Pay to Play – eSports and Subscription Gaming

27 October 2020
Carrier Billing

While the eSports industry is enjoying a recent global surge in popularity, the concept itself is not new. Competitive gaming has been popular since the 1970s. Add high-speed internet and more powerful games consoles to the mix, and tournaments have become global events.

With live events paused due to COVID-19, sports federations, games publishers, and broadcasters hosted “global tournaments involving both professionals and celebrities to replace live sports and events”, streamed directly to social platforms including YouTube and Twitch to give fans their competitive fix. Some were also broadcast to television networks, increasing the prominence of eSports on mainstream channels.

eSports Overview

eSports’ broad appeal is that it covers a variety of games – from Fortnite to Golf – across multiple gaming platforms, removing barriers to entry for many consumers:

  • 79% of eSports viewers are under 35 years old.
  • China currently generates 35% of the global total eSports revenue.
  • European eSports audiences were expected to grow to 92 million in 2020 – up +7.4% from 2019.
  • eSports sponsorship, was estimated to generate $636.9 million in 2020, up from $543.5 million in 2019.
  • Football as an industry has been quick to react to the professionalisation of eSports: “Manchester United’s Paul Pogba has joined Verdansk FC eSports team to play Call of Duty. Signing a high profile sportsman has continually leveraged the popularity of existing stars to bring eSports to a new audience.”

Mobile eSports

  • Mobile eSports games increased by 27.5% in 2019, generating $19.5 billion in revenue.
  • Emerging markets in Southeast Asia are at the forefront of growth of mobile eSports. As a whole, the region experienced a CAGR of 24% in 2019.
  • Smartphone users are set to reach 4.1 billion worldwide by 2023 – “increased smartphone penetration and a growing mobile market = more player engagement.”
  •  43% of active smartphones will be 5G-ready by 2023 – The global mobile market is on track for substantial growth and game-related engagement.
  • Increasing penetration of smartphones and rising mobile streamers are driving market growth. There were around 479 thousand active mobile streamers on Streamlabs in June 2019 – an increase from 150 thousand in June 2018.
  • In Malaysia and Singapore mobile gaming has overtaken revenue generated from PC gaming, this can be attributed to the mobile eSports craze and support of telcos in the region.

eSports Trends

  • eSports audience and awareness numbers are increasing in emerging markets; Latin America, the Middle East and Africa, and Southeast Asia – due to urbanisation and advances in IT infrastructure – as well as the increasing popularity of mobile gaming and the “continued appeal of the first-person shooter, battle royale, and MOBA genres”.
  • Investing in eSports is wise as the average age of a traditional sports fan continues to rise. Among younger demographic groups “a prolonged shutdown for traditional sports leagues may drive more fans to eSports on a regular basis – which globally would represent tens of millions of new consumers for the industry”.
  • Younger generations have grown up with gaming or watching video game content: “weakening participation rates and interest in traditional sports among young children, who by and large tend to favour video games over sports” and further driving eSports growth.
  • Long term trend – “widening of monetisation avenues through subscription and free-to-play models.”
  • New game-distribution services from Apple, Google, Microsoft, NVIDIA, and Tencent have suggested that video-game distribution could move from the still-dominant à la carte model, toward ‘Netflix-style’ subscriptions.

Subscription Gaming

Xbox Game Pass service offers its 10 million subscribers most of its first-party titles as part of a subscription service when games become available at retail. Other companies are using a lower-investment, long-tail strategy – Sony PlayStation Now, (2.2 million subscribers as of April 2020) focuses on the back catalogue, whereas Apple has reportedly invested $500 million in small indie game content.

Some services are also offering “cross-device play and saving”, or the ability to stream a game from console to PC. Annual launch dates and console updates are major dates in the calendar for gamers – Xbox and PlayStation own their annual launch dates with “large-scale and big-budget product updates, accompanied by innovative marketing campaigns that tie in with eSports competitions.”

Subscription Gaming Opportunities

The ‘Subscription Services’ Model is expected to register significant revenue. Here’s why:

  • Microsoft has reported that subscription gamers increase play time by up to 40%.
  • Major companies rely on a fixed revenue from monthly subscriptions. With games Counter-Strike and Dota 2, the subscription model “provides much data to game developers, such as most used weapon choices, in-game choices, and game modes.”
  • Twitch’s strongest monetisation tool is its subscription feature. In 2018, YouTube also opened its sponsorships model, in exchange for exclusive perks such as; “ad-free streaming, chat features, special emotes, badges and access to archived and private streams.”
  • This growth is further supported by the rise in the digital payment user base. In 2018, Mastercard signed a multi-year partnership with Riot Games to become the exclusive global payment services partner for the game’s global eSports events.
  • Subscriptions provide a reliable path to monetisation for smaller, quality games that otherwise lack the marketing or budget needed to break into the mainstream.

eSports Subscriptions and Mobile Payments

With the explosive growth of streaming platforms Netflix and Disney+, eSports and video games may be an obvious adjacent category to follow suit with digital subscriptions. This entertainment sector is booming in its own right after all, with a massive, fiercely devoted audience.

Other opportunities such as eSports betting, live gaming and ‘Let’s play’ content, as well as ‘sliced and diced content’ (sports clips and classics like ‘best goals’) may also drive engagement and extra revenues. And as continued advancements in mobile eSports and gaming take hold, carrier billing could be the perfect fit for driving mobile payments.

Talk to SLA Digital today to find out more about our simple and convenient carrier billing solutions for your gaming, eSports and subscription services.

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