Shanghai-based firm VSPN eyes growth in Indonesia, Vietnam, Malaysia

The coronavirus pandemic posed challenges to the esports industry through offline restrictions on gatherings in China and elsewhere, according to the co-founder of Versus Programming Network (VSPN), but the outlook is improving with the reopening of borders.

VSPN, based in Shanghai, was founded in 2016 and offers esports tournament organisation, venue operation, commercialization, talent incubation and management, and content production services. The company has a 70% market share in China for premium esports events and has raised over $250 million in Series A and B funding rounds.

"We used to have sold-out arenas. Our tickets would be sold out in minutes "Danny Tang, VSPN's chief financial officer, mentioned live audiences of up to 20,000 people.

"On the production side, it's difficult when you can't have the producing crew working together," Tang said in an interview on Jan. 8 in Jakarta, where she was attending the 2022 PUBG Mobile Global Championship (PMGC) finals.

"Domestic and global travel became challenges, and in that case, it was more difficult for us to send our crew out of China to go to other regions," she explained.

However, Tang stated that as a result of China's border reopening, Chinese esports teams will be able to compete more easily abroad, and international fans will be able to watch offline tournaments within the country.

"That's fantastic," she said, referring to Beijing's decision to eliminate incoming quarantine requirements, which went into effect the same day she spoke. "That means we've moved one step closer to normalcy."

"Nothing can replace the excitement of being in the physical arena with everyone else, watching the same team, and watching teams compete," she added.

Her company has also formed alliances with a number of Asian game developers, including Garena, the digital entertainment arm of Singapore-based technology group Sea, and VSPN backer Chinese tech giant Tencent.

VSPN has offices in China, South Korea, Singapore, Thailand, Malaysia, Indonesia, and the United Arab Emirates, employing approximately 1,000 people. It intends to open branches in Saudi Arabia, Egypt, Turkey, Germany, and the United States.

The PMGC finals, which featured 16 four-person teams, lasted three days. Earlier rounds featured 48 teams and more than 30 nationalities competing in Petaling Jaya, Malaysia, in November and December. The total prize pool for the tournament was $4 million.

"We have strong conviction in esports," Tang said of VSPN. "We see the market is there, and then we see the demographic changes -- everything is favorable to the market." She described esports as being at a "nascent" stage, with "a lot of potential" to grow.

According to market and consumer data provider Statista, the global esports market is forecast to have reached $1.44 billion last year and expand to $5.48 billion in 2029.

At the tournament venue, technicians sent live feeds to VSPN's headquarters to be localized and broadcast in more than a dozen languages -- with the help of local announcers -- just seconds later. Thousands of people, meanwhile, watched the Jakarta finals on site.

Tang said Indonesia -- with more than 270 million people -- is a "very vibrant" and "attractive" market in Southeast Asia, making the country VSPN's expansion priority. It now has at least four full-time employees in Jakarta and is still in the midst of expanding its head count in the country. It is also looking at Vietnam, Thailand and Malaysia for expansion.

"When we look around Southeast Asia for the next big gaming market, the next big esports market, we think Indonesia is a very natural first stop to go," she said.

Tang said Indonesia shares similarities with China in esports.

"We see young demographics, young gamers here, and just like in China we have a lot of young people who love gaming," she said. "The kind of enthusiasm from the fans and the players here that we see [is] very similar to what we've observed in China."

In 2021, Indonesia had an estimated number of 116 million gamers -- 41% of total gamers in Southeast Asia -- according to the Esports Industry Outlook 2021 by the EVOS Esports organization.

Tang said VSPN aims to deliver more content in Southeast Asia this year by hosting more large-scale tournaments like the PMGC finals and yearlong regular leagues. She did not offer an exact number for 2023, however, saying the company would "continue to be on gradual growth moving forward."

Tang declined to disclose specific figures when asked about VSPN's 2023 revenue target, citing company policy, though she said, "The trend is definitely positive," referring to a growth rebound compared to previous years.