Esports as a traditional sports substitute
The looming threat posed by Covid-19 has put the professional sports industry in a lurch. With major sports events getting canceled, stadiums in the United States have been lying dormant ever since the pandemic started. In response, sports competitions have swiftly moved to online entertainment arenas. According to research, the Novel Coronavirus pandemic will permanently increase the economic trajectory of eSports (MatthewBall). Beginning now, the segment will earn more revenue, funding, viewership and much better distribution.
The pandemic has given the esports segment its much-required thrust, where in pre-Covid times the companies operating in this segment were continually stuck in a vicious cycle of underachieved revenue targets. Huge losses made it impossible for the companies to invest in the right direction of growth. According to WeForum, the Covid-19 pandemic might result in eSports being normalized, all thanks to the accidental adoption of esports by various leagues, broadcasters and athletes. For example, NBA 2K – a popular basketball game has planned to host its first ever “3-on-3” tournament, where individuals can compete online and win a prize money of $25,000.
ESPN, NBC, Fox Sports and Fox have been streaming officially licensed video games of the NBA, Major League Baseball, NFL, Formula 1, FIFA and NASCAR while several video game streaming sites are getting massive viewership traction. As compared to Q4 of 2019, in Q1 of 2020, Twitch – a popular video game streaming platform hit a record of more than 3 billion watch hours, as reported by Streamlabs. It is estimated that global esports revenue will have a surplus of $1 billion this year, with China emerging as a leading market (Oxford Business Group).
Emerging markets re-align their strategies
The Coronavirus pandemic has forced the audience to become captive in their homes. As a result, it is estimated that $159.3 billion will be spent on video/online games in 2020, according to a report by Newzoo. The gaming market is forecasted to reach more than $200 billion by 2023. In the recent years, the emerging markets have witnessed a rapid growth of video/online games industry. Three driving factors of this are
1. Increase of usage of smart phones
2. Easy availability of high-speed internet
3. The overall growth of the online gaming industry at a global level
Another online technology that will boost the market is Cloud gaming which would enable players to stream high-end games on mobile devices, iPads etc, without spending on expensive hardware. Due to the pandemic, there is a notable increase in user engagement with mobile games. It is estimated by Newzoo that the mobile games market is set to generate revenues of $77.2 billion in 2020, with a YOY growth of 13.3%. In terms of game production and development, mobile games are far less impacted as compared to console games. Also, the programming for mobile games is far simpler than other console-based complex platforms. Hence, the market is less prone to disruption.
Southeast Asia and Latin America are the two hottest growing markets for online games. The online games market in Southeast Asia generated more than $4.3 billion in revenue in 2019, growing year-on-year with a growth rate of 13.9%. The rollout of 5G will accelerate the adoption of mobile games but due to extended lockdown periods, the actual deployment of 5G is hard to predict and several western markets expect delays.
Great opportunity for advertisers
The online gaming inventory has emerged as a secure space for advertisers to reach their target audience. To reduce anxiety & stress levels, users are increasingly indulging in online gaming which means that in-game ads are bound to have a larger reach. A report by MiQ reveals that since the beginning of the pandemic, there has been a 60% increase in impression opportunities on gaming apps and domains. The United States has the largest impression opportunity followed by the UK.
Conclusion
The Coronavirus pandemic has overall provided a boost to the online gaming industry even though it has created several supply-chain challenges and it continues to pose a threat to less-established players. It has also been noticed that Covid has bumped up the AYCE (All You Can Eat) game subscriptions. According to Google, the daily search traffic for Microsoft’s Xbox Game Pass has increased by 50-150%. This highlights an interesting insight that during such low times, it is the low-cost and high-value form of entertainment that thrives. In addition, the game developers who have launched their games during the pandemic will enjoy the benefits of a larger-than-normal audience.
