Friday, May 24, 2024

    Video games subscription revenue to exceed $11bn by 2025, but cloud growth will be slow

    Video games service platforms, such as EA Play and PlayStation Now, will grow to an $11 billion sector by 2025, up from an estimated $6.6 billion this year.

    These platforms represent a strong new revenue stream for an industry experiencing a revenue decline of around 3% per year over the next five years.

    However, Juniper Research expects cloud gaming subscriptions to comprise of only 25% of this revenue over the forecast period, as more general service platforms have fewer limits on their adoption.

    Subscription services a success story

    Juniper Research’s new report, Video Games: Industry Trends, Monetisation Strategies & Market Size 2020-2025, shows that subscriptions accessed through PCs will be the biggest segment; accounting for over $5 billion in revenue in 2025.

    This will be dominated by games publishers, as they can make the most popular titles exclusive to their services, and supplement them with studio acquisitions. While tie-ups between services do exist, such as that recently announced by EA Play and Xbox Game Pass, these will become less common as the space grows.

    Despite a booming mobile games market, mobile games subscriptions will be niche, with less than 1% of mobile gamers worldwide using a games subscription service on their smartphone.

    Cloud technology on old rails

    Meanwhile, cloud gaming is not being held back by demand for the services, which already have millions of users, but by a lack of awareness in many places. Slow data speeds also limit its reach in many markets, as data is needed for playability. This will limit the technology’s adoption to around 1% of active gamers globally.

    “Cloud gaming is a highly concentrated market, with over 60% of anticipated subscriptions to be in the US and China,” remarks research co-author James Moar. “Targeting specific types of players in these markets will bring sustainable success, but awareness of cloud gaming outside of particular gamer segments will keep the market niche.”

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