Asian celebrity investors are bringing star quotient to startup investing. Asia represents a thriving, diverse entertainment ecosystem. From K-pop and Bollywood, to live sports, esports, and gaming, entertainment in the region has grabbed eyeballs across the world. Entertainment in Asia has [...]
By Reethu Ravi and Sharon Lewis
This article is the third of a four-part Tech’s Year in Review series reviewing developments across industries in 2020. It discusses the world of lifestyle tech, focusing on esports and gaming, entertainment and media, and travel.
The year 2020 was a tumultuous one for the tech and startup industry. When the World Health Organization declared COVID-19 a pandemic in March, everything changed almost overnight, leaving companies across the globe scrambling for survival. While some sectors such as edtech benefited from the pandemic, several others (such as the travel sector) bore the brunt.
In this article, we explore some of the standout moments in lifestyle tech during 2020 within gaming, esports, entertainment, and travel.
Entertainment and Media
Lockdowns drove people to find different ways to keep themselves occupied. Many turned to gaming, and many others, to Netflix. Here are some of tech’s best and worst moments in entertainment and media.
Entertainment startups under pressure
All eyes were on TikTok this year as the video sharing platform found itself embroiled in a power tussle between the U.S. and China. The social media platform was was blacklisted in India and faced a potential ban-or-buyout crackdown in the U.S., putting two of the company’s biggest markets in jeopardy.
It also had to exit its Hong Kong operations in light of the territory’s newly-introduced National Security La. This law pushed TikTok further out of favor with international governments, and it began to face additional scrutiny in Japan, Pakistan, and Australia. However, much of the din surrounding TikTok died down after the U.S. Presidential Elections culminated. Read our full coverage of TikTok’s 2020 woes here.
iQiyi was another entertainment platform to find itself in ‘muddy waters’. The platform was accused of revenue fraud in a report authored by Wolfpack Research and published by investigative research firm Muddy Waters.
According to Wolfpack Research, iQiyi allegedly inflated its 2019 revenues by 27% to 44%. It did this by exaggerating user numbers, expenses, prices, and assets and acquisitions, Wolfpack Research said. iQiyi strongly refuted the claims.
2020 also saw short-form mobile entertainment platform Quibi shut down shortly after launch. The idea was to offer premium mobile-only news and entertainment content of 10 minutes or less for a paid monthly subscription of US$4.99. However, six months into its launch, the platform called it quits.
A statement from its founders noted that Quibi had to shut down “likely for one of two reasons: because the idea itself wasn’t strong enough to justify a standalone streaming service or because of our timing. Unfortunately, we will never know but we suspect it’s been a combination of the two.”
Events go virtual – and may stay so
COVID-19 kept most people restricted to the confines of their home. Several events, such as the Summer Olympics and Dubai Expo 2020, were pushed back, but some others chose to follow through differently.
One virtual platform reported a growth of 1000% since COVID-19. Another, Eventbrite, reported a year-on-year increase of 2000% in online events during April 2020 as compared to April 2019. In some cases, virtual events came to the rescue for businesses that were poorly impacted by the pandemic (such as Airbnb, with its virtual tours).
This massive transition was completely enabled by digital technologies, augmented and virtual reality (AR/VR), artificial intelligence, and the Internet. But that’s not to say that everything went off without a hitch: the need to integrate so many technologies into a single platform came with its own set of challenges, including glitches and server overloads. Over the year, Jumpstart reviewed numerous virtual events: take a look at our event coverage here.
Streaming subscriptions take over
2020 was also a hit year for streaming services across OTT platforms, livestreams, and podcasts. Numbers for the second quarter of 2020 tell a strong story. Where Disney+ had expected to gain 60 million or more users by 2024, the streaming platform hit that target in 2020, four years early. Netflix gained 10 million subscribers in Q2, atop the 15.7 million subscribers it gained in Q1. It also reported positive cash flows that quarter.
Podcasts continued building on momentum from 2019. In India, for instance, Spotify reported that podcasts were becoming more popular on the platform. Livestreaming too, saw growth. Hours watched grew 99% year-on-year in April 2020 compared to April 2019 (read on for our detailed analysis of the esports and gaming sector).
What to expect in 2021
Streaming services, especially video streaming, will have to maintain their win streaks in an increasingly competitive landscape. This is especially true with the emerging popularity of ad-supported video streaming services (AVOD) such as Roku or Hulu, as opposed to paid subscriptions video on demand (SVOD) services. News networks such as Al Jazeera and NBC already broadcast on YouTube for free.
Research also suggests that the global OTT streaming market is expected grow by 55% from $104.11 billion in 2019 to $161.37 billion in 2020. Growth is expected to stabilize to 14% from 2021, growing to $169.4 billion by 2023.
Virtual events are also here to stay. Its use case has been firmly established, with 71% of marketing professionals expecting virtual events to continue well after 2020. This doesn’t mean the end of the road for in-person events, but that these two models can co-exist going forward. Moreover, this will also complement a spike in interest and growth forecasts for VR along with the gaming industry.
Finally, despite early challenges, tech will continue to play a more significant role in the entertainment and media industry. With the advent of global 5G roll-outs, high expectations from smart homes and advances in content personalization through AI, the tech way is clearly the way forward.
Esports and Gaming
While 2020 has been a disastrous year for many industries due to the pandemic, the gaming industry thrived, and esports experienced a triumphant rise in viewership and audience engagement while people were confined to their homes.
According to Statista, with nearly 1.5 billion gamers, the Asia Pacific region was the largest region for video gamers globally in 2020, generating a combined revenue of US$78.3 billion. In 2020, there were 2.7 billion gamers worldwide.
Owing to the pandemic, mobile games revenue also surged this year, with the global mobile gaming market raking in US$75.4 billion – 19.5% higher year-on-year. Tencent’s PUBG Mobile, along with Game For Peace – the Chinese localization of the title – was the top revenue generator across the globe, garnering US$2.6 billion since January 2020, up 64.3% from 2019.
Here are the top highlights from the year:
- In light of the pandemic, some of the biggest game events across the world were canceled, including Counter-Strike: Global Offensive esports matches in China, the Game Developers Conference, and the Electronic Entertainment Expo – the world’s biggest gaming convention.
- In a major shake up in July, three senior heads were laid off from game-maker Ubisoft following allegations of widespread sexual harassment and abuse at the company. One of the giants of the gaming industry, Ubisoft became notorious as the company most frequently name-checked in the #MeToo movement. Following the publicized allegations, the company also released statements promising changes.
- In August, in a boost to the esports industry, renowned chess player Grandmaster Hikaru Nakamura became the first professional chess player to sign with an esports organization after he joined North American Team SoloMid (TSM).
- The Indian government banned PUBG Mobile, one of the most popular mobile games in India, on September 2, along with 117 other Chinese apps, stating that the apps have been engaging in activities “prejudicial to sovereignty and integrity of India, defence of India, security of the state and public order.” PUBG Corporation, the South Korea-based parent of the game, is all set to release PUBG Mobile India, a new game curated specifically for the Indian market, in the coming months.
- PlayStation 5’s (PS5) mid-November release marked the biggest launch month unit and dollar sales for a video game hardware platform in U.S. history, surpassing PS4’s November 2013 record.
- November also saw Nintendo’s Switch maintain its 24-month streak as the best-selling console every month by units sold.
- Cyberpunk 2077, released in December after nearly a decade of high anticipation, was supposed to be the biggest video game of the year. However, the game was rife with a multitude of glitches, bugs, and errors, prompting livid fans to demand refunds and Sony to remove the game entirely from its store.
Major fundings and acquisitions in the industry
The year saw investments pouring in for Indian gaming startups. In September, Dream Sports, which owns Dream11 – India’s only gaming unicorn – raised US$225 million in funding from Tiger Global Management, TPG Tech Adjacencies (TTAD), ChrysCapital and Footpath Ventures, doubling its valuation from US$1.2 billion to US$2.5 billion.
The same month, gaming startup Mobile Premier League (MPL) raised US$90 million in funding led by SIG Global and RTP Global, MDI Ventures and Pegasus Tech Ventures. The year also saw the launch of India’s first gaming-focused VC fund, Lumikai, which will fund up to 20 early-stage investments.
In a major acquisition in 2020, Microsoft, in late September, announced its plans to acquire ZeniMax Media, the parent company of Bethesda Softworks – one of the world’s largest game developers and publishers – for a whopping US$7.5 billion.
Other major acquisitions include social gaming company Zynga buying Istanbul-based Peak Games for US$1.8 billion, and Embracer, one of Europe’s fastest-growing video game companies, acquiring interactive games developer Saber Interactive in a US$525 million deal.
What to expect in 2021
- In the coming year, even after the pandemic, engagement and revenues are expected to rise in the industry. According to a report, around 2.8 billion gamers are expected to rake in revenues of $189.3 billion in 2021.
- The global esports market, valued at US$1.1 billion in 2019 and expected to grow to US$6.81 billion by 2027, is beginning to offer serious potential as a career option for young gamers.
- The much-awaited PS5 will be launched in India on February 2, 2021, with pre orders starting from January 12.
- The Indian gaming market, one of the fastest-growing in the world, is expected to attract more investments in 2021, thanks to its various revenue-generating opportunities.
- Advancements in AR/VR technologies, increasing popularity of cloud gaming with Microsoft set to launch its cloud gaming service on iOS and on computers, the adoption of 5G, and increased streaming, are some other trends we can expect to drive the industry in 2021.
With countries imposing lockdowns, travel restrictions, and quarantines to curb the spread of COVID-19, the travel industry suffered huge losses.
Late in January, the U.S. imposed its first travel restrictions as the initial outbreak raged in China. In the following months, more countries imposed travel embargoes and flight bans, as the virus began spreading globally. The Centers for Disease Control and Prevention (CDC)’s No Sail Order (which was lifted in October) in March saw cruising activities die down as well.
With all travel coming to a sudden stop in 2020, occupancy rates in hotels went down drastically, with several shutting down permanently. According to a survey by the American Hotel & Lodging Association (AHLA), 71% of hoteliers stated that they won’t make it another six months without further government relief, and 77% responded that they will be forced to lay off more workers.
The travel restrictions also severely affected the tourism industry, with the global revenue from the travel and tourism industry estimated to drop from a forecasted US$711.94 billion to US$396.37 billion – a decrease of around 42.1% compared to 2019.
How COVID-19 impacted travel operators
With pandemic shutting down the travel industry almost overnight, travel operators across the globe were severely hit. For instance, Airbnb, the home rental company, saw its gross bookings for nights and experiences plummeting by 72% on a year-over-year basis by April. However, the same month, the company raised US$2 billion in capital – US$1 billion in a funding round led by Silver Lake and Sixth Street Partners and another US$1 billion in debt.
With their 2020 revenue forecasted to be less than half of that in 2019, the Californian company was forced to lay off 25% of its workforce in May. However, Airbnb swiftly responded to the crisis by adapting and innovating to tackle the pandemic, which ultimately proved to be its salvation.
The company also adopted a hybrid workplace model to operate at full capacity without compromising the health and safety of its employees. According to OYO Founder and Chief Executive Ritesh Agarwal, the hospitality giant’s gross profit is expected to recover to pre-COVID-19 levels by early next year, from around 85% presently.
Similarly, MakeMyTrip, India’s largest travel platform, saw its revenues decrease 82.2% in the second quarter ending September 30.
Major fundings for travel and mobility tech startups
On the positive side, despite the pandemic, several startups in the travel industry were able to raise significant investments.
Indonesia-based Go-Jek, which provides ride hailing services along with other verticals, raised a total of US$1.5 billion in two Series F tranches this year. It also raised US$150 million from telecom giant Telkomsel.
Chinese hybrid Electric Vehicle (EV) maker Li Auto raised US$1.1 billion through its IPO and an additional $380 million through a concurrent private placement of shares to existing investors. Another Chinese smart EV startup Xpeng Motors raised US$500 million in a Series C+ round of financing in July. The following month, it amassed a total of US$1.5 billion from its U.S. IPO.
What to expect in 2021
With COVID-19 vaccines set to slowly roll out over the next year, the travel industry is expected to pick up in the third quarter of 2021. That said, in terms of overall economic recovery, the travel industry is expected to be the slowest. According to Forbes, to attract tourists in 2021, tour companies, hoteliers, and travel agencies will have to increase online engagement, maintain high cleaning and service standards, and offer travel bubbles, among other measures.
Meanwhile, IATA has stated that a net loss of US$38.7 billion is expected in 2021 in the airline industry, as opposed to the $15.8 billion forecast in June. However, while the first half of 2021 will be difficult, the second half is expected to see some improvements due to aggressive cost-cutting and increased demand.
And while passenger numbers are expected to grow to 2.8 billion next year, they are not expected to reach 2019 levels until 2024 at the earliest.
For travel, recovery is slowly approaching, whereas the entertainment and gaming industries have picked up pace. All three of these sectors are innovating at breakneck pace. Tune back into the series for its final installment on critical industries that will be reshaped in 2021.