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Home » In-app Game Purchases Rise by 23.4% as US eSports Digital Ad Revenue Increases by 12%

In-app Game Purchases Rise by 23.4% as US eSports Digital Ad Revenue Increases by 12%

While sports leagues have suffered a blow from the pandemic, the eSports outlook has largely remained positive. However, the gaming revenue generation dynamics have changed. Overall, there has been a reduction in advertising spending, resulting in revenue from in-app purchases overtaking ad revenue.

According to the research data analyzed and published by Safe Betting Sites, the global eSports market revenue is expected to reach $973.9 million in 2020. That would be a 1.7% improvement over 2019 when the total industry revenue was $957.5 million. Comparatively, it had risen by 23% between 2018 and 2019, from $776.4 million. It is estimated that in the coming years, the eSports industry will grow rapidly to reach $1.598 billion in 2023.

From the expected total of $973.9 million in 2020, sponsorships, which include advertisements, are the dominant segment. According to eMarketer, the segment is projected to rake in $584.1 million, more than half of the total.

However, it is noteworthy that the sponsorship segment is only expected to grow by 7.5% year-over-year (YoY). On the other hand, digital revenue which only amounts to $21.5 million will grow at an estimated 60.9%. Streaming, which is expected to contribute $19.9 million, is projected to grow at 44.9%.

Narrowing down to eSports digital ad revenue in the US, the segment is expected to grow by 12% YoY in 2020. From a figure of $175 million, it is set to rise to $196 million. It grew at almost double that rate in 2018/2019. It soared 23%, going from $143 million to $175 million. Prior to that, in 2017/2018, it had grown at 39%. By 2021, however, it is expected to recover losses, growing at 15% to reach $225 million.

On the other hand, revenue from video ads in gaming content is expected to grow at a much higher rate in 2020. The segment consists of video ads that appear during eSports tournaments as well as from gamers who broadcast on streaming platforms. This space is expected to grow by 18% in 2020 to surpass $1.56 billion.

 

In-app Game Purchase Revenue Grows by 23.4% in H1 2020

Even though the pandemic has resulted in a reduction in advertiser spending, in-app purchases have continued growing. According to Sensor Tower, global app revenue from in-app purchases rose by 24.4% in H1 2020.

From $40.6 billion in the same period in 2019, the figure shot up to $50.1 billion in 2020. Of the total amount, games contributed $36.6 billion marking a 21.2% increase YoY. Interestingly, during the six-month period, there was a 15% increase in in-app purchase revenue, coinciding with an 11% drop in advertising revenue.

Hybrid monetization models that use a combination of ads and in-app purchases also reported a drop. According to data from AppsFlyer, there was an 8% drop YoY in the share of games using the model during Q2 2020.

Casual and mid-core games that retained the model reported a drop of 30% in the share of revenue coming from advertising. Overall though, ad revenue in hybrid games performed well, registering a 47% increase. However, during the same period, revenue from in-app purchases shot up by 130%.

It is interesting that the ad revenue contribution differs significantly from one game genre to the next. For instance, in casual games, interstitial advertising made the largest contribution of 53.82% according to a white paper published by SocialPeta and TopOn. Rewarded video came in second with 40.47%.

On the other hand, for mid-core games, rewarded videos contributed 73.46% while interstitial and banner ads accounted for 26.54%. Hardcore games had rewarded video contributing 99.78% of ad revenue as they do not consider banner and interstitial ads.

 

In-App Game Purchase Revenue Jumped by 24% in April

Mobile gaming revenue already surpassed revenue from PC and console titles and is set to top $100 billion in 2020 according to App Annie. This would be more than triple the combined revenue from Playstation 4, Nintendo Switch and Xbox One titles.

According to data published by Unity, a gaming tech provider, in-app purchase spending spiked 24% globally at the peak of the pandemic. At the same time though, the price publishers pay for ads to persuade new players to download their games fell by 33% between March and April 2020 (average cost per install).

According to SocialPeta and TopOn, mobile game advertisers around the world decreased significantly during H1 2020. The highest drop was recorded in Q1 2020 at -3.82%.

Coinciding with the decline in mobile advertisers was a drop in Effective Cost Per Mille (ECPM). Due to the dip in marketing campaigns, the eCPM for the average mobile game ad sank by nearly 20% between January 1 and the end of March 2020.

sherine10sj@yahoo.com'

About Nica San Juan

Nica is a BA Political Science graduate, startup founder and financial expert. She has an entrepreneurial spirit and started several startups from a young age, eventually becoming fascinated with stocks, cryptocurrencies and the blockchain economy. She specializes in financial tech and her expertise is in writing detailed tutorials and guides on how to invest in stocks and cryptocurrencies.