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Gaming Exports Set to Surge as Russia Heads Europe's E-sport League

Russian e-sport sector to maintain double-digit growth even as Western Europe's interest looks set for imminent stall.

Photo: Warface: A firm favourite among Russia’s army of online gaming enthusiasts.
Warface: A firm favourite among Russia's army of online gaming enthusiasts.
Photo: Warface: A firm favourite among Russia’s army of online gaming enthusiasts.
Warface: A firm favourite among Russia's army of online gaming enthusiasts.

Russia is the largest e-sports market in Europe, with the country's online enthusiasts now spending US$38 million a year supporting and participating in their preferred pastime. In a survey of 20 European countries and the UAE, conducted by PayPal, the online payment platform, and SuperData, a New York-headquartered interactive gaming market-research specialist, Russia easily outstripped its two nearest rivals – Sweden ($31 million) and Denmark ($22 million).

The survey's valuations were based on the size of the audiences watching e-sport contests on Twitch or YouTube in each country. It also took into account a number of other factors, including ticket sales and the value of sponsorship deals.

This acknowledgement of the sheer size of the Russian market will chime well with two local businesses in particular – Mail.ru, the Moscow-based internet giant, and MTS, the country's largest provider of mobile-phone services. In the case of the former, Warface, the hugely popular online first-person shooter game, is already a group asset, as is ESforce, one of the world's largest e-sport businesses.

Just as Mail.ru was finalising its acquisition of ESforce in January this year, MTS announced a similar purchase with the news that a deal had been struck with the Gambit E-sports Club, the formerly UK-based e-sports team best-known for its success in the League of Legends Continental League, pretty much the e-sports premier division.

Even before the dust had settled on these deals, it became apparent that another of Russia's mega-corporations was keen to boost its own e-sport offer. This saw rumours circulate that Rostelecom, the state-owned telephony conglomerate, was close to a deal that would see it secure the services of the Moscow-based Vega Squadron, as well as access to its state-of-the-art gaming arena.

The thinking behind these big deals is not hard to fathom. In terms of population, Russia is by far the largest country in Europe, with young males in the 14-34 age group – the core audience for e-sports – disproportionately represented among its 145 million strong citizenry.

There is also the fact that widespread access to computers and high-speed internet connections reached Russia long after they had become commonplace in many of Europe's more developed nations, such as Germany or France. Inevitably, then, Russia's e-sports sector has far greater growth potential than the relatively saturated western European markets. At present, many industry analysts believe that, within Russia, the sector could maintain growth of well above 20% per annum for the foreseeable future.

This growth in the value of the sector also correlates with the expansion of its audience. In 2017, 3.7 million Russians watched e-sport tournaments. The figure is expected to rise to 4.1 million this year and to 4.9 million in 2019. There has also been a notable increase in the number of Russian women taking an interest in the sport – between 2015 and 2017, the share of female viewers rose to 16% from 13%, with that percentage expected to rise still further over the coming years.

At the same time, many in the industry believe that e-sport growth will notably decelerate in western Europe, a consequence of demographic shifts and declining purchasing power. By contrast, Russia's enthusiasm for new products and new technology related to the sector seems set to continue unabated.

In terms of the opportunities for Hong Kong businesses, inevitably demand is going to remain high for PCs, peripherals and gaming accessories. With the gaming community representing one of the more cosmopolitan strands of Russian society, it will also be possible to target end-users via English-language websites and promotions.

Given the tech-friendly proclivities of virtually all potential purchasers, e-commerce obviously represents the primary sales channel. Its use will be further facilitated by the fact that most orders will be relatively compact, while being inexpensive enough to fall below Russia's import tax threshold.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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