Report: Predictions for the Global Games market 2013-2017

Global Games Market 2013-2017

According to the latest snapshot report from our friends at Newzoo, the global games market is going to reach $102.9Bn by 2017 from $75.5Bn in 2013.

It’s mobile and online gaming which has shown the most rapid growth; from greater online access in emerging markets, to cheaper smart devices, the world is embracing gaming.

Already Apples revenues from gaming are almost identical to Nintendo ($2.4Bn), but it’s in the gaming markets outside the US and the West which are making the biggest gains.

The Asia-Pacific region delivered 82% of the global growth in the gaming market so far this year and by 2016, not only will China be the world’s biggest mobile gaming market, but the biggest gaming market overall.

And in regards to the growth of consumers who play games? By the end of 2013, there were 1.6Bn and by 2017 its estimated that it’ll be 2.2Bn – 600 million more consumers playing games in just 4 years with mobile and online gaming leading this adoption. What this means for the growing potential of branded mobile games is obvious.

The following 10 points are Newzoo’s predictions for the global games market from 2014 – 2017:

2014: Nintendo Outgrossed by Mobile Kingpins

Illustrative of the mobile revolution continuing in the games industry, we expect that by the end of 2014 far more mobile game companies will have matched or surpassed Japanese giant Nintendo than in 2013. GungHo, SuperCell and King will join Google and Apple as having grossed more revenue with just a handful of games than Nintendo with its entire game portfolio at its disposal. Recent first quarter results already confirm this, placing these companies significantly ahead.

2015: Smartphones and Tablets Match Console Revenues

We predict that mobile gaming will secure over a quarter (27%) of the global games market by the end of 2014, yielding revenues in excess of $21Bn. What is more astounding is that in the course of 2015, monthly mobile game revenues will surpass those generated by TV and handheld consoles combined. Full year console revenue will end up just marginally ahead of smartphone and tablet gaming: $26.4Bn vs. $26.3Bn.

2015: US Physical Game Sales Evaporate

Having dropped to just over 30% of the Total US games market in 2013, we estimate US physical games sales will account for less than 20% in 2015. This decline will escalate if publishers choose to embrace the organizational and financial advantages of digital-only releases, with lower up-front fees or alternate pricing for digital and physical versions. If the traditional forces in the industry go through this feasible transition there is plenty of money to be made. Microsoft’s and Sony’s consoles will continue to dominate core gaming on TV as other initiatives remain fragmented. Retail will remain important but store merchandise will continue to shift towards release exclusives, game credits and Skylander-type products.

2015: Tencent Takes 10% of World Games Market

Tencent recently reported 40% year-on-year growth for its first quarter. If Tencent continues to grow at its current pace, the company will have captured over 10% of the global games market by 2016. This is without taking into account any future acquisitions of Western and/or Asian companies. Currently ranked by Newzoo as the number one company in the world by game revenues (with Microsoft second, ActivisionBlizzard third) the projected growth of Tencent is in line with the fantastic growth projected in China and APAC.

2016: 2 Billion Gamers Worldwide and Rising

By the end of 2013 we had a global population of over 1.6 billion gamers. Based on the current growth of global online connectivity and economic KPIs, we calculate this number will grow to more than 2.0 billion by 2016, reaching almost 2.2 billion gamers by 2017. This accounts for 60% of the total global online population and 32% of the worlds’ population of 6.8 billion in three years’ time. Annual growth of gamer numbers will be highest for market segments of tablet (over 14%), smartphone (over 12%) and MMOs (just under 10%).

2016: China Overtakes US as World’s Biggest Games Market

Two years from now the US will be dethroned as King of the global games market. The relentless pace of Chinese online connectivity, economic growth and surging consumer demand gave rise to an impressive +38% year-on-year growth in 2013 alone. Population data, consumer spend figures and rapid industry growth leads us to one inescapable conclusion: By 2016, China will be world’s biggest games market, coming in at over $25Bn.

2017: APAC Grabs Half of the Planet’s Games Market

In 2013 Asia-Pacific region consumers accounted for 42% of global game revenues. Well on their way to taking almost half (49%) of the global market in 2017, this part of the world is expected to contribute 82% of the $6Bn dollar growth of the global market this year.  APAC’s annual growth rate (CAGR) towards a $50.5Bn market in 2017 of +12.2% is not the highest however: Latin-America boasts a growth rate of +14.2% per year, while EMEA and North-America grow at a more modest pace with +4.7% and +3.3% respectively.

2017: One in Three Game Dollars Spent on Smartphones and Tablets

We recently published our final take on the 2013 global market ($75.5Bn), with mobile game revenues boosting global revenues even more than anticipated in early 2013. Smartphone and tablet gaming are set to generate $21.7Bn by end of 2014, representing more than a quarter of all global game revenues. By the end of 2017 mobile gaming will have seized a 34% market share, surpassing $35Bn due to the increasing demand for mobile game content in LATAM, APAC and the China region and continued rising popularity of tablet gaming in the US and Europe.

2017: Global MMO Revenues ChallengeThose of TV/Console Gaming

While global TV console revenues are expected to show marginal growth (+1%) towards 2017, MMO revenues will reach unprecedented heights: By 2017, they will almost equal TV consoles at just under $24Bn, capturing 23% of the global games Market.  Companies involved in bringing games to the TV screen should not be too concerned, as gamers will always play and pay for games played on the TV screen. As the biggest of the Four Screens, it is expected to capture at least a quarter of the game revenues in Western markets. On a global scale, success depends on the uptake of Sony’s and Microsoft’s’ consoles versus alternative distribution methods, as well as the relevance of the TV from a cultural and social perspective.

2017: Global Games Market Races Past $100Bn

With a CAGR of +8.1% and $81.5Bn dollar revenues in 2014, we calculate that by 2017 the global games market will surpass the $100Bn threshold. A large share of this growth will be driven by the rising population numbers and access to technology in Asia, Eastern Europe, LATAM and MEA. In the more mature but saturated markets of the US and Western Europe, smartphones and tablets enable gamers more access and time with their games, turning time spend into a crucial revenue growth factor. The successful branching out of game franchises into other media formats and live events will serve to fuel growth in these mature markets.

In this new global market, there are no real borders between consumers and their electronic gaming needs except the ones built by the games market industry itself. Our data reveals the most successful games companies by 2017 will be those that use the interconnected social and digital fabric that binds gamers and their brand interests together on a global scale in the most inclusive, synergistic way possible.

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