E-Sports: Hong Kong’s Next Growth Sector?

Hong Kong has strong potential to become a formidable e-Sports hub in Asia. Boosted by technology, the city’s total video games revenue for 2016 was US$742 million, which reflects the increasing importance of e-Sports in the entertainment and media sector, according to a new report released by PwC.

PwC defines e-sports as a form of competition facilitated by electronic systems, usually video games with human-computer interfaces.

The growing popularity of e-Sports in Hong Kong is a reflection of the shift of consumer behavior and shift of user experience-driven content – young generation favor entertainment in digital mode.

Multiple revenue streams

Multiple revenue streams and cross-industry/sector participation in the value chain attracts foreign and domestic companies to the gaming market, according to PwC.  

Success of e-Sports relies on public engagement. E-Sport competitions attract millions of users through live streaming sites; users with willingness to spend. This offers lucrative sales channels for sponsors, advertisers, video steaming platforms and investors.

Other revenue streams along the value chain include admission fees, merchandises, content partnerships, and alliances, among others.

Strategically located between Mainland China and Asia. Hong Kong has long been viewed as an ideal ‘East meets West’ location for global exhibitions, and hosting international sporting events. In fact, the city will hold its first ever “e-Sport and Music Festival” from August 4 to 6, 2017.

Hong Kong’s e-Sports challenges

While the opportunity is huge, Hong Kong faces several challenges. PwC notes that the lack of ready-to-convert venues for hosting large outdoor events, increases the cost of event organization. There is also competition from  more mature market players, namely Mainland China and Korea.

South Korea is the first Asian country which promotes e-sports at the international level.  Mainland China is the world’s largest gaming market generating US$24.6bn in 2016, ahead of the US at USD$24.1bn. Collaboration between China and Hong Kong can optimize the market share.

Broadband internet has been facilitating e-sport’s fast growth since 2000.

Global e-Sports industry will accelerate from roughly US$327 million in revenue in 2016 to US$874 million by 2021, a 21.8% growth. The top 5 countries are U.S., South Korea, China, Germany and UK.

According to estimates, a little over half of the world's frequent e-Sports viewers and enthusiasts can be found in Asia Pacific. In total, it is expected that there will be 191 million viewers globally.

In 2016, the number of frequent e-Sports viewers and enthusiasts amounted to 162 million. This number is projected to reach 286 million in 2020.

In 2016, total video games revenue of China was US$15.4 billion, and is forecast to grow at a CAGR of 11.2% to reach US$26.2bn in 2021, making China the second-largest video games market after the US. 


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