China's booming esports industry is kicking into high gear, with hundreds of millions of players and viewers actively participating in numerous local tournaments.

Esports - professional video gaming in which teams play each other in competitions - are experiencing exponential growth in China, becoming a key driving force boosting the growth of the domestic gaming sector, said a recent report.

The domestic esports audience will grow to 350 million this year, a year-on-year increase of 10.6 percent, according to a report released by Penguin Intelligence. The company predicted that China will have the largest number of core esports fans globally, reaching 75 million this year.

The report said esports audiences' passion is set to create a market worth 13.8 billion yuan ($2 billion) in 2019, up by 63 percent year-on-year. The growth mainly comes from income generated by tournaments, including sponsorship, media rights and money earned by clubs and players.

"There is still plenty of room for growth in esports players and viewers," said Wang Xu, chief analyst at gaming database Gamma Data Corp.

"With more gaming firms tapping into the esports sector, a growing number of key tournaments have been held by esports brands in China. And the new type of competition has gained a huge following among netizens."

As local gaming regulators have tightened their grip on a market that is reaching a saturation point, esports are becoming extremely important in China.

Major cities and provinces, including Hainan province, Shanghai, Chongqing, Xian in Shaanxi province and Hangzhou in Zhejiang province, are competing to become the country's new esports hub.

Hainan province announced last week that a 1 billion yuan fund will be set up to promote the development of the esports sector. The money will be used to support related firms and investment in large tournaments.

The announcement came shortly after Shanghai introduced a plan earlier this month to dramatically boost the local cultural industry, with the goal of becoming a global esports hub within three to five years.

The International 2019, the world's largest Dota 2 esports tournaments, will be held in Shanghai this summer. It will be the first time for China to host the annual event.

Xiao Hong, CEO of Perfect World Co Ltd, the Dota 2 operator in China, said TI9's prize pool will break the record set by last year's tournament, hitting more than $25.5 million.

"As China is currently one of the leading esports markets in the world, more top tournaments will be held in China," Xiao noted.

"Both esports and traditional sports have a lot of similarities. They all have fixed areas and set rules. And they all need tactics design and trained players," Xiao added.

"Esports fans are just like traditional sports fans. The way traditional sports fans choose their teams and watch games has a lot more in common with esports fans."