Esports in Vietnam: An Untapped Industry

Esports in Vietnam are gradually demonstrating that it is more than just video games by contributing in the development of a complex digital entertainment ecosystem capable of attracting long-term investors and generating billions of VND. With esports being included as a medal event in the 31st Southeast Asian Games, and the Vietnamese teams winning four gold and three silver medals, the industry is beginning to receive the attention it requires to thrive, despite long-held public opinion and limited regulations.

What is Esports?

In addition to differing opinions about the market’s boundaries, there are many definitions of the term "esports." Newzoo, one of the most trusted sources for game market insights and analytics, defines esports as “professional or semi-professional competitive gaming in an organized format (tournament or league) with a specific goal/prize, such as winning a championship title or prize money.” With this definition, esports market sizing will only include revenues and viewership from professional competitive gaming content.

Esports industry. Photo Credit: Newzoo

Esports has become mainstream, with its own superstars and leagues, celebrity athletes and owners, and tournaments that sell out stadiums around the world and award millions of dollars in prize money. Although it will be some time before esports is included in the Olympics, Asia has taken the lead in recognizing esports as a sport, with esports being introduced as an exhibition event at the Asian Games 2018 in Jakarta and as a medal sport at the SEA Games 2019 in Manila.

As the esports industry gains popularity, especially in Vietnam, we also see the development of other relevant industries, such as event organizing, streaming, content creation, and so on. They have aided in the development of a complex digital entertainment ecosystem in Vietnam, which has the potential to attract long-term investors and generate billions of VND.

The Esports Scene in Vietnam

Despite the fact that it is still a nascent industry that just went through a devastating period due to Covid-19, esports in Vietnam has a promising future with positive figures on active players, viewers, prize pools, and so on.

Data from the Vietnam eSports Guidebook 2021 indicates that the number of domestic players has risen to nearly 18 million in 2020. Smartphones have surpassed PCs/Laptops as the most popular eSports devices in the Vietnamese community, accounting for 58.3% of the total.

Officially released by the Vietnam Recreational and Electronic Sports Association (VIRESA), this “whitebook” aims to become a guideline for investors and businesses to have a better understanding of the Vietnamese esports industry, enabling them to foster the digital games industry in the future.

Of the nearly 18 million esports players in Vietnam, Gen Z players (age 13 to 22) make up 75.8%. Despite not having stable incomes, they are willing to spend on eSports at a rate of 51-57%. This is not a bad number when compared to the Millennials (64%), implying that the potential for revenue generation from Gen Z is enormous in the future.

Although no eSports investor has yet announced sales in the Vietnamese market, with an estimated 26 million viewers, the increasing demand for entertainment is creating conditions for content creators, media channels, and eSports event organizers to enter the market. Streamers, content creators, casters/commentators, and professional players (pro-players) are emerging, with their personal accounts being followed by hundreds of thousands, making eSports a very effective brand promotion channel in Vietnam.

The total prize pool for eSports in Vietnam has reached $4 million USD as of December 2020. This is an impressive figure considering Vietnam has only recently entered the esports industry.

Also, according to the whitebook, esports in Vietnam thrived in 2020 and became a form of entertainment mainly due to the Covid-19 outbreak. Specifically, during the social distancing period, 80 percent of players said they spent more time on esports, with 52.5 percent of them playing games daily for an average of 2 hours and 55 minutes. Broadcasting platforms in Vietnam saw an unexpected increase in esports content, with the number of views on Facebook Gaming increasing by 81.37%. The amount of interaction and coverage increased by 50% and 79.6%,

Furthermore, seeing Vietnamese players compete in the global esports arena has captured the attention of many Vietnamese people, particularly the young. In October 2020, when the COVID-19 epidemic was still hindering the organization of many domestic and international tournaments, many Vietnamese and viewers around the world were watching and cheering for the inspiring journey of Vietnamese prodigy Le Quang Duy at the 2020 League of Legends (LoL) World Championship. With an aggressive and eye-catching playstyle, Duy, known internationally as "Style of Me" or SofM, helped his team Suning reach their first LoL Worlds Finals. This also marks the first time a Vietnamese player has ever reached the final round of this prestigious tournament. 

At the time, SofM's annual salary from Suning was around 20 million yuan, or about 5.8 billion VND per month. Despite not being able to return home as champions, SofM and his teammates' heroic journey will be remembered for a long time as an inspirational story of the young generation conquering the world. The interest and love of Vietnamese people for esports will continue to increase thanks to the continuous efforts of the national teams over the years. Moreover, with esports being included as a medal event in the 31st Southeast Asian Games, and the Vietnamese teams winning four gold and three silver medals, the industry is beginning to receive the attention it requires to thrive, despite long-held public opinion and limited regulations.

Obstacles to the development of esports in Vietnam

Social norms

Despite being gradually recognized by national and regional organizations, the majority of the Vietnamese population still does not take esports seriously. Because the majority of esports players begin their careers at a young age, many parents misinterpret their children's passion and dismiss video games and esports as "useless entertainment." Meanwhile, esports players continue to become a popular profession in many developed countries, bringing fame and fortune to those who are now idols to many.

The profession also faces other challenges in Vietnam, including low average wages, short career lengths, and a fiercely competitive environment. As a result, Vietnam will need a strong socialization strategy in order for esports to gain widespread acceptance.  Only then will the "gamer" profession be supported and pursued, allowing esports to flourish in Vietnam.

Legal barriers

From an economic standpoint, Mr. Nguyen Quang Dong, Director of the Institute for Policy Research and Media Development, stated, "A strong push from the policy and regulatory environment promises to transform digital sports into a key industry in Vietnam's digital economy, during and after the Covid-19 epidemic."

According to the Vietnam eSports Guidebook 2021, in order to create a more favorable environment for esports to thrive, management agencies need to facilitate 4 issues, including: content control; licensing issues; better protection of intellectual property rights; and industry cooperation contracts. 

Currently, the legal basis for eSports content (managed by the Ministry of Information and Communications) and eSports licensing issues (managed by VIRESA) are being handled well. However, the criteria in the industry's legal documents will need to be completed and concretized. Roles, responsibilities, and communication channels for e-sports content management must also be defined.

In terms of intellectual property rights, video game software, performances, sound recordings, video recordings, and broadcasts on OTT platforms (YouTube, Facebook, etc.) are all protected, but the gameplay of video games is not. There are no specific rules for eSports content creators or players. This necessitates an amendment to the Intellectual Property Law.

Investment Opportunities

Esports has already become a massive industry in some countries, contributing to $1 billion in global revenue. However, in Vietnam, esports is still at its early stage of development. Under the impacts of the Covid-19 pandemic, new industries such as video games and e-sports are expected to become "lifesavers" for the economy, and businesses. Vietnam, with its young population and developing Internet infrastructure, will be a fertile and potential land for these new industries to thrive. 

Currently, investors looking to invest in esports in Vietnam can consider the following options: 

Investing in esports teams or organizations

Investing or sponsoring in an esports team is no longer an unfamiliar concept in Vietnam. We have already seen the success of many teams invested by foreign organizations, such as EVOS Esports (Indonesia), Team Flash, Impunity eSports (Singapore), and GAM Esports. It is possible to start a new organization from the ground up. However, building a brand will be too difficult, and investors will have to devote a significant amount of time and effort to finding, recruiting, and training talent. As a result, in Vietnam, investing in a pre-existing organization is the best option.

In the summer of 2021, CMG.ASIA and NRG Esports, an American professional esports organization, announced the acquisition of GAM Esports, a powerhouse in Vietnam's highest level League of Legends tournament. Under the management of a new owner, GAM Esports was crowned champions of the VCS 2022 Spring Playoffs, claiming the 400 million VND prize, and then proceeded to win the gold medal for Vietnam in the 31st SEA Games with an unbeatable 10-0 record. 

This successful investment decision by NRG is expected to pave the way for foreign investors with deep pockets to enter the Vietnamese esports market and provide opportunities for the country's young talent.

Investing in the development of esport games

It's difficult enough to create an enjoyable video game, let alone turn it into an esports title that attracts a lot of sponsors and has spawned a slew of national and regional tournaments. To compete against other international studios that develop and publish games, the game will need a lot of selling points and trending content. However, this is not entirely impossible.

At the end of 2017, Free Fire was released by 111dots Studio, a small game studio in Vietnam. The game was later acquired by Garena, which gave it a spectacular makeover and helped it become a worldwide sensation. As the leading distributor of online games in Vietnam today, Garena helped Free Fire reach over 1 billion downloads on Google Play (as of 2021) and  over 100 million downloads on the App Store, making it the most popular mobile battle royale game. In 2021, Free Fire reached 1.23 billion hours watched across Twitch, YouTube Gaming, and Facebook Gaming, and generated 1.1 billion USD in revenue.

Investors can also try to form a partnership with well-established industry stakeholders to benefit from their market advantages. For example, Appota offers a variety of solutions for game developers, esports organizations, and gaming communities, aiming to innovate the Vietnam esports ecosystem. VIRESA, on the other hand, focuses on establishing competition rules and official regulations for esports, as well as establishing regulations for national eSports tournament systems and training.

Conclusion

Despite ongoing challenges, Vietnam presents significant opportunities for the future development of eSports in digital entertainment as a vibrant country that ranks second only to Singapore in terms of market dynamics in Southeast Asia. It takes meticulousness and care in investment for any capital to be placed in the right place at the right time, creating the right environment for Vietnamese talents and the development of the esports industry. For more detailed insights on the industry and current trends, feel free to contact Viettonkin, the leading consulting firm and business consultant in Vietnam.