Video gaming emerges as fastest growing e-commerce vertical as emerging markets drive growth

Video gaming is emerging as the world's fastest growing e-commerce vertical, with spending projected to more than triple to USD 633.8 billion by 2035 as emerging markets become the main engine of expansion. A new analysis by EBANX, based on World Data Lab (WDL) data, projects the global video gaming market will grow at a compound annual growth rate of 13.3%, rising from USD 206.1 billion to USD 633.8 billion over the period.

The findings highlight a significant shift in the geography of gaming growth, with 42 of the world's 50 fastest growing gaming markets located in emerging economies. Among countries expected to record annual gaming expenditure of more than USD 500 million by 2035, seven of the 10 markets with the highest projected compound annual growth rates are emerging economies.

Kenya leads the group with projected growth of 25.6%, followed by Turkey at 21.3%, Ukraine at 20.6%, Ethiopia and Pakistan at 20.3% each, Brazil at 19.5% and Saudi Arabia at 18.4%.

The findings come ahead of the APAC edition of the annual EBANX Payments Summit, which will take place from Sept 3 to 5 in Jeju Island, South Korea. The event will bring together global merchants, industry leaders and experts to examine consumer behaviour, payments and digital commerce trends across high growth markets.

EBANX Head of Market Intelligence Estelita Hass said the expansion of gaming in emerging markets reflects the arrival of new consumers into digital commerce. "Rates like these come from arrival, from people making a first purchase, opening a first wallet, paying for something they could not afford previously," Hass said.

"That is the moment a relationship begins and loyalty starts to be built, which is why meeting these players on their own terms, with the habits they already have, matters well beyond the first transaction."

For gaming companies, local payment infrastructure is becoming an increasingly important factor in converting this new consumer base into revenue.

Brazil provides one example. EBANX said 60 million adults in the country do not have a credit card, according to Central Bank data, making alternative payment systems particularly important for digital commerce.

The instant payment system Pix has become the payment method most used by local players to purchase from one of the world's largest video gaming companies. Another major gaming publisher increased its total revenue in Brazil by 12% after introducing instalment payments, which now account for 48% of its transactions in the country.

Colombia provides another example of the commercial impact of local payment options. A global video gaming company recorded revenue growth of more than 25% and a 32% increase in transaction volume after adding Nequi, the country's most popular digital wallet, to its checkout.

EBANX said Nequi is used by 62% of Colombian adults, according to Nequi and World Bank data analysed by the company, compared with a substantially smaller share of adults holding credit cards.

The company said similar patterns are emerging across its operations in Africa, Southeast Asia and India, where local payment rails and alternative payment methods are helping bring new consumers into digital commerce.

"Low card penetration and the digitalization of these economies through local rails and alternative payment methods have driven massive financial inclusion over the past decade, bringing a whole young generation into digital commerce," Hass said.

"These are the consumers behind video gaming growth in emerging markets, a profile completely different from what we see in the U.S. and Europe."

The demographic profile of future gaming consumers is also expected to differ significantly between emerging and developed markets.

EBANX's analysis of WDL data shows consumers aged below 45 will account for 51.6% of the projected increase in video gaming spending across emerging markets.

By income, consumers in the Core and Lower Middle Classes are expected to account for 61.1% of the increase.

Africa presents the strongest example of this trend, with consumers below 45 expected to generate 80.5% of the increase in gaming spending, while consumers below the upper middle income bracket account for 80.2%.

Southeast Asia follows, with consumers below 45 accounting for 62.7% of growth and consumers below the upper middle income bracket contributing 56.8%.

Latin America presents a profile closer to mature markets, with consumers below 45 accounting for 52% of projected growth and those below the upper middle income bracket contributing 48.1%.

The picture changes significantly in the United States and Europe, where growth is expected to be driven more heavily by older and higher income consumers.

In the US, consumers aged 45 and above account for 54.2% of the projected increase, while 90.6% of the growth is expected to come from the Rich and Upper Middle Class, defined as consumers spending more than USD 90 a day.

The US gaming market is projected to grow at a compound annual rate of 12.6%, increasing from USD 37.1 billion to USD 107.6 billion by 2035.

Europe is showing a similar pattern, with consumers aged 45 and above accounting for 55.6% of projected growth and the Rich and Upper Middle Class contributing 62.9%. Europe's gaming market is forecast to grow at 13.9% annually, from USD 27.9 billion to USD 89.9 billion.

"This concentration of growth in the wealthiest income bracket shows the American and European markets are expanding through consumers the industry has held on to for a long time. Renewal is a different job, and it is happening elsewhere, in emerging markets," Hass said.

The distinction has wider implications for global gaming companies as they seek to expand beyond established markets. EBANX said World Data Lab projects more than one billion consumers in emerging economies will join the consumer class by 2036, compared with 28 million in developed economies.

For gaming publishers, platforms and merchants, the expansion of the consumer class in emerging economies could therefore create a substantial new market opportunity, provided businesses adapt their payment and purchasing experiences to local consumer behaviour.

The findings also underline the growing importance of payment localisation as digital commerce expands. In markets where credit card ownership remains relatively low, access to domestic instant payment systems, digital wallets and instalment options can directly influence whether consumers are able to complete purchases.

As gaming increasingly operates as a global digital commerce industry, the next phase of growth may therefore depend less on established Western markets and more on how effectively international companies can reach emerging market consumers through the payment methods and digital ecosystems they already use.

Source: EBANX / World Data Lab