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The interactive games and esports market accounted for 5.9 percent of the total Australian entertainment and media market in 2020. By 2025, this share is expected to grow to 6.8 percent, making gaming one of the sectors with the highest rate of growth.
Total interactive games and esports revenue in Australia reached A$3.41 billion in 2020, and is expected to increase to A$4.9 billion in 2025. Based on the midpoint forecast scenario, the sector is set to grow at a healthy 7.5 percent CAGR between 2019 and 2025.
With more people choosing to play games on their smartphones as 4G speeds increase and core users switch to 5G, it is anticipated that mobile gaming will be an ongoing and major contributor to growth in this segment. High smartphone ownership and an increasingly sophisticated range of software offerings have transformed Australia into a mobile-first games market, with globally popular titles such as PlayerUnknown’s Battlegrounds (PUBG) Mobile, Among Us and Pokémon GO all significant earners in 2020.
In-game microtransactions continue to fuel growth, now accounting for almost a third of the total games and esports revenue in Australia. This is expected to continue on a growth trajectory over the forecast period, and will be a major contributor to growth, with a CAGR of 12.3 percent to 2025 based on the midpoint forecast scenario.
COVID-19 created an increase in gaming interest, both from new audiences and those Australians seeking an alternative form of entertainment, alleviating boredom and loneliness during lockdown.
Most screen-based media saw a spike in consumption during the pandemic, and gaming was no different. With major sporting events cancelled or postponed during 2020, interactive gaming and esports filled a void for consumers as a way to stay socially connected to their communities through competitive entertainment.
Despite the launches of digital-only versions of both XBox and PlayStation consoles in recent years, and whilst physical games consoles have been on a declining trend, the release of the PlayStation 5 console in November 2020 gave the market an uplift, resulting in a -7.1 percent CAGR for the physical games console market based on the midpoint forecast scenario. Despite a world-wide shortage of consoles, Sony achieved record sales in 20201, fueled by the pandemic lockdowns.
Australia’s total esports revenue was A$6 million in 2020, and this is set to grow to A$16 million by 2025. This growth reflects a 21.2 percent CAGR through the forecast period from 2019 - 2025, based on the midpoint forecast scenario. Whilst esports in Australia continues growing, it is at a slower rate compared to many markets of a similar size.
The Australian esports market faces a similar challenge to the UK, in that ready access to a thriving English-language scene in the US makes it more difficult to establish local activity. In 2020, the local office for Riot Games closed its doors, citing difficulties in maintaining a competitive esports team in this market.2 There is an opportunity for esports to turn the casual gamers and viewers into active participants and fans in order to grow the category. This will require a combination of broadening the appeal and accessibility of esports, as well as providing pathways for growth for those looking to take a more serious approach to their gaming experience.
The growing audience for people watching live streams of esports events can not be underestimated.
The market for gaming content, according to Adroit Market Research, is on track to be valued globally at $US79 billion (A$102 billion) by 2025.3 Twitch has now become a leader in entertainment platforms - on average, 93 billion minutes are watched per month across 26.5 million daily users. On a daily basis, Twitch users are spending an average of three hours on the platform, compared to Netflix users who only spend an average of two hours streaming per day.4
In May 2021 the Australian Government announced a 30 percent refundable tax offset for video game development, available from 1 July 2022.
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