A Global Phenomenon Under The Radar
DEC 20 2018
Online gaming could once have been dismissed as a niche market for investors, but the explosive trend is now impossible to ignore. Much of the growth is coming from Asia.
In China, the world’s leading gaming market, which saw US$32.5 billion in revenue in 20171, gaming accounts for an incredible 15% of leisure time.2
The driver for this boom has been the smartphone. Lower-cost mobile devices and more sophisticated hardware has enabled audiences to access better graphics and higher-quality gameplay, without the need to invest in pricey consoles or PCs.
The boom in online gaming demonstrates how quickly emerging markets are taking centre-stage in so many tech-driven, ‘new-economy’ industries.
Mobile-gaming app revenue is expected to reach US$74.6 billion by 2020, doubling from that of 20153. By then, an estimated 40% of global online gaming market revenue will come from smartphones4.
Growth is being propelled by the Chinese model of ‘freemium’ content where the game is free to download, but comes with in-app purchases. In Asia alone, free-to-play MMO games generated an estimated US$11.2 billion of revenue in 2016 compared with US$1.4 billion for pay-to-play games.5
Greater technological advances are also just around the corner. Semiconductor companies are now looking at the next generation of hardware, capable of supporting gaming-specific smartphones. The next step in hardware is the development of augmented or virtual reality, with a focus on accessibility from handsets and mobile devices not just PCs and consoles.
Crucially, gaming is no longer just about the players, it is a spectator sport. Platforms such as YouTube, Amazon’s Twitch and, in China, the Tencent-owned Douyu, have raised the profile of eSports (competitive professional gaming) to never-before seen levels. The 2017 League of Legends championship finals, hosted at Beijing’s Birds Nest stadium, was watched by a staggering 57.6 million people worldwide6.
In 2018, viewing numbers for gaming video content is expected to top 700 million – that’s more than five times Netflix’s worldwide subscribers.7 And the audience is poised to grow even further, eSports will be a feature of the Asian Games this year and serious discussions are also underway for a demonstration event at the Paris Olympics in 2024.
Sponsorship of eSports is still in its infancy but could mushroom in the same way that we have seen in other global sports.
Gaming revenue has risen steadily in the last few years, up 18.1% in the 2017 financial year.8 The boom in online gaming demonstrates how quickly emerging markets are taking centre-stage in so many tech-driven, ‘new-economy’ industries.
1Statista, Newzoo. 2Statista, Nielsen. 3Statista, App Annie, Venture Beat. 4Statista, Newzoo. 5Statista, SuperData Research, gamesindustry.biz. 6Statista, Riot Games, Rift Herald. 7Statista, SuperData Research, Netflix. 8 Statista, Newzoo.
Author:
Kim Catechis
Head of Global Emerging Markets
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