Here in 2020, gaming is a big deal. There are around 2.7 billion gamers across the globe (not including those who make a living from it) and according to analysts, collectively they will spend over $159.3 billion on the gaming market in 2020. By 2023, it’s been estimated that the market will grow at a rate of +8.3% CAGR to reach as much as $200.8 billion – not bad for an industry that only really began to develop properly in the 1980s as video game consoles first began to go mainstream.
A significant driver to the massive growth of the gaming industry has been the emergence of online gaming. With low barriers to entry and an almost immediate take-up amongst gaming fans, verticals like mobile gaming, cloud gaming, and eSports are cementing gaming’s place in the digital economy, and are even providing a blueprint for gaming to lead the way over the next few years.
Generating unexpected profits in unprecedented times
In the first few months of 2020 alone, online gaming has already begun to outperform expectations.
Gaming publisher Tencent, the company behind mammoth mobile and online hits like PUBG and Honor of Kings, recently reported better-than-expected results for the year to date. Boosted by the mobile version of Honor of Kings and a new release, Peacekeeper Elite, online gaming revenue for the company grew by 31% year on year, generating a total of 37.3 billion yuan in Q1 2020 – 34.7 billion yuan of which was generated by smartphone games.
Activision Blizzard, most famous for its Call of Duty franchise, also experienced significant growth during the early months of this year. With momentum driven by the release of Call of Duty: Mobile and the battle royale Call of Duty: Warzone, both of which are free to play titles, over 100 million active users per month now engage with its gaming content.
When Warzone was released in March 2020 it brought with it over 60 million more players. Meanwhile, innovations like cross-platform play for its premium titles have enabled the company to experience revenue growth of 64% year on year during Q1 2020.
There has also been significant growth and development in the more specialised gaming verticals. iGaming has been an increasingly popular trend in gaming across European and Asian markets, and thanks to the recent relaxation of online real money gaming laws in the US is set to grow just as big there. International gaming operator PokerStars has become the first online poker platform to launch in the state of Pennsylvania, leading the way for more operators across the online poker, casino and slots verticals to follow throughout 2020 and beyond.
The expansion of eSports will keep the industry thriving
Another key part of the online gaming phenomenon is eSports, a sector that wouldn’t exist without digital gaming innovation. Forecast to be worth over $1 billion by the end of this year, eSports has become properly “legitimized” as a professional competitive activity, and is interlinked with the ongoing success of the industry as a whole.
Now that traditional sports events and leagues are facing uncertainty, competitive video gaming is appealing to younger demographic groups, who altogether could represent millions of new consumers for the online gaming industry. Recent developments like the emergence of mobile eSports tournaments and leagues are taking full advantage of the low barriers to entry in the mobile vertical – over 40% of the world’s population owns a smartphone, and free to play gaming titles are consistently the most downloaded in app stores – to encourage and mobilise a new generation of pro gamers.
eSports is also ensuring that gaming remains a key part of popular culture through cross-industry collaboration. Gaming title Fortnite, for example, has broken through into traditional entertainment sectors like music and television following its record setting global eSports tournament last year. As one of the world’s most played games, the game has “hosted” live content and concerts, including a virtual rap festival in April that pulled in just shy of 30 million viewers.
This kind of pulling power makes gaming titles appealing partners for organisations in the wider entertainment industries, with events providing new opportunities both for the gaming industry and for supporting technology and infrastructure companies.