German Esports Market Overview
Germany is the most populous state in the European Union, and among the richest in the world. The population is well-educated and expanding. This, combined with high acceptance of technology and the Internet, means that Esports and gaming in general have plenty of opportunity in Germany.
In fact, Germany is one of the biggest and most important markets for gaming and hardware (source). According to Newzoo data, the gaming market in Germany is worth US$ 4.1 billion, making it the fifth largest in the world and the largest in the European Union. Half of that amount comes from the console segment, while mobile gaming contributes with US$ 900 million. The share of PC gaming is a little larger, with US$ 1.1 billion. It is estimated that the revenues will grow by an average of 2 to 4 percent per year.
An astounding 88 percent of the population are Internet users – 72.4 million, to be precise. Of these 72 million, about 37 million are gamers, and 20 million spend money on games. This is a huge market, with average spending of $192 per year per gamer. Of those 20 million, about 3.5 million can be considered Esports enthusiasts, meaning they have participated in or watched an Esports event. About 20 percent of online population is aware of Esports. Tablet adoption has been lackluster and most gamers spend their time in front of a computer, smartphone screen or a TV.
Curiously, nearly half of all German gamers are women (47 percent), and an average gamer is 35 years old (source). The German Games Industry Association reports that the average German gamer is 35 years old.
When it comes to popularity of consoles, the PlayStation 4 is the most popular, selling about 1.3 million units in 2015. Console market dominates the overall gaming revenues, with half of total revenue ($2bn) coming from console sales, while PC and mobile each get about a quarter ($1bn) of the total. Most gaming still takes place on PCs (about a half).
Regarding the popularity of Esports themselves, the market is expected to grow at a CAGR of 27 percent. Deloitte estimates that the Esports market is currently worth about EUR 70 million (US$ 76 million), and expects it to grow to EUR 130 million by 2020. This includes advertising, sponsorships, merchandise, premium content and entrance fees, sans gambling.
Newzoo data also show that the ratio of paying to nonpaying gamers is the most favorable in the world. About 70 percent of all gamers pay for games, which is 5 percent more than in China, and 8 percent more than in the UK. When it comes to esports betting, it is smaller than the UK market, mainly due to huge popularity of betting in the UK (and Australia). Currently, the lack of regulation is very enticing, as a treaty between the German states had effectively collapsed and enabled unregulated access to the German market.
Germany is also home to plenty of video game studios producing both AAA titles and those serving budget and niche markets. Over 500 companies in Germany deal with development and marketing of games – such as Crytek, InnoGames, Gameforge and Deep Silver.
Germany is also host to many important international competitions that draw in millions of spectators. One example is the ESL One Dota 2 tournament, hosted by ESL, which itself is a Germany-based company. The ESL was founded at the beginning of the new millennium and is one of the oldest Esports leagues. It currently numbers some 6 million active players and 500 thousand clans.
Furthermore, Cologne is home to Gamescom, the largest video game trade fair in the world, featuring hundreds of exhibitors and over 300 thousand visitors each year. Some ESL events have been hosted there as well (ESL Cologne, a CS:GO tournament with audience of 22 thousand). Riot Games, the company behind League of Legends, have opened an office in Berlin to host the European Championships there.
Overall, the German Esports market has plenty of opportunity for growth. Segments with especially strong growth potential are VR gaming and Esports betting. There is high interest in VR among the game development companies in Germany, bolstered by the fact that one third of all Internet users intend to use such a device in the future. Several companies are presently active, including Crytek with plenty of titles already developed. Plenty of opportunity is awaiting in the field of Esports betting, with one large player, Unikrn, hatching plans to offer their betting services in Germany as well.
Good demographics, economic well-being and first-class gaming and Esports infrastructure all but guarantee strong revenue growth in gaming, and especially in Esports. Germany certainly is the market to watch.