China on track to overtake South Korea as No 2 video games market by 2021, says PwC
Within five years China will surpass South Korea to become the second largest video games market in the world with revenue of more than US$26 billion, according to a study by consulting firm PwC.
Total video games revenue in mainland China reached US$15.4 billion last year and will grow at an annual rate of 11.2 per cent to a forecasted US$26.2 billion in 2021, making the country the second-largest market after the US, PwC said on Tuesday.
Cecilia Yau, entertainment and media leader at PwC, said the study examined multiple revenue streams in the sector, ranging from game sales and sponsorship to revenues in streaming.
“Video games revenue started to take off in mainland China around 2015,” she said, “Social and casual games serve as a major boost to growth.”
The report was published in the run-up to Hong Kong’s first ever e-Sport and Music Festival, which will be held from August 4 to August 6.
Hong Kong is expected to see its revenues in the sector grow from US$742 million last year to US$1 billion by 2021, representing a compound annual growth rate of 6.6 per cent. The study shows revenues in video games will surpass those of the newspaper industry in the city by around 2018.
“The video game industry will be a key driver for Hong Kong’s economy in the future,” Yau said, noting that in the 2017-18 budget speech, the city’s financial secretary declared e-sports as a new sector with economic potential.
Yau said the Hong Kong video games sector is well-positioned for growth as the mobile games penetration rate has already reach over 84 per cent.
Wilson Chow, mainland China and Hong Kong TMT industry leader at PwC, was also bullish on the video games industry in Hong Kong. Highlighting the pending listing of Singapore-founded hardware design firm Razer in Hong Kong, he said video game companies are emerging as important players in Hong Kong as they ride the coattails of growth in the sector.
Chow noted that Hong Kong stock exchange plans to introduce a third board which will target technology or new-economy companies.
“This will be a huge opportunity for technology companies, especially those which are associated with games, to file for IPOs in Hong Kong,” he said.
Within the video games sector, the global e-sport industry alone is expected to grow from roughly US$327 million in revenue last year to US$874 million by 2021.
“Five out of the top 10 highest-paid e-sports player are Chinese. Hopefully, Hong Kong will soon see a player who can make that list,” Yau said.
In 2016, the number of frequent e-sports viewers and enthusiasts amounted to 162 million, the PwC report found. This number is projected to reach 286 million in 2020.