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by Klaus Schachinger, Euro on Sunday
Demons, monsters and knights fight in virtual worlds, a mix of fantasy from the Middle Ages and Tolkien’s epic “Lord of the Rings”. The world of “League of Legends” is particularly in demand among fans of computer games in the present plagued by Corona. Around 43 percent of gamers on PCs worldwide played the mega-seller developed by Tencent’s subsidiary Riot Games in March. At the top, “League of Legends” has up to eight million gamers online at the same time worldwide. The title of the French computer games company Ubisoft “Tom Clancy’s Rainbow Six: Siege”, inspired by novels by the espionage bestselling author Tom Clancy, came in at just under 20 percent on the list of coveted PC games, a bit off, in second place.
Solid growth, robust condition
Because of the worldwide restricted social contacts, the business with computer games gets even better. It’s a market in which nearly $ 149 billion was turned in 2019. The experts from the US market researcher Newzoo estimate the annual growth between 2018 and 2022 to be over eight percent each. In China and the U.S., almost half of global revenue was grossed at $ 37 billion and $ 36 billion in 2019, respectively. Titles on smartphones are particularly popular in populous Asia. This is probably why almost 46 percent of global gaming revenue is brought in via mobile phone. Consoles from Sony (Playstation), Microsoft (Xbox) and Nintendo (Switch) run 30 percent of global sales.
The industry’s robust condition pays off for investors. While Wall Street’s broad S&P 500 index and the Nasdaq 100, the price barometer of the largest tech stocks, have lost 17 and 10 percent since the turmoil on February 20, gaming leader Tencent was able to maintain its market value. The shares of the US competitors Activision Blizzard and Electronic Arts even rose.
After all, the prospects for the industry are good. Even people who previously ignored cell phones and computers for games are now discovering new opportunities. On the list of frequently loaded programs for Apple’s iPhones, the card game Uno advanced from place 49 to place 5 in March.
The title ranking on the online gaming platform Twitch shows what professional players are looking for. The big favorites on the most popular platform for gamers are strategy games in fantasy worlds or in the war against terrorists and enemy armies. Such as Activision Blizzard’s “Call of Duty”: According to Newzoo, it was played more than 96 million hours online worldwide in March. This includes the online times of those who were active or were watching the game. With this record time, the first-person shooter game made up 15 ranks and came second in the Twitch statistics behind “League of Legends”. The number 1 clocked 123 million hours.
Global billion dollar e-sports business
Amazon’s Twitch, like the video platform of the alphabet subsidiary Google, Youtube, is also a popular arena for e-sports. This means professionally organized national, regional and global video game tournaments for gamers and teams. Like in sports, millions of fans are thrilled online. The finals take place in large halls with similarly spectacular shows like rock concerts.
For “League of Legends” tournaments are organized in America, Europe and Asia. In 2019 the World Cup was played in Berlin, Madrid and Paris. At the final in France, the hall was sold out with more than 20,000 spectators. More than 44 million fans tuned in online during the World Cup tournaments. The teams are playing for several million dollars in prize money.
Similar professionally organized e-sports There are also other games, such as “FIFA”, the realistic football simulation from Electronic Arts. Worldwide, E-Sport 2019 generated a little more than $ 990 million. According to Newzoo estimates, the current year is expected to exceed $ 1.1 billion.
The sponsors of e-sports provide the lion’s share of the proceeds with 56 percent. However, because public tournaments are likely to be canceled due to Corona, the growth of the industry depends on the steadfastness of the sponsors. A move of the events into the online world could, under certain circumstances, be even better received by fans and thus also by donors than, for example, ghost games in football.
The two game developers Tencent and Activision Blizzard, both also strong in e-sports, have permanent positions in the top ten in the industry. The tech giants Sony with the Playstation and Microsoft with the XBox are also at the top thanks to the popularity of their consoles. Apple and the alphabet subsidiary Google are also at the top thanks to their dominant mobile phone operating systems and numerous game apps. The expansion of the gaming industry into the cloud expected by experts in the medium term offers the two companies additional potential.
The kick for shareholders
Electronic Arts (EA) is measured at eye-level with Activision Blizzard. From their popular soccer simulation “FIFA”, the Californians have developed the “FIFA Ultimate” version suitable for esports. Gamers can put their team together for tournaments. EA has a similar portfolio for America’s professional sports, i.e. football (NFL), basketball (NBA) and ice hockey (NHL). Every season there is an updated version with all teams, players and individual skills of the stars in real sports.
At EA, online sales provide a good two thirds of the revenue. In the current environment with canceled sporting events in Europe and the United States, Bloomberg Intelligence analysts expect up to a fifth more revenue from live services in the fiscal year that started in April, for a total of $ 1.5 billion. The stock has just been upgraded by analysts on Wall Street.
Games plus social web
The broad-based Chinese technology group, which operates the popular social web app WeChat in China with almost 1.2 billion active users, is the global number 1 of game developers. Games and WeChat deliver a lot of thrust in the corona environment. For 2020 and 2021, analysts expect earnings growth of 20 percent each. The quarterly balance sheet comes on May 13th.
15 million users in the first three days – “Warzone”, the multiplayer version of “Call of Duty”, got off to a better start than “Fortnite” from Epic Games. The competitor had long unsettled the grades in business in multiplayer mode. When Activison Blizzard released its quarterly balance sheet on May 6, Warzone could have delivered up to $ 200 million in sales. A version for mobile devices brings imagination.
Gamers put their teams together in the ultimate versions of the football game software “FIFA” and for all leagues in US professional sports. Electronic arts should therefore give corona-related cancellations of sporting events additional impetus in the business. In the current business year (until March 2021), analysts expect up to a fifth more sales in the largest area of online games, which also include versions of “Star Wars”.
More news about Sony Corp.
Image sources: Sascha Schuermann / Getty Images