Interactive entertainment generated $108.4 billion in 2017, exceeding previous forecasts by SuperData Research. The analyst firm has released its annual Digital Games and Interactive Media report that reveals 2017 revenue alongside forecasts for video games, augmented/virtual/mixed reality, esports and game video content (GVC).

Free Is The New Premium

According to SuperData’s report, 2.5 billion—roughly one in three people on the planet—play free-to-play (FTP) games across PC and mobile platforms. In fact, FTP games generated $82 billion in 2017, accounting for 89 percent of revenue across mobile and PC markets.

The FTP market is expected to exceed $75 billion in 2018, with a majority of revenue arising out of Asian markets. Across mobile, FTP PC and social platforms, consumers spend far more money on mobile. Last year, gamers spent $36 billion, $9.1 billion and $5.9 billion on FTP mobile games across Asia, North America and Europe, respectively.

Mobile Mania

Overall, consumers spent $14 billion more on mobile games in 2017 than in 2016. This momentum was aided largely by games published in Asia, which contributed to a 31 percent year-over-year growth for the worldwide mobile market.

In the same way that mobile game whales contribute the most money while accounting for the fewest percentage of players, SuperData observed that the top 10 mobile games control 20 percent of global revenue.

Mobile revenue is predicted to reach $55.5 billion across Asian, North American and European markets in 2018.

Competition Rules Revenue

Playerunknown’s Battlegrounds (PUBG) was the breakout hit of 2017, bringing in 12 percent of all premium PC revenue and generating $712 million in just eight months. This, in turn, helped generate interest in the battle royale genre—paving the way for games like Fortnite and Knives Out.

Highly-competitive games topped the charts for premium PC in 2017 with PUBG, Overwatch, Counter-Strike: Global Offensive (CS:GO) and Destiny 2 holding the top four spots. Big-name shooters also helped boost console revenue by 15 percent last year, with competitive titles rounding out the top 10.

If you don’t develop big-name shooters, however, there’s no need to despair. SuperData observed that 25 of the top 30 most downloaded games on Nintendo Switch came from indie developers.

Gaming Is A Spectator Sport

Esports generated $756 million in revenue and is on track to become a billion-dollar business in 2018, according to the report. A majority of this income—70 percent—comes from sponsorship and ads. Why? Because esports attracts consumer eyeballs and by extension, wallets. SuperData stated that esports attracts 258 million unique viewers.

Gaming is the second most popular video topic on YouTube, second only to music. However, 2017 proved to be a difficult year Google’s video platform as it struggled with brand safety and monetization. As a result, YouTube’s game video content (GVC) revenue dropped 50 percent year-over-year.

Twitch, meanwhile, accounted for 54 percent of the $3.2 billion GVC market. Despite having half the audience of YouTube, 51 percent of GVC revenue on Twitch came from users supporting their favorite streamers.

Changing Realities

Consumers spent $3.4 billion last year on augmented, mixed and virtual reality.

VR headset discounts and popular content drove revenue up 37 percent for extended reality (XR), which includes AR, VR and mixed reality. Oculus, in particular, benefited from price cuts, allowing the headset to outsell HTC Vive in 2017.

PlayStation VR shipped 1.7 million headsets last year thanks to franchises like Resident Evil and Skyrim attracting consumers. An overall lack of non-gaming content limited XR revenue for the year, SuperData noted.

The future looks bright for interactive entertainment, especially with AR expanding to new audiences. This year, consumers are predicted to spend $7.7 billion on XR, driven by the launch of Apple’s ARKit SDK and non-gaming applications.