Illustration: Felipe Mayerle
Technology

Amazon's Twitch faces other tech giants in the new billion-dollar game era

Trends such as live streaming, free mobile games and esports generate new business opportunities. Microsoft's Mixer, Facebook and YouTube are all eyeing a market worth $148.8 billion in revenues

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In August 2019, the American streamer Tyler “Ninja” Blevins announced that he was leaving Twitch, Amazon‘s game streaming platform that catapulted him to fame, to join Mixer, a rival service from Microsoft.

Blevins is the most famous streamer in the world and made his name playing mainly Fortnite, a “battle royale” style shooting game that already has 200 million registered players and has turned its developer, Epic Games, into one of the gravitational forces in the industry. Fortnite is free and can be played on powerful computers, consoles and even cell phones.

The importance given to Blevins’ transfer, as if he were a worldwide famous soccer player, brings together several trends, many of them already consolidated, that have shaken the lucrative video game market in recent years. In 2019, according to the game expert consultancy company Newzoom, this market registered $148.8 billion in revenues, more than the movie and music industry combined, and it should continue to grow according to projections. High-end games distributed free of charge, games for mobile phones, countless hours of live streaming of the moment’s hottest titles, and esports, competitions seen by millions of viewers and which distribute millionaire prizes, are taking the gaming industry to another level.

Infographics: Leticia Mulinari/LABS

In the 1990s, “playing video games” was a much more defined and restricted activity: it was enough to have a console, buy or rent cartridges and play alone or with friends in the same room. Today, there are more ways to have fun, and countless ways to make money with them. To enjoy one of the biggest one, live streaming, you don’t even have to play: just open one of the several sites that offer this service and watch other people, more skilled and/or charismatic than you, exploring virtual universes.

The time comparison was made by Alessandro Sassaroli, manager of gaming partnerships on YouTube for Latin America.

“We have been playing video games in Brazil since the 1970s. I think we are celebrating a moment that has been settling down for a long time.”

Alessandro Sassaroli, manager of gaming partnerships on YouTube for Latin America

Used to leading the markets where it operates, in live game streaming YouTube is the challenger. The industry leader is Twitch, purchased in August 2014 by Amazon for $ 970 million.

READ ALSO: The Free Fire phenomenon in Brazil

The other streaming war

If for many people the concept of watching another person play for hours still sounds weird, for streamers (as these new professionals are known), gaming has long become a serious business – as well as profitable. Blevins told CNN that he made $10 million in 2018. To get him out of Twitch, industry sources estimate that Microsoft will pay him between $20 million and $30 million a year. Few generate revenue at this level, but the number of streamers who dedicate themselves to this new market and actually get paid for the work of entertaining virtual audiences continues to grow.

YouTube is a challenger in the live game streaming area. Photo: YouTube

The Chinese platform Nimo TV, in Brazil since May 2019, searches for prominent streamers and closes exclusive contracts for live broadcasts. Nimo’s differential is to focus on mobile games. “[The Chinese head office] saw in Brazil a large slice of the mobile games market that was not being absorbed by the other active platforms”, explains Lin Chi, marketing manager at Nimo TV Brasil. (The service also attends Mexico and Argentina).

A common Nimo contract provides for a set number of hours transmitted per week or month and participation in events organized or supported by Nimo. There are individual streamers and professional teams, managed as companies and with players dedicated entirely to the trade. The most important one in Brazil is LOUD, created in 2019 and whose trajectory has been meteoric until now. The fixed amounts paid by Nimo to LOUD are not revealed.

In addition to this source, streamers at Nimo also receive virtual items from viewers that can be exchanged for real money, which gives aspirants a chance to already earn some money without depending on the platform’s centralized, direct payment model.

READ ALSO: The next big thing in gaming is mobile, and influencers are crucial to take advantage of this

Nimo is still fighting to face the big sharks in the area. The company doesn’t appear in the Stream Elements Consultancy survey, which monitors the volume of hours watched on game streaming platforms. In 2019, Twitch led the way with 9.3 billion hours watched on its platform worldwide, a 20% growth compared to 2018. YouTube was a distant second place, with 2.7 billion hours, an increase of 16%. Following YouTube, but even more distant, appeared Facebook Gaming (356 million hours) and Mixer, from Microsoft, with 354 million hours. Despite the smaller volume, the relative growth of these two was enormous: 210% and 149%, respectively.

The “streaming war”, which involves companies like Netflix, Disney, Amazon and Apple, wins most of the headlines and public attention, but there is another parallel battlefield almost as disputed as that of TV streaming platforms. Sometimes they meet, like when Reed Hastings, CEO of Netflix, told shareholders that “we compete more (and lose) with Fortnite than with HBO“, but overall, it is a war on its own.

The common strategy in series and film platforms, to differentiate themselves with exclusives, is repeated in games with a fundamental difference: “titles” are scarce and it is more difficult to create successes from nothing. Therefore, the biggest platforms, with deep pockets, promoted a festival of signings in 2019 worthy of the transfer windows of European soccer, something that should continue for some time. 

160 minutes

Average time per session on Twitch in Brazil

66%

of the Brazilian population plays video games. Of these, 83% play on cell phones.

The main target is the leader Twitch, which in 2019 lost other big stars besides Ninja, all co-opted by rival platforms. YouTube, the biggest platform when considering “non-live” videos (VODs, in jargon), is trying an alternative, cumulative strategy to secure the rights to entire championships, one of Twitch’s major sources of traffic. A few weeks ago, the Google video platform announced the acquisition of exclusive rights to broadcast the championships of publisher Activision Blizzard, highlighting the League of Duty, a paid title that topped 10 of the 20 best-selling games in the United States in the last decade, and the Overwatch league, another blockbuster with more than 50 million players. Until then, they were broadcast on Twitch.

Despite that, Twitch is focused and calm. “Having competition is very healthy, because in the end the user wins”, defends Wladimir Winter, director of content and partnerships for Twitch in Brazil. For him, despite the advances of competing platforms, Twitch remains at the forefront for the tools it offers. “I think that is the big difference in relation to other players, the Twitch community is very engaged, has a sense of community”.

Wladimir Winter, director of content and partnerships for Twitch in Brazil. Photo: Twitch

With an eye on the frequent market twists, Winter adds that Twitch’s next move should be in the mobile market, taking the opposite path from Nimo. “Twitch is very interested in the mobile audience”, without revealing any more details.

Mixed trends

A shortcut that Twitch can take to speed up its entry into the mobile segment is called Free Fire, the great success of Garena, from Singapore, with Android and iOS versions. In 2019, the free game gathered the three largest live audiences in the history of YouTube in Brazil, became Nimo’s flagship and won all the categories in which it was competing in the eSports Brasil Award, an initiative by Grupo Globo to encourage esports in the country, including the best athlete of the year for Bruno “Nobru”, a kind of Messi of games, holder of the newly formed Free Fire Corinthians team – yes, the same name of the popular soccer team from São Paulo.

It would not be an unprecedented path. In fact, collaborations between the various players in the ecosystem are common. Razer, an American company expert in gamer hardware, has long been betting on this: “We launched several customized products with very successful game themes, such as Overwatch, Gears 5 and Destiny 2“, explains Vitor Martins, director of Razer Latin America. He does not reveal figures, but says that Brazil is responsible for 50% of the company’s sales in Latin America.

Although born as an accessories manufacturer, Razer well incorporates the sector’s dynamic pace, which requires adaptation and agility. The company already has notebooks, cell phones in its portfolio, and announced in January its first desktop computer and is not afraid to present super futuristic concept products, even if they never reach the shelves. “We provide a complete ecosystem of hardware, software and services for gamers”, continues Martins. “Our goal is to offer all the tools that players need to reach maximum performance, comfort, immersion and personalization of their gaming experience.”

Alessandro Sassaroli, manager of gaming partnerships on YouTube for Latin America. Photo: YouTube

Like Twitch, Razer also launched itself into the fierce cell phone market. After purchasing the startup Nextbit, in January 2017, the company put up for sale the Razer Phone, one of the pioneers of the still incipient segment of gamer cell phones. It has all the eccentricities of computers, such as intimidating names and LED lights, as well as other more practical differentials, such as turbocharged components and software optimizations that allow you to run heavy titles more smoothly.

Esports are also experiencing a special moment in the country, but there is still a lot of room for growth. The diagnosis is from Fernanda Domingues, CEO of FD Comunicação, a company specialized in advising and promoting companies in the games sector. Since 2012, when Riot brought to Brazil its League of Legends, the most popular MOBA (multiplayer online battle arena) in the world, Domingues saw the market mature and reach its current size: “About five years ago, esports had a boom out there. According to Newzoo, Brazil is the third largest audience of esports–behind the United States and China. I believe that the future [in the country] is promising.” She believes that in three years Brazil will be a match for more mature markets.

$5.5 billion

Game industry’s revenue in Latin America in 2019, 8.9% larger than in 2018.

“The companies that really invested in Brazil are reaping what they sowed,” she says, citing Riot and Garena as examples. For her, the numbers of the Brazilian market, with millions of gamers, a good part of them interested in esports, can cloud the strategists’ view. “These numbers impress the companies abroad, so they think the profit will be immediate”.Playing or watching, on expensive computers in crowded esport arenas or in the waiting room of the doctor’s office, for pure pleasure or with millions at stake, the fact is that there are already many gamers around the world – in Brazil, 66% of the population, according to the 2019 Game Brasil Survey, by Sioux Group, Go Games, ESPM and Blend New Research. “I think it is very powerful to think that a child who comes from a place with fewer resources, with a cell phone and a game, can get wherever he wants to”, says Sassaroli, from YouTube.