24 Mar The Games Sector: It’s Huge, and Growing
The Games sector has been around for decades. During that time, it has evolved with technology advances and grown explosively. That trend has accelerated in recent years, and will continue in the coming decade (and beyond).
The sector is very broad, and comprises everything from stand-alone videos games on platforms to Esports events played by professional gamers/teams and streamed to large audiences. It also includes digital sports/sports tech, which uses technology and platforms to engage with people using wearables/sensors for sport and fitness activities, in addition to being an important and growing component of the education technology (EdTech) space.
Taken in aggregate, the Games sector is massive. In 2020, the combined revenue from Games/Esports/Dsports was bigger than the music industries and Hollywood combined, making the sector the biggest in the media universe. And, whilst this in itself is an impressive statistic, the growth trajectory is where the most exciting trend can be found.
In 2020, digital video games saw 20% growth year-on-year. For Dsports, that figure was 31%, and for Esports, growth was at 40%. And, in terms of end-users, the trend has been longstanding and durable. In 1995, there were 100 million gamers globally. By 2019, that figure had jumped to 3 billion. This growth trend will continue strongly in the 2020s.
In contrast with the more traditional media sectors (such as music, Hollywood, traditional television), technological innovation is a catalyst for superior growth in the Games sector. In the case of TV, for example, there has been a decline of 4% in the previous three years, with a forecast for stagnation in the coming years.
It cannot be overstated how much technology is a key element for the continued growth in Games. With the inception of smartphones in the late 2000s, growth exploded and continued gaining momentum through the 2010s. In the current decade, a confluence of technological advances — everything from the 5G rollout to increased smartphone penetration to greater adoption of wearables — will power the next phase of growth in the sector.
Generational change and trends also point to a bright future for Games. Roughly 60% of all Millennials prefer watching Games to Sports. About 80% of the Esports audience is under 35. And the appeal of the sector to Gen Z is powerful, especially as that generation wants to play and watch.
An analogy from the energy industry shared with us by our friends at Hiro Capital is perhaps the best way to capture the potential for gaming and its superiority over other media investments. Anybody would rather invest in clean energy than coal. The same is true in media — it is better to invest in a growing, future-focussed media sector than in stale, old-media companies.
The Games sector is already huge. In the 2020s, though, it will get even bigger.
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