players, anchors and commentators. Why is such a big deal?

Through intensive reading of the prospectus of VSPN, we answer three questions:

1. How is the largest E-sports event operator in China refined?
2. 2. Why is it so difficult for the largest E-sports operator to make money?
3. 3. How can E-sports operation become “live broadcasting with goods”?
4. Far view is e-sports, close view or Tencent
5. On November 7, 2021, China’s EDG club won the champion of the global finals of the League of heroes. In the early morning of that day, practitioners in the e-sports industry may not have expected that so many people stayed up late to pay attention to the game.
6. In the current domestic E-sports circle, the hottest E-sports events are nothing more than the “World Cup” of the e-sports world, such as the LPL of the hero League, the glory of the king KPL and the peace elite pel. The number of spectators watching the finals of KPL professional league in 2020 has exceeded 100 million. It is hard to imagine that this is a mobile game event that can be played by ten people poking at the glass plate.
7. King glory professional league Poster
8. Take a closer look. The game copyright of these domestic hot E-sports projects is Tencent. It can be said that China can’t do E-sports without Tencent.
9. Tencent naturally thought of a good way to improve the vitality, attention and revenue of a game, that is, professional events.
10. However, after the actual operation of the event, Tencent found that it was a thankless job, and the offline venues in hundreds of cities were a big trouble. In addition, the different stage layout, the number of rebroadcasting slots, choreography procedures and network support involved in different games all made the large-scale event operation a “heavy asset” business.
11. Finally, it became the situation that Tencent handed over part of the event operation rights to VSPN, an independent third-party event operation company. However, in the decision-making process, Tencent still kept an eye on it. On the one hand, the hero league competition is still run by itself, so tengjing sports also came into being. On the other hand, it deeply binds VSPN and firmly controls it.
12. According to tianyancha, on May 7, 2018, Tencent investment has taken shares in VSPN in the name of strategic investment, and Hou Miao, a non-executive director of VSPN since 2020, was previously the deputy general manager of Tencent holding E-sports division.
13. Tencent not only injected Tencent gene into the management and equity, but also the largest customer and supplier of VSPN: according to the prospectus, the revenue brought by Tencent accounted for 44.6%, 48.2% and 31.2% of the total revenue of VSPN in 2019, 2020 and September 2021, and almost half of the revenue of the whole company came from Tencent.
14. In addition, the revenue brought by Betta to VSPN before September 2021 accounted for 16.2% of the total revenue, while Tencent held 37.2% of the shares of Betta; Tiger teeth is a similar situation. In fact, the revenue from Tencent accounts for more than 50%.
15. If we look at the event operation business whose revenue accounts for more than 50%, Tencent’s impact on it is even more exaggerated. On the one hand, it is the largest customer and on the other hand, it is the largest supplier.
16. Tencent’s King glory related events KPL, KGL and KCC, PEL and PEC of peace elite and pugb of Jedi survival accounted for 79.4%, 72.0% and 68.4% of the overall revenue of VSPN event operation in September 2019-2021.
17. In terms of suppliers, according to the prospectus, in 2019, 2020 and the first September of 2021, the procurement costs brought by Tencent as a supplier accounted for 12.8%, 10.4% and 9.3% of revenue costs and operating expenses, accounting for about one tenth. Moreover, the original words of the prospectus show that “Tencent” has an irreplaceable position among the suppliers of E-sports event sponsorship business. Once Tencent “cuts off supply”, VSPN’s main business can be said to be almost impossible to carry out.
18. It can be said that both customers and suppliers are people of Tencent, and VSPN is sandwiched in the middle of Tencent department and specializes in the hard work of event operation.
19. Therefore, VSPN and Tencent have many related party transactions, but these related party transactions have a contract. The operation right of these major events will be effective before November 18, 2023. It is unknown whether to renew the contract after that.
20. At the same time, due to the proportion of connected transactions, the company had to make a statement in the prospectus to limit the upper limit of some connected transactions in 2022, 2023 and 2024.
21. VSPN is backed by Tencent, a towering tree. Tencent has been mentioned 227 times in the prospectus. If Tencent eats a mouthful of meat, it should naturally have a mouthful of soup, but it is not as beautiful as expected.
22. E-sports events are difficult to realize
23. Relying on Tencent’s thigh, VSPN improves its self-confidence by strengthening its cooperative relationship with Tencent and constantly holding competitions