$16 Billion annual revenues and growing at 32% CAGR - Let’s decode the Online Paid Competitive Games Industry.

Hello there, Leeds1888 family !

Here’s wishing you a Happy Easter in Advance.

As the long weekend kicks in I am back with my Friday weekly newsletter ! By the way, I hope you've got some fun plans lined up for the next few days, whether it's feasting on some lip smacking food, hunting for the Easter chocolate eggs or dominating the competition in your favourite online game.

Speaking of online games, my focus for this week will be on a particular category within the industry, namely Paid Competitive Games. Although mobile games make up a significant portion of the market - nearly $220 billion globally - I will be examining this segment in more detail.

The current Indian Premier League (IPL) and the flood of advertisements on social media and TV channels promoting online fantasy gaming - particularly cricket games - have piqued my interest in exploring this topic further. These companies are luring millions of users to their platforms by offering hundreds of thousands of dollars in daily prize money, enticing them to spend money and engage in gameplay.

It’s interesting to note that there are several formats operating under this paid competitive gaming industry. We often hear terms like Fantasy Gaming, Real-Money gaming and esports and I tried to understand how these terms are defined.

Fantasy Gaming- Fantasy games are online sports that allow users to create make-believe teams with genuine players from a specific sport. The player’s squad then participates in the fantasy sports, and the achievements of the players in the virtual world is dependent on their real-life performance. Now it’s a subject of debate whether Fantasy Gaming is more a game of skill or a game of chance, but this genre of paid games segment has seen an explosive growth with over 150 million active users in India alone. Dream- cricketing games fall in this category.

Real-money Gaming -Real-Money Gaming (RMG) as a category is a business model where the players play the game for money and stand a chance to win more money than they put into the game while game provider makes its revenue via a platform fee charging the user a flat commission basis the amount wagered by the user in that game. Online Poker, rummy etc fall in this category.

Esports- It refer to professional video game competitions played by individual or multiplayer gamers. Examples of games in this category include League of Legends and Counter-Strike.

In the recently held game developer conference in San Francisco, Newzoo and MPL release the Global Paid Competitive Gaming (PCG) Report 2023 and I am listing the key points below:-

The global online gaming industry is projected to cross $223 billion by 2024 and growing at a rate of 5% CAGR and the PCG games contributes to almost $16 billion to this kitty. However the most astonishing part is that this segment is growing at 32% CAGR which is almost six times faster than the online games industry.

Top 5 countries contributing to the PCG segment in the world

The top 5 countries currently contribute to almost 99% of the global revenues in the PCG segment.

Distribution of online paid games players by region

Factors fueling the growth of the PCG industry

The majority (80%) of participants in this market are below the age of 30, and the Covid-19 pandemic has been a significant catalyst in driving their transition towards online gaming. Nonetheless, the allure of the competitive nature, immersion, and the potential for earning rewards - typically in the form of prize money - has induced many players to shift from free-to-play games to paid competitive games (PCG).

Smartphones with faster processing speeds are becoming increasingly affordable, and the rollout of high-speed data networks, including 5G, has contributed to a seamless user experience, which has added to the overall growth of the PCG segment.

In developing nations like India, paid competitive games, particularly fantasy sports, offer children an opportunity to earn additional income independently, reducing their reliance on family for financial support. Additionally, it provides a worthwhile and acceptable way for them to engage in their leisure activities. Meanwhile, for the wider global population, such games are regarded as a means to leverage their esports expertise and generate supplementary earnings, which can be crucial during periods of economic uncertainty.

To conclude, it seems reasonable to suggest that the paid competitive games sector will continue to drive the growth of the online gaming industry unless it encounters regulatory challenges arising from the ongoing dispute over whether such games rely on skill or are simply a type of gambling.

Before I move to the next segment, I would like you to take a moment and share your feedback on the newsletter, and also share it with your network.

News in focus for the Media Industry

Singapore launches a $ 7.5 Million fund to boost films and TV production showcasing the city-state.

International media and entertainment firms that create worldwide content showcasing Singapore are eligible for the fund, which will be assessed based on a range of factors. These may include the project's market reach, content concept, potential to highlight Singapore's offerings and experiences, and the participation of local talent in credited positions.

That concludes this week's newsletter. Until next time, signing off.

Bye

Vipul