Note: This is a guest post by Carter Rogers, Insights Team Manager at SuperData Research. SuperData Research is the world’s leading provider of market intelligence. Through proprietary data partnerships SuperData collects point-of-sale and event data from publishers, developers, and payment service providers. This allows it to base analyses on the monthly spending of over 160 million unique, paying digital gamers, worldwide.
The concept of watching others play video games is no longer confined to the periphery of quirky internet behavior. Amazon put game livestreaming on the map when it acquired game livestreaming site Twitch for $970M in 2014. Gaming video content (GVC), which refers to online videos and live streams related to all things gaming, has only grown from there.
In March 2018, streamer Tyler “Ninja” Blevins and rapper Drake made headlines when they exceeded 600K concurrent viewers on Twitch while playing Fortnite: Battle Royale. While the market for GVC continues to grow (up 9% from last year), platforms, broadcasters, and related businesses cannot rest on their laurels and assume the growth of the games industry itself will continue to propel GVC forward. Instead, platforms and content creators need to improve their monetization of a growing audience that is spending a significant number of their leisure hours watching other people play.
GVC already has a massive footprint. This year, it is on track to earn $4.6B in revenue while attracting 843M viewers. Ads and sponsorships are set to make up roughly two thirds of GVC revenue this year while consumer spending on subscriptions and donations to content creators makes up the rest. What’s impressive is that GVC viewers will pay well over $1.0B to content creators this year not because they have to, but because they want to. Voluntary spending may have benefits like an on-air shoutout or access to special chat “emotes” but the core content is generally available for free.
Viewer donations to creators are the lifeblood of the GVC industry and companies that facilitate these payments stand to benefit. Donations and subscriptions are a viable monetization model for a huge variety of content because streamers can “microtarget” an audience that pays them directly instead of relying solely on ad revenue. They also don’t need to attract a gargantuan audience to make a decent living since their income will come from individual donors. What’s more, viewers are likely to show their appreciation for content that seems to be tailored specifically for them. Globally, 58% of livestream viewers (among those who are also game consumers) regularly donate or pay for subscriptions to content creators.
Viewers in mature markets like North America and Western Europe don’t mind spending a part of their disposable income to support their favorite live streamers, unlike those in emerging markets. That doesn’t mean it’s going to stay this way: From 2017 to 2020, GVC viewership numbers will grow by 16% in North America and 17% in Europe. In contrast, viewership in Asia and Latin America will grow by 23% and 26%, respectively, during the same period. It’s not hard to imagine a shift in consumer behavior once these markets have their own local GVC celebrities.
As GVC expands into new markets, video platforms and third party donation portals will need to look beyond incumbent payment methods like traditional eWallets and credit cards. Limited payment infrastructure already stunts the growth of digital games in many emerging markets. For example, in South Africa, 28% of game consumers regularly are unable to pay with their preferred payment method. In contrast, only 7% of consumers in the US face this issue.
The next wave of superstar streamers from emerging markets will favor the video platforms and donation platforms that make it easy for their fans to contribute small amounts to show their appreciation. Businesses that make payments as accessible as possible will be poised to reap rewards as GVC expands.