Newzoo released its quarterly update of its Global Games Market Report on Monday, forecasting that 2.3 billion gamers will spend $137.9 billion on video games this year, a majority of which comes from the mobile sector.
Global games market revenue will increase 13.3 percent from the year before, or $16.2 billion. At $125.3 billion, digital game revenues will take 91 percent of the global market. Consumer spending on games will grow to $180.1 billion by 2021, a CAGR of 10.3 percent between 2017 and 2021.
Mobile Gaming On The Move
Mobile gaming will be a $100 billion market by the year 2021, according to predictions by Newzoo but the meantime will fetch $70.3 billion in 2018—51 percent of total industry revenues. This is the first time mobile gaming has accounted for more than half of all game revenues—no small feat, considering that mobile gaming was the smallest segment in 2012.
Smartphones will account for 80 percent of this of mobile game revenue this year at $56.4 billion, with the remaining 20 percent coming from tablets. Mobile game revenue growth will outpace the overall games market, growing to $106.4 billion in 2021. By that time, smartphone and tablet games combined will generate 59 percent of revenues in the entire market.
Newzoo attributes growth in the mobile market to several factors, including the growing number of users—particularly in Asia—as well as an increased spending per player in “mature” mobile markets such as the US, Japan and to a lesser extent, China.
“The rise of competitive gaming on mobile is another contributing factor, as there are types of games which players often spend more on,” Newzoo market consultant Tom Wijman told AListDaily. “By becoming more immersive and ‘core,’ games are drawing in more of the traditional gaming audience found on PC and console, who are used to spending on games.”
Despite the impressive growth mobile gaming has not significantly cannibalized revenues from other platforms like PC or console, Newzoo observed.
Console gaming is the second-largest segment generating $34.6 billion in 2018—a quarter of global revenues. Newzoo predicts that the console segment will grow to $39.0 billion in 2021 with a CAGR of 4.1 percent.
Newzoo says it sees further room for growth in the console segment if publishers continue to improve in-game spending options while retaining the upfront price point, such as loot boxes in Star Wars: Battlefront II, Destiny 2 and Shadow of Mordor.
“While some of these games did get public backlash for implementing these [monetization] strategies, the issues were mostly related to how they were implemented rather than that they were at all,” said Wijman. “We expect that publishers will continue to experiment with in-game monetization while keeping that same purchase price and, ultimately, finding a way to do so without upsetting their fanbase. We’re likely to see more optional cosmetic spending along with the season passes on a (semi) annual basis whereby more significant content will be added to the game, which will be more costly (~$40).”
The company also sees livestreaming and esports being fully embraced by the console segment by 2021, further driving player engagement.
PC Keeps A Slow Pace
In 2018, PC games will bring in $32.9 billion, or 24 percent of total market share, the smallest gaming segment. The total PC gaming market will grow at a CAGR of 1.8 percent between 2017 and 2021, Newzoo predicts, as the continued shift from browser PC to mobile games cuts revenues from the browser segment in half.
While PC gaming is expected to grow over the next few years, it will be at a modest rate of 1.8 percent CAGR through 2021.
“We believe that some of the most popular [PC] titles are already operating at close to their full monetization potential and, at the same time, are unlikely to be displaced by new games soon,” explained Newzoo. “In addition, average prices for pay-to-play PC games have been declining in recent years, putting downward pressure on the segment’s overall revenue growth.”
Editor’s note: This article was updated to include analyst commentary received after publishing time.