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e-Sports - New horizons forHong Kong and the world
Wilson ChowPwC Global and China/Hong KongTelecommunications, Media & Technology (TMT) Leader
www.pwchk.com
PwC 2August 2017
Agenda
1. Overview of global e-Sports market size and projection
2. Implications and opportunities for Hong Kong
3. Drivers of market growth
4. Business opportunities and challenges
5. Key takeaways
PwC
Overview of global e-Sports marketsize and projection
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• Broadband internet hasfacilitated fast growth
• Korea starts the e-Sportscompetition
China startedtelevision andbroadcasting
First e-Sportscompetition started:“Spacewar” held byStanford University
e-Sports andMusic Festival inHong Kong
e-Sports — History and developments
1972 1990 2000 2015
Nintendo WorldChampionshipheld in US
2011 2017
Start of “League ofLegends”internationalcompetition
4August 2017
2010
China startedfirst e-Sportscompetition
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e-Sports market size and projection (in million)
Global e-Sports industry will accelerate from roughly US$327 million in revenue in 2016 to US$874 million by 2021, a21.8% growth. Top 5 countries — USA, South Korea, China, Germany and UK.
Germany: 19.4% CAGR (2021: US$77mn)
UK: 32.1% CAGR (2021: US$35mn)
South Korea: 13.9% CAGR (2021: US$195mn)
USA: 22.6% CAGR (2021: US$299mn)
China: 26.4% CAGR (2021: US$182mn)
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North America13%
Europe18%
Asia Pacific51%
Others18%
e-Sports size of viewers worldwide & market size in 2017
According to the estimates, a little over half of the world's frequent e-Sports viewers and enthusiasts can be found inAsia Pacific. In total, it is expected that there will be 191 million viewers globally.
China36% (US$77mn)
Japan3% (US$7mn)
South Korea60% (US$128mn)
Asia’s e-Sports market sizee-Sports size of viewers worldwide in 2017
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e-Sports size of viewers worldwide from 2016 to 2020
• 2016 - number of frequent e-Sports viewers and enthusiasts was 162 M. Occasional viewer number is 161 M
• 2020 – number of frequent viewers projected to be 286M; occasional viewers is 303M. A total of nearly 590M!
• 5-year CAGR at 12.8%
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Frequent viewers Occasional viewers
CAGR: 12.8%
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Implications and opportunities forHong Kong
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China and Hong Kong video game market
• 2016: China’s video games revenue of China - US$15.4 B
• 2021: Reach US$26.2 B at CAGR of 11.2%
• China: Second-largest market after US
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Hong Kong: 6.6% CAGR
China: 11.2% CAGR
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Hong Kong video game market
• 2016: Revenue at US$742 M
• Segment in the entertainment and media sector showing faster growth in next 5 years
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Social/causal games: 8.0% CAGR(2021: US$549mn)
Advertising: 10.4% CAGR(2021: US$15mn)
Traditional games: 4.9% CAGR(2021: US$456mn)
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Newspaper: -2.6% CAGR
OOH: 4.0% CAGR
TV ads: 1.0% CAGR
Video games: 6.6% CAGR
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Drivers of market growth
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Key drivers of growth
Key growthdrivers
Popularityof videogames
Technologyfeasibility
Userbehaviour
shift
Enhanceduser
experiencePopularityof anime/
virtualcontents/IPs
Correlation/linkage with
popidols/KOLs
Social mediaplatforms
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e-Sports business opportunities andchallenges
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Hong Kong’s competitive advantages as an e-Sports hub
‘East meets West’ - global exhibitions and international sporting events
Favorable market factors (e.g. increasing mobile penetration, broadband access,gaming market & revenue, etc.)
Riding on high growth of Asia’s e-Sports market
Popularity of Social games which can be subject for e-Sports events
No censorship restrictions on foreign games
Government’s support
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e-Sports business incentives for domestic and foreign companies
• Admission fees / sponsorships /merchandises / TV rights / video games/ online and mobile advertising /product placements / IoT devices
• Content partnerships — live streaming /KOLs / music collaborators
• Alliances with sports & apparel firms /entertainment & media / telecomnetworks
• VR/AR applications as demand fordigital entertainment surges
• Crossover with other entertainment andmedia industries (e.g. live music andmovies) and other industries (Food andBeverage, Retail and Consumer, Gamingequipment)
Incentives fordomestic and foreign
companies Languageand
culturalease
Mainland China is theworld’s largest gaming
market (US$24.6bnin 2016)
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e-Sports challenges and competitive considerations
Lack of ready-to-convert venues for hosting large outdoor events
=> increase costs of event organisation1Competition from Mainland China and Korea, more mature marketplayers2Government support:
• Conversion of existing venues to be “e-Sports friendly” and “weather proof”(e.g. West Kowloon, Cyberport, Science Park, Kai Tak Sports Stadium, etc.)
• Funding to boost e-Sports as a tourist attraction; attract foreign investmentvia trade associations i.e. InvestHK, HKTDC, HK Tourism Board…etc.
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Key takeaways
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Key takeaways
18
1. Growing popularity of e-Sports is a reflection of the shift of consumer behaviourand shift of user experience-driven content
2. Technology enhances the feasibility of growth
3. Strong video game growth supports e-Sports growth
4. Multiple revenue streams and cross industry/sector participation
5. Success of e-Sports relies on public engagement which creates lucrative saleschannels
6. Mainland China can be an ally or keen competitor
Hong Kong has strong potential to become aformidable e-Sports hub in Asia and is ready to go!
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Let’s talk
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.© 2017 PricewaterhouseCoopers Limited. All rights reserved. PwC refers to the Hong Kong member firm, and may sometimes refer to thePwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
Wilson Chow
Global and China/Hong Kong
Telecommunications, Media & Technology Leader
Whatsapp: +852 6876 7701
WeChat: 138 231 67701
Email: [email protected]
19August 2017
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