ONLINE GAMING MARKET

KEY FINDINGS

1. The global online gaming market was estimated at ~$33.6 Billion in 2020 and forecast ~$36.2 Billion in 2025
2. The world of online gaming is witnessing substantial growth with more and more user engagement now than ever before. Novel technologies such as Virtual reality and Augmented reality have played a major role in elevating the adoption rate and popularity
3. Action games and sports games are the two most popular genres of online gaming market. It is likely to witness the maximum developments in terms of new gaming content and game releases owing to its popularity among audience in the long term
4. Game developers are constantly trying to re-establish their position in the market by rolling out games that are compatible on multiple platforms such as Xbox, PCs and mobile phones further increasing its popularity and expanding their consumer base
5. After years of uncertainty over its capabilities, 5G is a reality, and it’s proving to be a vital component of the future of mobile gaming. Thus far, China is the biggest beneficiary of 5G, although the US, the UK, have also started implementing the technology. At its core, 5G promises ten times more speed than 4G
6. Recent advances in advanced cloud technology have turned the idea of cloud gaming into reality. In cloud gaming, the server, where all the games are stored, does all the computation work, which includes game scene rendering, game logic processing, video encoding, and video streaming
7. Paytm First Games announced growth to over 80 million registered users. There has been a 200% growth in userbase and a 4X increase in gameplays in the first half of this year with over 25 million active users. During the ongoing cricket season, there was seen a rise in the number of fantasy sports players engaging on the platform
8. In the second quarter, Activision’s player base grew 30% year over year, adding more than 100 million monthly active players. Time spent in their games grew 70% over the same period, and Q2 engagement and player investment were at historic highs
9. Classic games perform the best for 7-day user retention period followed by mid core games and casual games. Most casual game genres have a decreasing retention rate after 28 days with exception of puzzle games
10. Net Bookings contribute majorly towards revenue generation for gaming publishers. Net bookings for games were witnessed to be at record highs for the year 2020
11. In India, the revenue generated from the gaming sector has increased by ~50% since the lockdown, with national average gaming time spent by players increasing to 4.1 hours post-covid from 2.5 hours pre-covid
12. In September 2021, temporary suspension of approval of new online games in China has led to decline in the stocks of gaming companies in the country
13. Nazara Technologies said that that it has acquired complete stake in Hyderabad-based skill gaming company OpenPlay in a cash deal of₹186.4Cr
14. Esports Technologies has partnered with Aspire Global to launch a new online gaming site

INTRODUCTION

Games have been a source of entertainment for mankind ever since. However, from tabletops to virtual reality, how we play games has changed extensively over time. Since its commercial birth in the 1950’s in the form of prototypes for video games to highly popular open-world games, online gaming has blossomed into one of the most profitable entertainment industries in the world today. 

Online gaming means playing video games over a computer network, particularly over the internet. It can be played solo as well as in multiplayer mode. Compatible with both PC’s and mobile devices today, online gaming has been a revolution in the history of games.

Many genres have been introduced in the world of gaming since its introduction, thus grabbing the attention of every individual irrespective of their age.  

ONLINE GAMING MARKET DYNAMICS

Online gaming has never been more popular, owing to greater connectivity, technology in both large and small devices, and a larger appeal. The gaming industry is booming in every field, whether it's online casinos, old arcade games, Esports, or MMORPGs.

Technological innovations in both hardware and software development backed with an increasing internet penetration across the globe have majorly contributed to the evolution of the online gaming industry. Advancements in various aspects such as graphics and experience enhancements in the gaming sector have further influenced the online gaming market growth.

More and more game developers across emerging economies are looking to constantly engage and improve the gamers’ experience by launching and rewriting new codes for diverse platforms across new channel. Thus, it is leading to a fierce competition in the gaming landscape: and thus proving to be a gamers’ paradise as a counterpart.  

The adoption of gaming platforms, such as E-sports, are witnessing substantial market demand in the current market scenario, and are thus driving the overall gaming industry across the globe. Riot Games with League of Legends and DotA 2 are two of the notable examples of influential actors in the eSports business. South Korea is considered to be the country of origin of eSports. Even though the United States overtook South Korea in terms of revenues in the eSports business, it still hosts one of the biggest tournaments in the world. ​

In India, the revenue generated from the gaming sector has increased by ~50% since the lockdown, with national average gaming time spent by players increasing to 4.1 hours post-covid from 2.5 hours pre-covid.

Currently, India is known to have one of the top five most lucrative mobile gaming industries in the world. It makes up around 14% of the share of global game sessions.

In September 2021, temporary suspension of approval of new online games in China has led to decline in the stocks of gaming companies in the country.

ONLINE GAMINGMARKET SEGMENTATION

COMPONENTS OF ONLINE GAMING

• Distributors and Retailers: Platforms that distribute and sell games 
• Streaming Services: Services that allow users to livestream games 
• Hardware Developers: Companies that build the electronic infrastructure required to play games 
• Gaming Arenas: Venues that host gaming events 
• Esports: Organized, multiplayer video game competitions, typically between professional players 
• Software Developers: Develop applications that allow users to do specific tasks 
• Game Publishers: Companies that finance and distribute games 
• Game Developers: Studios that develop games

NEW GAMING PRODUCTS LAUNCHED POST COVID

ONLINE GAMINGMARKET TRENDS  

With such lucrative revenues and profitable margins, many new players have entered the market to provide for this demand, thus making it more accessible to the mass and further increasing its popularity. The use of virtual reality is constantly blurring the lines between fantasy and reality and indulging its audiences greatly.  

Many game publishers are quickly adopting free-to-play and subscription models as their preferred delivery mechanism.

Free-to-play means that the game – or a version of it – is available for no charge and is supported by in-game purchases and advertising. Subscription services work with membership payments allowing access to a variety of constantly changing material.

Also, modern gaming attracts gamers of various ages, genders, sexualities, and ethnic origins, especially with the rise of mobile gaming.However, the diversity of gamers has not yet been matched by the diversity of gaming characters.

One important factor that is hugely contributing to the rising demand for online gaming is the advent of cross platform gaming. Game developers are constantly trying to re-establish their position in the market by rolling out games that are compatible on more than one platforms such as Xbox, PCs and mobile phones further increasing its popularity and expanding their consumer base. 

Online connectivity now allows players to compete in officially organised tournaments with opponents from all over the world.There are currently a number of professional and highly successful Esports contests, and the Olympic committee is considering officially recognising Esports.

The emergence of cloud gaming is driving the market.This has the twin benefit of circumventing the limits of individual player configurations while also gaining greater control over money streams.

Memory capacity and device capability limit games stored on physical media, as do games purchased online and downloaded. Only the cloud's capacity and bandwidth access limit games hosted and played directly in the cloud.

Therefore, recent advances in advanced cloud technology have turned the idea of cloud gaming into reality. In cloud gaming, the server, where all the games are stored, does all the computation work, which includes game scene rendering, game logic processing video encoding, and video streaming. 

Several companies such as OnLive, G-Cluster, StreamMyGame, Gaikai, and T5-Labs are already offering commercial cloud gaming services. This in turn has prompted video game majors such as Sega, Ubisoft, Epic Games, Atari, Warner Bros, Disney Interactive studio to establish partnerships with Onlive to distribute their games. 

Also, in May 2020, Nvidia GeForce Now added 19 games to its cloud gaming library, and further announcing an additional18 new games that will be available on GeForce NOW.​ ​

Scientific Games Corporation has signed a three-year content partnership with Design Works Gaming. Under this agreement, DWS will roll out range of online casino titles across US & Canada through the OpenGaming platform, providing SG customers a diverse content selection and opportunities for game development.

Gaming Startup Awon GameZ raises $2 million to focus on market reach and product development, along with hiring global talent and launching an online marketplace. The startup is aiming to reach the 10 million users by the end of 2021.

Esports Technologies has partnered with Aspire Global to launch a new online gaming site.

Roblox is changing the game when it comes to indie games by allowing both users and developers better access. It is assisting indie game developers in becoming bestsellers by providing a Steam-style platform that allows for easy access and distribution.

ONLINE GAMINGMARKET DRIVERS

Smartphone Gaming has exploded in recent years. The increase in the number of smartphone users coupled with a stable internet connection has risen quite significantly, which in turn is boosting the global online gaming industry. The online multiplayer games like that of PUBG and Call of Duty Mobile have recently become extremely popular among users due to the presence of its social elements.

People can team up with peers irrespective of their locations globally. These multiplayer formats engage their audiences by giving them the opportunity to socially interact with their peers and also give them a sense of achievement over other gamers. 

In addition, the advancement of technology in this aspect and the advent of cloud gaming and virtual reality has made it possible for mixed reality features and real time user experience of gaming on a smartphone as gamers today are preferring games on mobile devices more. It gives them the option of faster gameplay thus catering to the needs of millennials for instant results and instant gratification of their needs.

The explosive growth of social media in the 21st century has further fostered the growth of the online gaming market creating more buzz and attracting new potential audiences.  

Mobile gaming is thus the fastest growing segment in the online gaming market with the lowest barrier in entry and less room for delays in developing and processing due to Covid19, proving to be a more cost-effective opportunity for developers, gamers and publishers alike.  

ASIA PACIFIC REGION EMERGING LEADERS

Asia Pacific region is anticipated to hold the largest market share in the online gaming industry where countries such as China, Japan and South Korea show great potential in market growth.

Chinese Enterprises like Tencent Holdings are looking to take up any business opportunity in this regard and remain relevant in the industry to generate enough users’ gaze and even attract new players into the market.

The gaming industry is thus proving to be a functioning ecosystem of its own: with many collaborations and partnerships for mutual benefits. This ecosystem creates dozens of revenue streams for the industry as a whole and great opportunities for growth.  

GROWTH IN YOUTUBE STREAMING

With the expansion of the online gaming market, the online streaming platforms have also seen an upward trend. As more and more people are indulging into online gaming, the demand for video game tutorials and play through videos has also witnessed a surge.

Several upcoming players, professional gamers and even celebrities are resorting to these platforms like Twitch and YouTube to reach out to their audiences and engage them into the world of online gaming as many audiences choose to live stream these videos proving to be a win-win situation for both.  

• Felix Arvid Ulf Kjellberg, commonly known as PewDiePie was one of the pioneers in streaming and has one of the highest subscribers on the platform with over 100 M subscribers. He earned ~$13 M in revenue from YouTube.
• Daniel Robert Middleton, with his channel DanTDM is also a gaming streamer with over 24 M subscribers. He earned ~$12 M in revenue in 2019 from YouTube

This online streaming trend is expected to greatly boost the online gaming market. As per recent trends, it has also been noticed that many audiences prefer watching other players play.

To know more about YouTube streaming trends, read our report “ Global vlogging camera market”

There was a notable surge in live gaming stream recently, where notable players could showcase their gaming skills on a streaming platform such as Twitch and their fans could just sign up and watch them play. This demand for streaming services is further going to accelerate the demand and market for online gaming.  

ONLINE GAMING MARKET GROWTH

Many online gaming companies are putting efforts into the development of the new games and bringing in a lot of new software updates in order to keep their customer interested in the games as they have seen enormous gaming traffic on their games.

For example, Activision Blizzard, an online gaming company released its Call of Duty: Warzone online game as free to play version, compatible across PC, and gaming console and was able to generate huge amounts of revenue on the same.

The company said that the game was downloaded about 15 million times within 3 days if its release. A considerable amount from this population consists of teenagers and school-going children who are left with very limited activities to do.

And, similar trends have been observed among other game makers companies as well. And these initiatives are the main reason for the inline e-gaming market’s growth.

COVID-19 IMPACT ON GLOBAL ONLINE GAMING MARKET

COVID-19 is one of the main reasons for a sudden boost in the demand for online e-gaming. A lot of suppressing instructions including travel restrictions and business shutdowns are contributing to the same. So, a lot of people are staying at their home and spending time online and internet traffic is generally up by 25-30% than usual.

As per one of the reports given by Nokia, online gaming traffic has also grown significantly. A report shared by a U.S telecom company Verizon says that they found that gaming traffic is increased by 75% during the lockdown enforced because of COVID-19 situations all over the globe.

Since the physical sales of video games have been declining over the past few years and high street closures an

d the avoidance of physical retail spaces have further boosted digital and e-commerce gaming sales.

But  during the last year, gamers have used these services at an unprecedented volume and the exceptional situation has led many holdouts to finally embrace digital purchases.

It is estimated that the time spent on video gaming during the COVID-19 pandemichasincreased by double digits in all regions, with Latin American gamers increasing their time spent on video games by 52%. Asia-Pacific was ranked second in terms of increased user engagement with a 42% increase of gaming time. Multiplayer games proved especially popular during COVID-19, and the most popular gaming genres based in increase in time spent were fighting, MOBA, and battle royale games. 

A survey of European gaming audiences found that playing video games during lockdown made players feel less isolated and happier overall. Especially online multiplayer players felt positive about their gaming experiences during lockdown periods.

ONLINE GAMING MARKET SIZE AND FORECAST

The smartphone market is growing tremendously at a significant rate which in turn is contributing to the global market globally. The online multiplayer games like Call of Duty, PUBG, CS Go have gained a lot of attention because of the social elements like teaming up with other players despite of being at different locations globally.

Electronic sports (eSports) are the tournaments planned for video game players. It’s a platform where a lot of players meet and compete with each other. Esports event includes competitive league tournaments. The Esports generate income through sponsorship and advertisements, tickets, media rights, and merchandise.

On the basis of platforms, the mobile segment witnessed the maximum contribution toward the growth of the e-gaming market and has the maximum market share.

On the basis of pricing models, the freemium segment is expected to show maximum growth and would contribute to the market over the forecasting period of 8 years. North America accounted for the highest share in the global e-gaming market. We can also find a lot of professional players in the same region.

The global online gaming market is estimated at $33.6 Billion in 2020 growing at XX% CAGR till 2026

ONLINE GAMING MARKET COMPETITIVE LANDSCAPE

Global online gaming market is fragmented, with various regional players (in Asian countries) occupying relatively smaller share of the market. Activision Blizzard and EA cumulatively account for 36.3% share of global market, largely driven by US.

Key players in the market include Microsoft Corporation, Nintendo Co. Ltd, Valve Corporation, Electronic Arts Inc, Activision Blizzard Nintendo, Microsoft Corporation., Rovio Entertainment, NVIDIA Corporation; Valve Corporation; Playjam Ltd.; BlueStack System and Sony Corporation etc.

Companies are largely focusing on building and developing more engaging gaming content and next generation gaming experiences. They are also emphasizing on improving customer experiences by offering innovative products with multi-utility features like real time personalization and cloud gaming thus providing vast opportunities for different brands and advertisers to tap into this lucrative market.  

Copyright and piracy issues are going to impact market growth in a negative way. The issues related to frauds while playing games like hackers are going to impact the growth of e-gaming markets in a negative way as well.

Zynga’s ability to publish their games on mobile platforms, primarily Apple’s iOS and Google’s Android directly impacts its revenue. In 2019, Zynga derived 50% of its’ revenue and 49% of its’ bookings through Apple and 43% of its’ revenue and 46% of their bookings through Google.

Activision Blizzard’s net revenues presented in accordance with GAAP were $2.30 billion, as compared with $1.93 billion for the second quarter of 2020. GAAP net revenues from digital channels were $2.03 billion. GAAP operating margin was 42%. On a non-GAAP basis, Activision Blizzard’s operating margin was 44%.

For the quarter, operating cash flow was $388 million, as compared with $768 million for the second quarter of 2020. 

Electronic arts Inc. net bookings for fiscal 2021 was $6.190 billion, up 15% year-over-year, and over $600 million above original expectations. The company delivered 13 new games and had more than 42 million new players joining their network during the fiscal year.

FIFA 21 has more than 25 million console/PC players. Apex Legends has more than 100 million players life to date on console/PC, and Season 8 had more than 12 million weekly average players.

Nazara Technologies said that that it has acquired complete stake in Hyderabad-based skill gaming company OpenPlay in a cash deal of₹186.4Cr.

OpenPlay currently has an annual gross gaming revenue of Rs 80 crore and is operating on EBIDTA positive margins.

Nazara Technologies’ consolidated net profit was Rs 13.50 crore in Q1 June 2021 as compared to a net loss of Rs 21.70 crore in the same period of 2020. Consolidated net sales increased by 45% to Rs 131.20 crore in Q1 of current FY from Rs 90.50 crore in Q1 FY21.

MGM resorts is planning to expand its online gaming business to the global level. 

THE WAY FORWARD IN ONLINE GAMING MARKET

Several companies such as Onlive, G-Cluster, StreamMyGame, Gaikai, and T5-Labs are already offering commercial cloud gaming services. This new sector is also seen as a serious competitor for the traditional game market.

Some of the popular consoles developed by these companies are XBOX One by Microsoft corporations, PS4 (Play station 4) and Wii U by Nintendo  Co., Ltd. And these market players are focusing on delivering to the customers is product differentiation and innovation with a view to increasing their market share.

With the competitive market and a lot of big players in the market offering a fruitful experience to their customers with games like PUBG, Call of Duty and others the E-gaming market is expected to grow tremendously in the coming years.

ONLINE GAMING MARKETCOMPANY PROFILES

1. Activision Blizzard
2. Tencent Holdings
3. Take-Two Interactive
4. Electronic Arts
5. Huya
6. Gameloft
7. Mattle Games
8. Zynga
9. Nintendo
10. Ubisoft
11. Tencent Holdings
12. Hasbro

ONLINE GAMING MARKETREPORT WILL ANSWER FOLLOWING QUESTIONS

1. Online Gaming Market size and Forecast, by region, by application
2. Average B-2-B price for Online Gaming Market, by region, per user
3. Technology trends and related opportunity for new Online Gaming Market tech suppliers
4. Online Gaming Market share of leading vendors, by region,
5. Coronavirus impact on Online Gaming Market earnings