Internet companies change landscape of Chinese sports industry

The sports industry appears to be the next growth area for Chinese internet-enabled companies. More and more internet giants have rushed into the sports business sector after the Chinese government announced a series of reform plans to revitalize the country’s sports industry and grow it into a 5-trillion-yuan business. 

With big names like Alibaba, Tencent, PPTV and LeEco jumping on the bandwagon by establishing their own sports companies and bidding for broadcasting rights to top international events, they are changing the face of the industry.

These Chinese companies have made significant noises both in China and on the global stage during the past several months by striking big deals for the rights to a broad range of sports. These vary from extreme sports to the English Premier League, the NBA, and the European Champions League.

-Last January Tencent acquired exclusive online five-year rights to the National Basketball Association in mainland China, in a deal that people familiar with the negotiations said was worth at least $500 million.

- Last August PPTV, a Web company backed by electronics retailer, Suning Commerce Group, acquired the five-year exclusive all-media rights for La Liga in mainland China, Macau and Taiwan. 

- Le Sports, which says it has bought over 250 events in everything from cycling to golf, recent announced a three-year strategic partnership with MLB to screen the American sport in China. 

-Alibaba, which has already signed a series of deals with FIFA, NCAA-Pac-12 and other sports leagues, organizations and teams, opened this year by striking a deal with the NFL. The e-commerce giant is also having talks with FIBA. It is believed that the two sides will soon announce a partnership agreement.  

With all these top sports resources falling into the pockets of the country’s online giants, companies like Le Sports, Tencent and Alibaba are beginning to stream games on the internet for free although they’ve spent billions of dollars to get those games.

"Owning more media rights is a key to attract users. So if the users come to your platform, they may become a potential subscriber or consumer," said Yu Hang, Le Sports Vice President.

The price is skyrocketing in the bidding war. Even the rights for China’s football league, the CSL, sold for 1.2 billion dollars, a 20-fold increase. Mr. Yu thinks the market is overheating.

"The market is irrational, we need to cool down to see the business model behind that, if there is not a paywall that online streaming sites can count on," Yu said.

In order to gain more users for paywall, Le Sports is making bold moves to penetrate the whole value chain -- by title sponsoring a major football club in Beijing, introducing fancy technologies like panoramic view in broadcasting, and producing professional programs in its own studios.

Newcomers from the Internet are changing the rules of the game, and Chinese audiences may be saying goodbye to free TV sport sooner than they imagined. But eventually, experts say, they’ll pay for the better games.

Source: CNTV

Proofread by John Devlin