Reports This Month
One Big Thing
Gaming seems to be taking over sports funding – in a big way. According to data from the Insights Deal Tracker, we have tracked $90.8 billion worth of eSports and gaming-related deals since June. The $90.8 billion figure represents almost 80% of the total deal volume, clear leader.
It is important to note that the $69 billion acquisition of Activision Blizzard by Microsoft is an outlier in the data. Even when excluded from the totals, eSports and gaming have led the pack in terms of deal volume and total dollars spent.
This year should be a meaningful year of growth for gaming. Throughout the pandemic, gaming studios were operating at significantly less than full capacity, with a number of high profile games that were ultimately left off the release pipeline. Consensus in the industry is that 2022 will, for the most part, see a correction in this trend.
In any case, the total market size for the gaming industry is currently estimated at $177.8 billion and expected to grow 8.6% annually to $405.7 billion through 2030 according to research from Market Research Future.
By my estimates, particularly with the introduction of more blockchain applications, these estimates may soon be considered conservative.
Three specific areas to watch out for include:
Historically, Microsoft has been the leader in gaming subscriptions with Xbox Game Pass, but this is set to change in 2022.
- Nintendo is reportedly increasing investment in its Switch online subscription with new perks and features
- Sony is rumored to be launching its own Game Pass competitor, including a tier that could potentially bundle Playstation Now and retro games
- Apple’s Arcade service has continued to grow as part of apples services business
- EA and Ubisoft both offer their respective (but often limited) versions of gamepass which are currently limited but there are plans for expansion
The recurring revenue model is too lucrative not to capitalize on, and corporate titans within the industry are bought in on investing in the business model.
Virtual goods, such as skins, in a variety of mainstream games are the main assets that have been created for utility. Prominent gaming companies such as EA and Square Enix have made massive investments in blockchain technology with NFTs being one of their growth strategies.
In 2021, the total market cap for NFTs jumped from $55 million to more than $7 billion, according to NFTGO.io with 90% of that growth coming within the last four months of the year.
Furthermore, OpenSea, the largest NFT marketplace, has become a significant player in gaming. In 2021 Opensea reported around $10 billion in total all-time sales. This was due to a $3.4 billion transaction volume during August. A key trend driving growth? GameFi. The gaming application is becoming an increasingly important part of OpenSea’s business model.
While the OpenSea numbers are impressive, standalone blockchain-based games provide the most compelling use case. Axie Infinity, an NFT-focused video game developed on the Ethereum network, crossed $1 billion in total trade volume in August 2021, perhaps the most prominent 30-day period in the history of NFTs.
While 2021 was a year of stagnation in many respects, 2022 should prove to be a year that sees growth across a variety of sectors. Even without blockchain gaming, there is enough momentum around subscription gaming, AR/VR models, and new IP to see the industry flourish.