The gaming industry is a multi-billion-dollar industry today that continually pushes the boundaries of technology and entertainment. With the advent of mobile gaming, cloud gaming, and improvements to hardware, gaming has become a viable form of entertainment for players from different backgrounds and ages, creating new segments of game enthusiasts and revenue opportunities. Consumer engagement with gaming has also increased as people have had more time at home due to the ongoing pandemic and driving further growth in the gaming market.
The creation of games is also turning increasingly complex, and the cost of creating a game on major platforms like consoles has escalated with this growing complexity. Earlier it was unimaginable to pump millions into development costs, but today’s games can cost hundreds of million dollars. This has pushed game development into new territories.
How much is the Gaming Industry worth?
The video game sector is larger than the movie and music industry combined, and it is only growing. The world’s 2.7 bn gamers (i.e., 34.6% of the world population) spent US$ 174.9 bn on games in 2020 (US$15.6 bn higher than Newzoo’s early 2020 estimates), according to the October update by market researcher Newzoo. By 2023, the game market is expected to cross US$ 200 bn. Increased interest in gaming due to COVID-19-related lockdown measures and the launch of next-generation consoles are the chief driving forces of this global growth of the gaming market.
All game segments (PC, console, and mobile) saw an increase in engagement and revenues as a result of COVID-19 measures, but mobile gaming saw the biggest increase.
China and the U.S. represented 49% of the world’s games market in terms of consumer-generated revenues. APAC and Europe are generally very mature markets in terms of gaming, and therefore see a lower growth rate-relative to more emerging markets. APAC was estimated to generate game revenues of US$ 84.3 bn, accounting for 48% of the global games market.
Types of Gaming
Through the years, video gaming has evolved to include different mediums, broadly – PC gaming, Console gaming, and Mobile gaming. Apart from these three, online gaming and VR Gaming are also gaining popularity. From consoles getting more sophisticated over the decades, to PC games supporting multi-players, to the emergence of an entire ecosystem of mobile games, the industry has come a long way.
Evolution of the Gaming Industry
The gaming industry has gone through a massive evolution since the 1970s and has moved from an unconventional activity into the mainstream, evolving from PC, Console, and Mobile gaming platforms to VR and Cloud Gaming.
There is a great shift in the structure of the gaming value chain as technological innovations, diffusion of mobile devices, and online gaming remove a lot of middlemen in the video game industry. Here’s how the value chain has changed –
Competitive Rivalry in the Gaming Industry
Given this immense revenue potential, it is no wonder that the gaming industry is extremely competitive. The industry is growing and the potential for success is high. Yet, gaming companies are under constant stress in the face of fast-evolving technology, volatile consumer habits, intense competition and lack of regulation in an unstructured industry where no competitive edge is sustainable, and the top position must be constantly fought for.
Every technology player wants to have a pie of the lucrative market
Unlimited processing power and the entry of new players in developing countries will transform video games and blur the lines between real and virtual worlds. Facebook recently announced the launch of cloud gaming capabilities, joining other big tech giants Google (Stadia) and Amazon (Luna) in launching similar products. Chipmaker Nvidia Corp. is expanding its business and foraying into the growing video gaming industry to help attract customers from rival gaming services run by Microsoft, Google, Sony and Apple. Even Intel is planning to take on the desktop GPU category oriented towards the gamer demographic with their new gamer-focused Xe-HPG architecture expected to launch at the end of 2021.
What are the key current and emerging trends in the gaming market?
From high-end consoles and cloud gaming platforms to attractive gaming models and convenient VR headsets releases, the industry is evolving in many directions. Here are some key trends to watch for –
The Future of the Gaming Industry for 2021 and Beyond
The gaming industry is moving towards a borderless, cross-platform, digital-focused marketplace. Game companies are becoming more open to sharing their content than they were in the past, hence, exclusive games won’t stay exclusive forever.
A large amount of older titles will be made available on devices going ahead. Mixed reality is expected to lead in future games, expanding on the proven popularity, technology, and accessibility of games such as Pokémon Go.
The rise of live streaming culture and platforms like Twitch are fueling a new PC gaming boom. Also, Nintendo Switch’s success signaled that handheld game consoles could be a significant part of gaming in and after 2020. Overall, the future of gaming is expected to be “kind of a post-console world” where users can have quality gaming experiences across a variety of technologies.