Australia's gaming industry grows to $3.4 billion amid Covid-19

07 February 2021 Consultancy.com.au 4 min. read
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Across mobile gaming, consoles and e-sports, Australia’s gaming indutstry has thrived over the course of 2020 – owing to lockdowns and a growing reliance on digital entertainment. A new PwC study spells out the details. 

The gaming sector in Australia was drawing less than $3.2 billion in revenues in 2019 – a figure that jumped to $3.4 billion last year. The 6% plus jump year-on-year continues a longer term growth story in recent years, with a notable injection of momentum from the Covid-19 crisis.

Few businesses have benefitted from the lifestyle changes that emerged during lockdown and after. Gaming is among them, presenting a fun alternative to outdoor entertainment. A boom in revenues resulted – in a country that already places among the highest per capita spenders on video games globally according to PwC.

Total interactive games and esports market

Having enjoyed a bumper year, the question remains of whether the industry can sustain its moment in the sun. According to the researchers, this depends on several factors – most notably how the vaccine rollout pans out this year (which PwC is working on), and the knock-on effects on the economy as a whole.

The Big Four accounting and advisory firm lays out three scenarios. ‘Positive’ is the best case – where infections are contained this year, borders open consumer spending starts to climb. ‘Gradual’ is the midpoint – where the economic recovery will take between 18 months and two years, although the trajectory remains in an upward direction. ‘Negative’ is the worst case – vaccines are delayed, lockdowns persist and the economy stagnates.

Best case, Australia’s interactive gaming and esports market continues its boom, touching $6 billion by 2024. Worst case, it flattens out in and around the $4 billion mark. PwC expects the mid point to manifest, where a nearly 7% compound annual growth rate (CAGR) takes the industry to around $5 billion by 2024.

Projected mobile gaming revenue

As this trajectory unfolds, the winnings will sprinkle variably across different gaming segments. App-based gaming, for instance, held more than 30% of Australia’s gaming revenue inflows in 2019 – largest among the segments.

“Higher smartphone ownership, more capable devices, and better monetisation strategies have all contributed to greatly increased revenue from mobile games,” explained Laurence Dell – partner in PwC Australia’s Telecom, Media and technology (TMT) division. That being said, the era of booming mobile gaming revenues in Australia might be on the decline.

Mobile gaming

One reason is saturation in the smartphone market, while mobile gaming in itself has stagnated. “There is a sense that the mobile games market has begun to be over-reliant on a handful of mega-earners like Clash of Clans and Game of War, which have now been on the market for many years,” said Dell.

Online micro-transactions revenue

The only scope for growth in mobile gaming lies with in-game microtransactions. Per the report, revenue from such transactions is expected to jump by roughly $500 million in the lead up to 2024, racing past the $1.5 billion mark.

So the mobile gaming market seems set in its prospects for the foreseeable future. Less certain is the fate of console gaming – described by the report as the “cornerstone of the video games market in Australia.” The market was healthy going into last year, riding an incline in revenues from the Nintendo Switch launched in 2017.

Building on this, 2020 saw both Sony and Microsoft launch hardware upgrades. Sony launched the Playstation 5 – its first upgrade since 2013 – while Microsoft built on the 2017 Xbox One X launch with the Xbox Series X launch last year. Sales have been high as expected, and it remains to be seen how consoles will fare in the post-Covid market.

Projected esports market revenue

Riding on console advancement: a bright spot in Australia’s gaming sector last year was esports. “Covid-19 introduced new audiences to esports with the introduction of new esports events to satisfy Australians’ desire for sport content prior to the creation of player ‘bubbles,’” explained Dell.

“Adapting quickly to the situation, a number of sports were able to follow the lead of global brands such as FIFA, MotoGP, NASCAR and the NBA, by hosting esports events between players from rival teams and codes, streaming them online for audiences to watch.”

Esports is currently growing at a CAGR of over 11% – a strong performance when weighed against the broader gaming and media & entertainment industries. At the same time, other comparable global markets such as Mexico, Brazil and Spain appear to be clocking even higher esports growth, leaving Australia with some catching up to do. According to Dell, innovation in line with market trends will be key, not only for exports but for the gaming market as a whole.