As a leader in the esports industry, China is often a pioneer when it comes to both competitive performance and esports developments.
In an environment where there is an ever-increasing pressure to achieve excellence and build sustainable infrastructures, esports organisations have been exploring new ways to monetise audiences, increase revenues and improve profitability.
Chinese teams, in particular, are utilising property investments such as home esports venues to achieve greater ambitions.
In an interview with Ban YiBo and Wang ZhenHuan, the Business Development Manager and Venue Manager of Chinese esports organisation JDG Esports, respectively, the duo provided some insight into how its esports venue is commercialised and the organisation’s partnership strategy. Note: This interview was conducted in Mandarin and translated into English.
JDG Esports Home Venue
While most esports competitions across the world are played in studios and managed by tournament organisers, China was one of the first to implement the concept of home venues. Similar to what happens in traditional sports like football, some Chinese organisation have created their own stadiums to compete in. In the LPL, China’s franchised League of Legends league, there are four venues alongside the LPL’s venue in Shanghai. These venues are run by LNG Esports (Suzhou), Ninjas in Pyjamas (Shenzhen), Team WE (Xi’an) and JDG Esports (Beijing).
Located in China’s capital city, the JDG Intel Esports Center was officially opened in June 2023 with a total construction area of over 14,000 square meters, which includes a main arena and supporting facilities.
“There are multiple functional spaces like the control room, media release room, rest areas for home and guest teams, makeup room, rest areas for hosts and guests and VIP boxes,” said Wang. “Combined with the 2,500 square meter main arena, it’s close to 6,000 square meters.”
According to Wang, the property also includes a 1,000-square-meter lobby, restrooms and 1,800 square meters of commercial space outside of the venue. For the remaining 8,000 square meters, the esports organisation has office space for its 200 employees, as well as accommodation for players and a match information base on the fifth and fourth floor, respectively.
As the Venue Manager of JDG’s stadium, Wang is primarily responsible for the commercial aspects of the entire space, including attracting business, coordinating business activities, managing matches and other event logistics. Wang has years of experience in the traditional sports space, previously working as a coordinator for French football club Olympique Lyon and organising marathon events for a sports company before joining JDG Esports.
How does the JDG Intel Esports Center generate revenue?
Wang mentioned JDG’s home stadium hosts 40 to 50 LPL matches every year. Just like most stadiums, its main revenue stream comes from ticket sales. However, the organisation does not receive all the revenue due to a revenue split agreement with TJ Sports, the organisers of the LPL.
“We cannot fully control this aspect so it’s challenging to increase its value through commercialisation,” said Wang.
The manager mentioned it’s been challenging to generate strong margins on esports events alone, especially given that not all matches attract the same level of attendance. “For the venue to break even on esports events alone, the average attendance rate should be above 50%,” he revealed.
With that in mind, the manager has focused on finding new ways to generate additional income for the organisation. Merchandise sales, business receptions and selling VIP boxes for sponsors or fans are just some of the methods that Wang has looked to utilise.
By pairing these ideas with supporting consumer facilities, such as food and beverage areas, JDG can look to further improve its monetisation.
Making full use of venues and finding ways to improve it
While, at its core, the venue is a gaming arena, JDG doesn’t just utilise the space for its esports operations. “We have an annual utilisation rate of 70%, half of which is used for our own matches,” added Wang.
“The challenge is how to make the most of our space during non-match periods – and that’s why we work to create diverse events such as brand launches, concerts, and comic conventions.”
In particular, the venue has hosted small to medium-sized concerts since the end of last year. This includes Chinese artists like rapper Zhang ‘Wiz_H’ ZiHao and singer Bai JuGang.
When asked what JDG is looking to improve on with regard to the venue, Wang highlighted the supporting facilities. “The commercial space is small and limited,” he said. “When I was in Lyon, the commercial integration inside and outside the stadium was excellent. For example, you could order food and drinks from an app and they would be delivered to your seat, including alcoholic beverages.”
Finding innovation in commercial strategies
Aside from generating more commercial opportunities for the team, JDG also puts emphasis on how it activates offline and online sponsorship engagements. Its goal is to create a strong community that is deeply tied to the JDG brand, with the team being a bridge between all stakeholders.
Just like Wang, JDG’s Business Development Manager Ban also has a strong relationship with sports. Before joining JDG Esports, he worked in the consulting industry and joined the organisation after completing a Master’s in Sports Business Management at Loughborough University.
Within JDG, sponsorships play a vital role in its revenue generation. That said, Ban is always looking to generate value outside of its main KPI: “I focus on activating our business relationships by considering the cultural value and emotional attachment we can offer sponsors.”
He explained that a successful partnership consists of three main pillars: performance, a pool of options and a strong case study to give a great first impression. He also explained how JDG has been exploring approaches such as performance-based agreements that tie sponsorships to results. These types of deals are high-risk, high-reward but they can prevent the sponsor from overspending if competitive results are not as expected.
“I strive to ensure that the distance between sponsors and consumers is minimised through our media channels, fostering an environment of equality. The three units—business, marketing and home venue management—are closely connected,” added Ban.
”If we can achieve excellent integration for our clients, it demonstrates we truly ‘run as one’. This approach is an additional requirement from our team when it comes to sponsorships.”
For Ban, esports is a long-term game and it requires time. That said, businesses always need to strike the right balance between short and long-term plans. This is the biggest challenge esports teams have faced for years. “We aim to maintain the highest standards as a competitive club. We need to balance immediate revenue while also focusing on the impacts of our actions. It’s crucial to think from the perspective of our clients and ensure that our strategies are sustainable.”
Despite being in one of the most developed ecosystems when it comes to esports, JDG Esports’ ambition doesn’t stop just the domestic market.
The esports team is exploring new collaborations and sponsorship opportunities to attract a global audience and expand its presence. “We are continuously looking to improve our performance as we strive to take esports to new heights, which is also why we have been open to opportunities internationally as well,” said Ban.
“Our vision is to establish ourselves as a prestigious club with global influence, conveying our values and bringing that unique identity to the world through esports.”
