The gaming industry continues to thrive despite the current economic climate. In fact, gaming is one of the fastest growing sectors in consumer entertainment as it continues its unprecedented expansion - both geographically and demographically - capturing the interest and engagement of new entrants across the globe.
The global video games market is forecast to be worth $159 billion in 2020, around four times box office revenues ($43 billion in 2019) and almost three times music industry revenues ($57 billion in 2019). The biggest market by revenue is Asia-Pacific with almost 50% of the games market by value. North America accounts for a quarter of revenue. A separate part of gaming is esports which is forecast to grow to just over US$ 1 billion in 2020. Business models in esports closely follow professional sports – though competitions are far more fragmented – with the majority of revenue coming from advertising and broadcasting. Although relatively small in comparison with the overall gaming market, esports is relevant here because it appears connected to the continued growth of gaming.
Pivot or Perish?
Against the ongoing back-drop of the COVID-19 pandemic, when we look for new opportunities for future proofing media businesses, esports presents itself as a shining example of what could potentially be a trojan horse in the portfolio of a media company. Predicated on a potent trio of ubiquity of mobile, an evolving gaming business model and the massive interest in gaming, esport is clearly a business with less risks and down-sides for a seven to ten year investment horizon typical of the Indian marketplace.
What Is It?
For the uninitiated, esport is a multiplayer video game played competitively for spectators, typically by professional gamers. In many countries around the world, esport is already a preferred pastime among young millennials and gen-z as it is a digital-first product for a digital generation of cord-cutters and cord-nevers. The success of an esport athlete, in fact, requires many of the same attributes required from any other sportsman - skill, strategy and competence earned through practice, dedication and discipline of sticking to a routine. For the esport fan, the drama of LIVE sport is all there. The thrill of watching and interacting with their heroes, along with reeling in a sense of camaraderie with a community of fellow fans makes the esport fan one of the most loyal, sought after consumers today. Esports gameplay is as unique as its fan base with ambitious titles, creative storylines and realistic worlds. Gaming titles typically fall in one of four categories: First Person Shooter, Real Time Strategy, Multi-Player Online Battle Arena and Fighting. (Motorsport does deserve a mention as a fifth category. We'll cover that in detail in another story).
Potential?
Given the inherent interest of the digital-first generation in mobile phones and streaming platforms over football fields and running tracks, and, coupled with technological advancements such as 5G and adoption of cloud gaming, esport will obviously be a major player in the world’s sporting landscape. For India, esport could potentially challenge the top 3 cultural connectors - Astrology, Bollywood and Cricket - as early as the end of this decade.
Evolution?
Competitive video gaming, known as esports today, started somewhere in 1970's and over the decades gamers and gaming have become increasingly sophisticated, and, accessible to a much wider audience. The advent of India’s online gaming industry can be dated back to the 2000's, when console and PC gaming brought several middle-income group Indians on digital gaming platforms. During the mid-2000's, online gaming was largely in the form of social games. Between 2010 and 2016, smartphones became the primary mode of internet usage, enabled by an increased internet penetration and volume of budget devices. The rise in internet and mobile volumes has contributed significantly to the evolution of online gaming consumption in India. However, the ARPU for gamer(s) remained a fraction of the developing and developed global counterparts.
On the back of impressive growth over the past 10 years, India is expected to move towards value driving consumption and comprehensive local development. The Indian industry is expected to gain momentum and reach a market value of 1 Billion USD and nearly 310 million online gamers by 2021. Esports viewing in itself offers a great opportunity for the growth of the industry.
Today, online streaming platforms like Twitch, Youtube Gaming, Facebook and connected consoles link competitors across geographies – anyone, anywhere, anytime to play popular game titles, and spectating has blossomed online to support them. New digital communities of players and fans and brands spend hours a day streaming game content and posting comments during live gameplay. Indians already spend almost as much time watching esports streams as it uses social media, and, as of January 2020, consume more game streaming content than anywhere else in the world.
[This is Part 1 of a 5 Part Series on Understanding Esports. Part 2 discusses the streaming landscape. Part 3 will discuss opportunity for marketers in esports. Part 4 will discuss the rise of franchise based esports. Part 5 will discuss the Indian esports landscape]