One of the most notable developments across games market operations has been the huge number of merger and acquisition deals, investments, and IPOs, including Roblox, Applovin, Krafton, and Unity. Most of these deals were closed or announced in the first half of 2021, profiting from a positive sentiment on the stock exchanges. “Still, the number and size of large-scale acquisition deals is unprecedented, with multiple acquisitions valued over one billion dollars,” says Michiel Buijsman, a Senior Market Analyst at Newzoo. “Acquisitions are coming from all corners: console platform holders expanding their first-party portfolios, mobile advertising firms acquiring game studios for vertical integration, AAA/AA publishers expanding to diversify geographically or by platform, and much more.” To name a few of these: Microsoft acquired ZeniMax to boost its content and Game Pass efforts. Mobile publishers acquired ad-tech companies to offset privacy challenges resulting from Apple’s ATT (e.g., Zynga acquired Chartboost). ByteDance’s acquisition of Moonton put the TikTok maker in the fast lane to becoming a major core mobile game publisher. Sony acquired some long-time partners to boost its games development (e.g., Bluepoint) and efficiency (e.g., Nixxes). Get even more great insights in the Newzoo Platform Looking for more games trends and data? Download free report Speaking of Sony and Microsoft, the companies respectively launched their PlayStation 5 and Xbox Series X|S at the end of 2020. Supply of the new consoles has been short and demand high ever since. Both companies’ consoles are selling better than their predecessors despite these supply constraints. Players on the new consoles even got a sneak peek at gaming’s future at the end of 2021, with an impressive playable demo of Unreal Engine 5 based in The Matrix universe. “The engine will officially launch in spring 2022, promising photo-realism and streamlined development tools that point to an exciting future for games,” said Julianne Harty, Newzoo’s Lead for the Global Games Market Report. “All signs point to Unreal 5 bridging the gap between assets in movies and assets in games, providing a key piece of the metaverse puzzle for brands.” Of course, one of the hottest games market topics in 2021 has been the metaverse, which includes: The continued success of virtual concerts in Fortnite and other games; Roblox’s IPO debut with a market cap of $40.6 billion; Facebook’s rebrand into Meta. But what exactly is the metaverse? And who are its biggest stakeholders and innovators? Download our free Intro to the Metaverse Report to find out. “Whether or not people agree with the metaverse-centric future that Meta, Roblox, and Epic Games are trying to build, one thing has become increasingly clearer over the last year: personal expression and identity have become vital for players,” says Mihai Vicol, one of our new Market Analysts specifically focused on emerging trends within gaming. “As the social activities of the relatively more tech-savvy younger generations tend to move online, virtual worlds are poised to become the social hubs of the next decade at the expense of traditional 2D social media platforms.” Many are pegging the metaverse as the future of entertainment. But gaming is also conquering more traditional forms of entertainment: movies, TV series, and Hollywood. “Gaming is to the 2020s entertainment what superheroes were to the 2010s,” says Julianne Harty. “The wild success of Arcane (Riot Games’ Netflix series based on the League of Legends universe) and season 2 of The Witcher (which takes visual cues from The Witcher games) highlight that games can inspire commercially and critically successful media beyond games. The future looks bright, with a The Last of Us series, Sonic movie sequel, and an Uncharted movie on the horizon.” Cloud Gaming and 5G in 2021 Of course, we couldn’t talk about 2021’s biggest games market developments without mentioning cloud gaming, where there’s been plenty of innovation and consumer uptake this year. In fact, the cloud gaming market generated more than twice as many revenues in 2021 than it did in 2020, and even more growth is coming: global_could_gaming_market_revenue_forecast_2021 ‘’The cloud gaming market is well-positioned to meet the strong growth that Newzoo predicts for next year and beyond,’’ says Market Consultant Guilherme Fernandes. ‘’Many consumers will search for alternative ways to play new releases, as gamers struggle to upgrade their hardware and new components will be hard to come by until late 2022 at least. Cloud gaming is a perfect solution for these players.’’ Discover more insights into cloud gaming from Guilherme and other Newzoo experts in this free cloud gaming report, which includes an infographic of the cloud gaming ecosystem. Cloud gaming is one of the biggest use cases of 5G. Luckily, more consumers are adopting 5G-ready devices: Newzoo_Global_Active_5G_Ready_Smartphone_Forecast In 2021, the global number of active smartphones reached 4.6 billion (+5.7% year on year), among which 15.4%, or 703.5 million, are 5G-ready. This represents an impressive year-on-year growth of +230.9% in the number of active 5G-ready smartphones worldwide. The past year in general has been an eventful one for the mobile market. “One of the most influential changes has been Apple’s App Tracking Transparency,” says Tianyi Gu, Newzoo’s Market Lead for Telecom & Mobile Services. “Key players in the mobile (gaming) ecosystem—including developers, publishers, ad tech firms, and app stores—all need to adapt to these new changes and the challenges they present.” “Yet, the mobile market has led some of the biggest and brightest evolutions in gaming, and we are confident that the mobile market will continue to thrive under the new privacy norm.” What else is happening in the mobile market? Download this free report to find out. 2021 Esports Market Highlights Gaming goes far beyond playing and social engagement. Viewership is also an essential part of the pastime. To that end, the esports and live-streaming markets have seen massive success in 2021. And there are more esports fans in 2021 than ever before: 465.1 million people watch esports (up +6.7% year on year). 235.5 million of these are occasional viewers (watch less once a month). The remaining 229.6 million are esports enthusiasts (once a month or more). Many of these fans—especially the enthusiasts—can’t wait to return to physical esports events after the market moving to digital-only during the pandemic. “The return to in-person events adds back one of the most thrilling factors for esports, the crowd arenas,” says Hugo Tristão, our Market Lead for Esports. “A live audience allows brands to connect to the fans more intimately, attracting more sponsorships; therefore, bringing more future revenue to the industry. Audiences have had a small taste of in-person events again this year, and they can’t wait for arena play to become the norm again.” The market’s strong engagement has trickled into revenues, which grew despite in-person events not fully returning. Esports will generate more than $1.0 billion this year, driven mainly through sponsorship revenues: esports_revenue_sreams_2021 Raising investments remains a vital part of the business model for teams and organizations. A milestone for esports was when FaZe Clan announced it would go public via SPAC at a $1 billion valuation, the first time an esports organization raised capital from the public market. Meanwhile, 100 Thieves raised $60 million in a Series C round. The company is now valued at $460 million. Looking to rely less on raising capital, esports organizations are looking to diversify their revenue streams. Many are doing this via blockchain tech. We’ve seen many teams and organizers diving into NFTs to monetize esports’ increasing engagement further. One recent example includes FaZe Clan partnering with MoonPay for NFTs and crypto. While the trajectory is unclear, NFTs may play a big part in esports’ future as teams continue to diversify their revenue streams. The technology is even more present within the metaverse: “As 3D avatars will likely serve as one’s digital identity into virtual worlds, an alternate economy is likely to emerge,” says Mihai.” Instead of serving consumers (D2C), businesses and individuals will primarily cater to digital avatars (D2A – Direct-to-Avatar).” Bringing things back to today, esports games are continuing to use smart strategies to grow their viewership numbers. A recent example includes Halo Infinite’s HCS. The base HCS prize pool will be $3 million but will be pushed further by crowdfunding (a small share of every Halo Infinite purchase will get added to the prize pool). What’s more, the game’s publisher, 343, allows streamers (more on them shortly) to co-stream esports events. 343 has also leveraged Twitch drops (rewards for fans who watch a HCS stream). Halo esports has enjoyed a huge resurgence due to these tactics and the successful release of Halo Infinite. Our esports data also shows that League of Legends and Free Fire amassed record-breaking viewership across their world championships, showcasing strong viewership for both longstanding esports titles and newer mobile ones. Game viewing, however, expands beyond professional competition. Looking at the general game-streaming audience numbers is even more impressive. Game Live-Streaming Engagement in 2021 We are quickly closing in on 1 billion people watching live-streamed gaming content. 2021 marked a landmark year for live streaming, which broke all viewership records set the year before. Again, 2020 was a particularly big year for streaming due to the pandemic. But the audience continued to grow, +12.7% year on year to 747 million people in 2021. games_live_streaming_audiece_growth_2021 Looking at each platform: Twitch generated 23.3 billion hours of live viewership so far in 2021, an all-time high for the platform. YouTube generated 4.5 billion hours so far in 2021. Facebook Gaming, which we started tracking in April 2021, generated 3.5 billion hours from then until now. One of the main takeaways from our 2021 live-streaming data and Consumer Insights is that many people who started watching streams during the early pandemic have stuck around. This helped the biggest platforms enjoy massive viewership boosts in 2021. But smaller platforms are also benefiting: “Some viewers are shifting from big, established platforms towards smaller alternatives,” says Luca Chiovato, a Market Analyst at Newzoo focusing on the live streaming market. “Often, these smaller platforms put a heavier emphasis on localization, pushed by brand injections and activations. These services are tailored around specific gaming experiences (e.g., mobile gaming) and are designed to work best on those devices.” Simply put, engagement is through the roof, and there is more competition in streaming than ever before, creating a better ecosystem for viewers and streamers alike. As Senior Market Analyst Jordan Fragen puts it, “The platform wars have reignited with a vengeance. YouTube is attracting many Twitch streamers, as Google’s platform requires fewer hours of streaming per month, giving creators a better work/life balance and more opportunities to build their brand outside of streaming.” In terms of hours watched, Twitch remains the clear market leader in the West and continues to innovate beyond games. Across the board, more creators have partnered with sports leagues and brands to bring even more users to Twitch. For example, Brazilian streamer Gaules partnered with the NBA to stream basketball games to his followers. And this is just the beginning. The coming months and years will bring even more innovation: “Going into the next year, we expect the engagement with live-streaming platforms to keep growing as creators and platforms continue to connect to and resonate with their communities. Weare excited to see in which new ways the market will take shape,” said Luca. Want to learn more about esports and streaming. Hugo, Jordan, and Luca are always working hard on our Global Esports Market & Live Streaming Report subscription, which some of the biggest brands and games companies are using to navigate both markets. What’s Next for Games and Esports? In the end, games, esports, and streaming had a great 2021. But the future’s even brighter. In 2024: The global games market will generate revenues of $218.8 billion. Mobile games alone will generate $116.4 billion via consumer spending. Cloud gaming will generate $6.5 billion. Esports will generate $1.6 billion. And engagement across all these sectors will continue to grow. But what about the trends powering the revenues and engagement?