Research: eSports entering mainstream consciousness
January 8, 2020
Esports continues to edge its way into mainstream consciousness and is becoming one of the most coveted marketing channels for brands seeking to make an impact in gaming, according to Futuresource Consulting.
The competitive gaming industry is expected to breach the $1 billion threshold in 2020, an accomplishment for a largely grassroots powered industry, but a niche in the wider entertainment business with traditional media and streaming services valued over 250 times this amount. The hype surrounding esports has yet to slow, and with the gaming market behind it expected to be valued at close to $230 billion by 2023, its plain to see why consumer electronics brands and other household names are keen to find their way in and profit from the business at large.
The active fanbase of competitive gaming grew by 18 per cent in 2019, with 480 million fans tuning in regularly to watch gamers compete in organised tournaments. With the ‘digital native’ crowd of 16-35 year olds accounting for the largest share of regular esports viewers, marketeers are keen to leverage esports as a means of reaching the demographic. With traditional advertising forms becoming less effective with younger consumers, thanks to cord cutting and wider trends in digital media, esports has become an effective means of targeted advertisement. Sponsorship has become big business, with endemic and non-endemic brands alike bidding for prime sponsorship positions and tournament naming rights.
The amount of time dedicated to watching eSports is growing alongside the fanbase, with a total of 5 billion hours spent watching tournaments online in 2019. Esports is intensifying competition for consumers’ free time amongst entertainment providers, with Netflix recently identifying gaming as bigger competition than other subscription video on demand services, in terms of consumer viewing time. Esports is a digital native form of entertainment, with most of the content consumed online and whilst there have been attempts to bring competitive gaming to linear channels, the traditional online platforms remain the most popular. These include Amazon owned Twitch, YouTube Gaming and up and coming platforms such as Mixer, as well as a host of Chinese platforms that cater to the vast swathes of Chinese viewers.
Beyond major headline events, CE companies are increasingly using esports demonstrations as a marketing tool within gaming exhibitions such as Gamescom, GDC and E3. These events allow incumbent companies and newcomers alike to showcase their ranges of professional tier gaming accessories. In an environment where slim advantages can make such dramatic differences to success, the wide cross section of esports fans who also play games are a highly receptive consumer demographic for companies offering best in category gaming accessories. Showcasing products through esports enables companies to reach fans with authenticity, a trait which this fanbase responds to with great positivity.
The rich potential for gaming is important for CE’s next wave of growth, as many CE products have stagnated and become less relevant for consumers living in a digital and smartphone focused era. However, gaming and eSports are complex markets with highly engaged consumers critical of inauthenticity. For those who manage to break into gaming, the rewards are potentially huge.
Meanwhile, Futuresource also reports that gaming in all its forms continues to enjoy lasting appeal, with worldwide consumer spend on gaming software growing to $144 billion in 2018. The gaming market is currently driven by three key areas, namely uptake of the Nintendo Switch hybrid console, spend on console and PC gaming software, and strong growth in mobile gaming, which accounted for nearly half of all software spend in 2018.
The next generation of consoles, poised for release in 2020, will also add a boost to the industry. Immersive audio and advanced communication capabilities are likely to be key components of these consoles, helping to unlock new opportunities for monetisation. In addition, developments in cloud gaming platforms such as Google Stadia will allow consumers to access content on a wider range of devices and will bring a new range of subscription business models into play. These will focus on content access or processing services, or a combination of the two. Futuresource also expects the rise of cloud gaming platforms to increase the total addressable market for gaming accessories.
The worldwide gaming accessories market, which includes headsets, speakers, keyboards and mice, grew by 22 per cent in 2018 to achieve 76 million units shipped, according to Futuresource, and generated a global market value of $3.1 billion. As live streaming of video game play becomes an increasingly popular pastime for younger generations, this will provide additional exposure to gaming accessories due to hardware partnerships with gaming influencers. In turn, this will generate more buying signals and help to fuel future market growth.
In 2018, the gaming headsets market hit a high point due to the widespread popularity of the Battle Royale game mode, popularised by the likes of Fortnite and PUBG, and gaming headsets grew by 35 per cent in unit terms and 46 per cent in value that year. Futuresource expects 2019 to have experienced a slight decline in volumes from the high levels of 2018, mainly impacted by the cyclical nature of hardware trends for consoles. On the other hand, this cyclical beat is expected to boost 2020 and 2021 shipments for console-based accessories, following the release of new hardware. Much of the 2019 console-driven decline will be offset by a strong gaming PC market and a rapid uptick in demand for gaming on mobile.
The development and demand curves for mobile gaming are being driven by improvements in both hardware and mobile infrastructure, especially in emerging markets such as China. Futuresource expects the popularity of mobile gaming, helped by its convenience, cost and accessibility, to further increase over the forecast period out to 2023, and directly benefit the gaming headset market, while negatively impacting the gaming accessories that are used for stationary gaming.
Looking to the brands, the gaming headset market remains dominated by the big four, with Logitech, Razer, HyperX and Turtle Beach having a combined share of more than two thirds of global value in 2018. And while console-focused headset brands such as Turtle Beach benefited from the 2018 upsurge in demand, 2019 saw share decline, with HyperX among the strongest performers, achieving third place with a global value share of 17 per cent.