JAKARTA -- Indonesian conglomerate Salim Group is hoping to tap into the booming esports market, setting up a joint venture with a German company that organizes and produces video game competitions.
The deal with ESL is another move by the instant-noodle-to-autos conglomerate to increase Salim Group's presence in the digital sphere and cater to a younger audience. The group has acquired an e-commerce platform and in 2017 rolled out a shopping app with South Korea's Lotte Group.
Salim's move comes as the global esports market is forecast to rise from $655 million in 2017 to $1.6 billion in 2021, according to Dutch research specialist Newzoo. Southeast Asia has the world's fastest-growing population of esports enthusiasts, Newzoo says, expanding at an estimated compound annual rate of 36% between 2015 and 2019, to 19.8 million by the end of this year.
Adrian Lim, a director at Salim's Innovation Factory, and Nick Vanzetti, ESL's senior vice president of Asia Pacific Japan, revealed the deal to the Nikkei Asian Review in a recent interview. Salim and ESL signed a strategic partnership in September to host esports championships in Indonesia, but this is the first time their plan for a joint venture has become public.
"Indonesia [is] such a large market," Vanzetti said. And "we [are] always in conversations for great partners [to] expand into various countries." ESL already has offices in Singapore and Malaysia, but "this is our first foray, really, into building up more of an operations and local hub for Southeast Asia and Indonesia."
Salim Group is best known for controlling Indofood Sukses Makmur, Indonesia's largest food company and the world's biggest instant noodle producer. "If you look at some of our brands ... I think the demographic is getting younger, and there is a lot of overlap between the communities engaged in esports and the communities that are consuming our products and services," Lim said. "I think our common objective is how to make this overlap as big as possible."
Lim said that the idea for Salim to move into esports came from Anthoni Salim, the group's 69-year-old owner. "Our chairman is always looking at ways to engage new communities," Lim said. "He never views what we are doing as a business. I think we believe if we can cultivate the right community, there is always business we can do in the future."
Lim stressed that Salim will be engaged in esports for the long term.
Salim Group also has significant businesses in the Philippines, controlling PLDT, the largest telecom carrier in the Philippines, as well as Metro Pacific Investments, its infrastructure arm, under its Hong Kong-listed holding company First Pacific.
Helping ESL expand into the Philippines as well as other Southeast Asian markets is "definitely part of the discussion," Lim said.
Both parties declined to comment on the shareholding structure or the value of their investments.
Competitive gaming was included as an exhibition event in the 2018 Asian Games -- the Asian equivalent to the Olympics -- held in Indonesia. There is also talk of making esports an official medal event at the next Asian Games, to be held in Hangzhou, China, in 2022.
ESL's Indonesian championship began this January, consisting of two popular esports titles, "Dota 2" and "Arena of Valor," with eight teams from around the country competing in a league. The matches will be played online, but the top teams will gather in Jakarta in March for a live finals event.