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Home > Coronavirus > Video gaming and esports, already growing in the U.S., see major lift during pandemic

Video gaming and esports, already growing in the U.S., see major lift during pandemic

Jun. 8, 2020 by Victor Kao

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A rise in video gaming since pandemic shelter-in-place orders went into effect could be the wave the esports industry has been looking for to become a more widespread trend in the United States.

Until more recently, the growing popularity of esports had been most dramatic in Asian countries. The trend is now spreading more in Europe and North America. Even prior to COVID-19, video gaming and esports were on the rise; consumer spending in the industry as a percentage of total entertainment spending in the United States increased steadily between 2012 and 2019, according to Bloomberg.

Verizon’s daily video game traffic has more than doubled since Americans began sheltering in place, according to Verizon data from early April, and that video game traffic increased more than video and web browsing. Week over week, Verizon’s gaming traffic continued to grow, according to data from the company later in April.

The esports industry was already growing before the pandemic, exceeding $1 billion in revenue in 2019 with year-over-year growth of 15.7%, according to market data from gaming and esports analytics company Newzoo. Just Fortnite and Dota alone, two popular online games, accumulated more than $35 million in competition prize pools last year. Such lucrative payouts have attracted more gamers to enter the world of competitive video gaming, and the audience eager to watch through streaming platforms is getting bigger as well. As audiences grow, ad revenue and sponsorships follow.

And money is far from the only driver increasing gaming. Live sports have largely been halted because of the pandemic, so gamers and even professional athletes have turned to video game sports such as NBA2K20, Madden NFL 20 and MLB The Show 20 in the meantime. In April, professional NBA players participated in a video game tournament, which aired on ESPN.

More acquisitions expected

With the popularity and increase in valuation of video gaming and esports, analysts expect the industry to attract more private equity, venture capital funding and targeted acquisitions in the near term.

Social and mobile gaming company Zynga – which owns FarmVille and Words with Friends, among others – made waves in early June with the news that it will acquire Istanbul-based Peak Games for $1.8 billion. The deal represents the first billion-dollar-plus exit for a startup out of Turkey, according to news site TechCrunch.

Within the gaming industry, mobile gaming is expected to be the fastest growing segment overall through 2023, according to Newzoo. Mobile game revenue in 2020 is expected to account for nearly half of the $160 billion in global gaming industry revenue, Newzoo data shows.

Also, large video game companies such as Tencent, Activision Blizzard, Sony, Nintendo and Electronic Arts are in a prime position to capitalize on the growing popularity of esports. Hardware sales from Sony and Nintendo are expected to rise significantly during this economic crisis, much like they did during the Great Recession.

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Filed Under: Coronavirus, Tech, Media and Telecom Tagged With: coronavirus, Covid-19, gaming, sports, technology

About Victor Kao

@victorkao4

Victor provides a unique blend of accounting, operations, and IT subject matter expertise, and leads a wide spectrum of projects including internal audit, Sarbanes-Oxley compliance, systems organization controls readiness and attestation, business process improvement, and information technology assessment services. Prior to joining RSM, Victor served in senior management roles in a variety of industries, including consumer products, food and beverage, technology, banking, and financial services. Currently, Victor’s core industry and subject matter expertise lies within technology.

Victor has substantial IT risk advisory experience leading and coordinating ERP software selections and implementations, IT general controls review, segregation of duties analysis, cybersecurity, and system and organization controls readiness and attestation. In 2018, Victor was selected as a senior analyst in RSM’s cutting edge Industry Eminence Program, which positions participants to understand, forecast and communicate economic, business and technology trends shaping the industries RSM serves. These senior analysts advise clients on conditions impacting middle market leaders.

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