When we think about inflation, as pretty much everyone does today, a question that probably doesn’t occupy our thoughts is “Will inflation kill the global video game market?” Yet as we reflect on how massive a market video games are, it’s definitely a question well worth considering.
Inflation could actually cause the video game industry to see a decline for the first time in at least seven years, as it forces people into hard choices about how they’re going to spend their money and what percentage of their income is truly disposable. To learn more about the prospects for the industry, I chatted with Mark Elfenbein, CEO of X1 esports and a true esports veteran, to talk about how inflation could impact the video games and esports markets and the post-pandemic prospects for Esports and Egaming.
Elfenbein doesn’t believe that inflation is going to kill the global video game market, but believes that 2022’s disappointing industry revenue, following years of 15%+ growth, is understandable:
“What is important to consider is that the video game industry was one of the greatest beneficiaries of the pandemic as people staying home took to video games across all age demographics. Currently, it's estimated that over 3B people globally play video games. As such, considering we are coming out of a pandemic and tying in inflation in the market, the video game industry is faring far better than most other industries.”
The numbers support his argument. In 2019 global video game industry revenues were estimated to be $120B, a figure that’s almost unbelievable to people who aren’t in the industry or don’t regularly game. Having 2021 and 2022 industry numbers in the $180-109B range are certainly respectable given the pandemic:
“To put all of this in perspective, the comparable numbers should be 2019, the most recent pre-pandemic year, as it’s not really fair to compartment numbers off an inflated pandemic baseline,” Elfenbein argues.
All of this isn’t just about gaming. Massive streaming networks such as Twitch have been booming since the pandemic, with over 130 million users. I’ve personally noticed the impact of Twitch, as some of the sports and legal commentaries I do on ESPN radio have a live and engaged Twitch following. I had no idea until talking with Elfenbein that there are over 100,000 concurrent content streams on Twitch.
All of this together explains why Elfenbein suggests that by 2025, annual global video games revenues could hit “somewhere north of $275B,” more than double the pre-pandemic baseline year. Along with that general video game wave, Esports and Egaming revenues are also set to boom:
“2024 revenues are projected to increase by 50% from 2021 estimated revenues. Sponsorships are the primary source of revenue in the Esports category with more Fortune 500 companies turning to this area to reach Gen Z users,” Elfenbein adds.
A huge part of what’s driving all of this is an enhanced post-pandemic creator economy. As Elfenbein told me, these armies of Twitch and TikTok content creators “is now a tremendous catalyst for Egaming growth as over 50M people globally now consider themselves professional content creators with a vast percentage of those specifically building content around video games.”
All of this new content being used and created by such a massive audience also has a legal dimension. Jonathan Marshall, a New Jersey lawyer, reminds us that with all of this net new revenue comes some inevitable legal hazards:
"With so much new content being produced by content creators, it's inevitable that there will be legal disputes about ownership, especially where the content in issue generates significant recurring revenue."
That’s just part of the reality of a growing pie - everyone seems to want a piece of it and sometimes they aren’t willing to play by the rules to get in the game.
Given that inflation hasn’t put the brakes on the global video game market, the future looks bright for both creators and fans around the world who look forward to the next great release.
About Aron Solomon
A Pulitzer Prize-nominated writer, Aron Solomon, JD, is the Chief Legal Analyst for Esquire Digital and 24-7 Abogados. He has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world. Aron has been featured in Forbes, CBS News, CNBC, USA Today, ESPN, TechCrunch, The Hill, BuzzFeed, Fortune, Venture Beat, The Independent, Fortune China, Yahoo!, ABA Journal, Law.com, The Boston Globe, NewsBreak, and many other leading publications.