Investors are game for the UK’s gaming industry.
And why not?
Last year, the global gaming market was valued at a staggering £114 billion. In the next 5 years, the figure is expected to increase almost two-fold!
In that extraordinarily flourishing market, the UK ranks just below China, the US, Japan, and Germany in bringing in the most money. Last year, its market was valued at a record-high of nearly £5 billion, a figure soon expected to cross £7 billion.
While gaming giants like China, Japan, and the US are also innovating at breakneck speed, it is the UK — London, to be precise — that is considered the unicorn hub of the world when it comes to gaming. In other words, London houses the majority of gaming startups that are expected to be valued at more than £1 billion.
As a result, London’s gaming scene has become one of the largest, most promising, in Europe. Already, the sector is amongst Europe’s — and surely, one of the world’s — top destinations for Foreign Domestic Investment, with venture capitalists from the US having donated more than $4.2 billion over the last 5 years.
In short, the UK’s gaming sector is taking centre stage across investment and market research worldwide.
But what does market research tell us about what is driving that outrageous growth? While there are several factors, the primary, most influential factor behind such a dramatic change is a dramatic event: the pandemic.
Let’s take a look.
Cloud gaming is here to stay
The first week after the UK underwent a nationwide lockdown in March, 2020, video game engagement went up by nearly 45%. It is not hard to figure out that gaming, like the use of OTT platforms, was integral to quarantined, stay-at-home entertainment.
While one might expect spending to go down, in truth, it went up. Quite significantly. Hardware costs increased by 60% — another record — crossing the £2 billion mark. This includes consoles, the use of which increased by 24% (£1.7 billion). And graphic cards, gaming mice, and other accessories that complement the PC, the use of which increased by 14% (£669 million).
And all this could not have been possible without tremendous advances in cloud computing infrastructure.
The internet is not just fast, it is also cheap. It has never been easier to store, save, or stream games online. And the trend is expected to dominate the UK’s gaming market for a long, long time.
Already, the world’s biggest gaming companies, like Sega, and its most promising commercial cloud computing companies, like Onlive, are forming lucrative alliances. Last year, Nvidia added 19 games to its online gaming library, and is expected to add many more in the coming years.
Most aspects we thought fundamental to our lives have now transitioned to online: friendship, work, and now, play. Investors can no longer dismiss the online gaming market as something fringe or niche. In 2021, and beyond, it is serious. And it is here to stay.
The rise of eSports
The rise in online gaming goes hand in hand with the rise in eSports. If online gaming is serious and here to stay, so are eSports.
Just look at the trends.
Last year, in line with online gaming, the global eSports market earned more than a billion pounds in revenue. And while South Korea and the US might be industry leaders today, the UK is not far behind.
Online multiplayer games such as Fortnite, Counterstrike, and Dota 2 are immensely popular in the country. And just like regular sports, people don’t just enjoy playing eSports, they also enjoy watching other people play.
For casual streamers, Twitch has been the go-to for watching not just their favourite players, but internet celebrities and influencers, play their favourite games.
For hardcore fans, there are entire tournaments. The winning prize? In Fortnite’s case, more than £30 million! The mammoth prize money is an indicator of how highly valued is the global gaming industry is. And especially, eSports.
It is worth reasserting that the eSports industry, like the online gaming industry, might not be a niche, but a full-blown market.
Investors take note.
Don’t underestimate mobile gaming
What is a niche but very much on its way to perhaps become a full-blown market is the mobile gaming industry.
Believe it or not, the mobile gaming industry even trumped the PC, last year. While the PC grew by 14%, making £669 million, the mobile gaming market shot up by 21%, making £1.5 billion! Of course, the numbers are outrageous because the industry is small. But there is no denying its meteoric growth.
Several factors are driving that growth. The pandemic and the resulting boredom. Then, like cloud computing, mobile phones also have undergone tremendous advances, which have made them more capable of delivering graphic performance than ever. In fact, manufacturers are now designing gaming phones — dedicated mobile technology for a single purpose, targeting a single slice of customers.
Other than cloud software and infrastructure, we have also made innovations in Virtual Reality (VR) and Augmented Reality (AR) technologies. Then, there is 5G, offering super-high data download and upload speeds, allowing gamers to play online anywhere they like. In a world so fast-paced, the on-the-go is what we want.
All these factors conspire to make the mobile gaming market a serious competitor to the PC and console gaming market.
We might be in for a disruption. Investors take note.
