Continued growth and a shift to new markets and new players

The video games industry continues to enjoy significant growth, with revenues growing at double-digit rates since 2012. At the time of writing, current revenue volume exceeds $130 billion. The industry remains global, but the emphasis is slowly shifting to Asia, with around 25% of revenue coming from China, the home of the largest company by revenue (by some way), Tencent – also currently the 9th largest company in the world.

The sector is also attracting new players, with revenue growth coming more from new players than increased ARPU, and in new segments (with 43% of gamers being over 36 and 66% of the population over 12 being gamers, up from 58% in 2013).

As mobile device screens and capabilities continue to increase allowing console-quality games on the move, and multi-device platforms allow continuous play across devices, the industry is also becoming rapidly more mobile based, with the mobile sector recently exceeding 25% year on year growth, and surpassing 50% of global revenues for the first time.

However, the growth is not all about mobile. New platforms such as Nintendo’s Switch, and streaming platforms that allow for high-end games to be streamed to basic devices, drive interest in games further. We have also seen rapid growth in eSports and, of course, genres such as battle royale generating stratospheric revenues for publishers.

The freemium model has established itself as the default model in the mobile space, with increased revenues from micro-transactions continuing to drive investment.

So, the industry is growing up, becoming more agile and more mobile, making more money from a larger number of players, while also heading East. However, it is facing some trade winds. Continued controversy over monetisation methods, particularly micro-transactions such as those around loot crates, continue to cause negative publicity and drive regulation.

Labelling requirements are being brought in to flag games that require in-game purchases. Rules on advertising and marketing which diverge in some markets, and the introduction of GDPR bringing new challenges to the sector, not least around player acquisition and leveraging of player data. Also, the games industry is not alone in being afected by the shifting sands in the way people are employed, and evolving attitudes to the relationship between employers and employees.

2019 has never seen a more exciting, as well as challenging, time for the sector.

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