Consumer spend on gaming software continues to grow, achieving $132 billion, including mobile, PC and console games worldwide in 2018, according to a gaming trends market report from Futuresource Consulting.
“Behind the steady rise in revenues, the gaming landscape continues to shift and change,” says James Manning Smith, Market Analyst at Futuresource Consulting. “We’re seeing a range of factors coming into play, including changing consumer behaviours, new publisher strategies, the growing significance of esports, and the relentless increase of mobile’s share of the gaming pie.”
Mobile on the move
In 2018, mobile gaming spend grew by over 10%, reaching $63 billion. The segment continues to attract investment from media companies keen to capitalise on the global trend of mobile gamification, driving by the increasing smartphone ownership worldwide, in particular, mobile first markets such as Africa, Latin America and Asia Pacific.
“Mobile gaming continues to thrive on an active smartphone base, which is now upwards of four billion handsets,” says Manning Smith. “Every year the tech becomes more powerful and better suited to gaming. By 2020, we expect mobile spend to be knocking on the door of $75 billion, accounting for half of the total games software market worldwide.”
Rising console profits
Console gaming software also continues to thrive, achieving consumer spend in excess of $28 billion in 2018. “Digital delivery of console software is becoming the norm and developments in gaming hardware is reflecting this, such as the Xbox One S All-Digital Edition,” adds Manning Smith. “In 2018, 2.3 physical console games were purchased for every 1 digital full game download. In 2023, we expect sales volumes to be neck and neck, following a significant growth in digital purchases.”
The shift towards digital content follows existing trends in the PC gaming market, which has seen an enormous shift towards digital content, with more than 35 digital game downloads per every physical copy sold.
Mid-tier publishers squeezed
The games publisher market continues to converge upon the leading houses. Despite thousands of active publishers worldwide, the top 25 account for nearly 75% of gaming software revenue.
“It’s all about the franchise,” says Manning Smith, “with EA highly reliant on the success of the FIFA series, and although Activision has diversified its position through its merger with Blizzard and the acquisition of King, its market performance is still heavily influenced by the Call of Duty series.
“Yet, despite the growing market share of the largest conglomerates, we’re still seeing a thriving independent developer and publishing community. The barriers to developing and publishing have been reduced significantly in recent years, most notably for mobile but also for PC and console.
“It’s the middle ground where the challenges lie, with midsize publishers lacking the marketing budgets and development resources needed to compete with the largest publishers.”
China leaps the USA
Until recently, the USA led the world in annual gaming revenues, but has now been overtaken by China, due to China’s thriving PC and mobile gaming markets. However, the USA retains the top spot for highest gaming spend per household, at $199 per year.
“Since the launch of the Xbox 360, the USA has been a Microsoft-driven market,” commented Manning Smith. “Despite Sony having a significant advantage globally, outselling Microsoft by two to one, in the US the ratio is closer to parity.”
Japan has the third highest gaming software spend worldwide, whereas the UK is the largest gaming market in Western Europe, showing many similarities to the USA.
A shining future
“The global gaming market shows little sign of slowing and will grow to be worth nearly $150 billion by 2020, with mobile continuing to lead the revenue charge,” says Manning Smith. “Keep an eye on the rise of esports too, which will begin to make its presence felt. Achieving just under $765 million in revenues last year, that figure will rise to nearly $1.1 billion by 2020, and will play a significant role in attracting new players to the wider PC gaming market.”
The Futuresource global gaming trends market report provides an overview of the current performance, sizing and trends within the video games market, together with an outlook to 2023. Packaged games data includes a breakout by dedicated console and handheld platforms for hardware sales, installed base and software sales. Digital gaming forecasts are broken out by console online gaming, PC online gaming and mobile gaming, and benchmarked against packaged gaming to provide context and total gaming spend.