E-Gaming Becomes One of the World’s Fastest-growing Industries
Electronic gaming (e-gaming) swiftly turns into a significant sector of the world’s economy. The overall video game market volume has been surging drastically since 2018, when it reached $137.9 billion. As estimated by USA Today, it is likely to reach $180.1 by 2021.
Business heavyweights across the world tend to switch to highly scalable strategic models in a run for the highest profits possible in this seemingly ever-growing market. This race is led by companies from China, USA, Japan, South Korea, and Germany.
Among these, Chinese technology giant Tencent Holdings seems to be in the most favorable position. Though still recovering from the initial blow brought by the ongoing Sino-American trade war, the company has capitalized on its 48.4 percent stake in Epic Games. 2018 saw the latter getting a whopping $2.4 billion profit for “Fortnite”, which was the top-grossing game that year.
Tencent also has a share of League of Legends which has been going strong since its release in 2009. Moreover, it has considerable shares in a number of other top video game publishers, such as Take-Two and Activision Blizzard. But, perhaps, its golden goose is WeChat platform and related third-party contracts with game publishers eager to import their products to China’s largest social media platform.
Free-to-play mobile games have recently turned into the major segment of e-gaming industry. It is sufficient to say that it generated $87.7 billion in revenue in 2018 alone, leaving traditional PC and console games far behind. By now, free-to-play titles account for nearly 80% of all spending on digital games. Free games earn revenue through microtransactions which boost a player’s performance or give access to special items.
The California-based Glu Mobile Inc. is the biggest whale here. The company’s market cap exceeds $1.5 billion thanks to a diversified portfolio of mobile games. The stock, which gained around 87 percent in 2017, continued its bull run and clocked gains of around 112 percent during 2018.
E-sports: big names and big wins
E-sports brings yet another significant dimension to this market. Recent years saw these “competitions augmented by technology” watched by millions, both online and offline. A recent report by analyst group Newzoo forecasts yearly 26.7% increase in revenues from e-sports. Such a surge mostly results from media rights deals which are expected to grow by 41.8% to $251.3 million. Another $456.7 millions are to come from sponsorship, advertising, and marketing sales.
Newzoo predicts that should the said market tendency continue to prevail, e-sports market is likely to reach $1.8 billion by 2022.
It’s worth mentioning that NVIDIA’s computer chips are the gold standard in gaming and can cost up to $3,000 a piece. 86% of competitive gamers use them and NVIDIA has become the official hardware provider for almost every major E-sports league in the world.
In other words, by now, Tencent and NVIDIA have beat the market over the last 5 years. GLU Mobile has soared from October 2018, with the popularity of gaming continuing to explode. With huge potential for technological advancement in virtual reality and other industry improvements to come, gaming sector investment is seen as a very exciting prospect indeed.