Global videogame revenue is expected to surge 20 % to $ 179.7 billion in 2020, according to IDC data, making the videogame industry a bigger moneymaker than the global movie and North American sports industries combined. The global film industry reached $ 100 billion in revenue for the first time in 2019, according to the Motion Picture Association, while PwC estimated North American sports would bring in more than $ 75 billion in 2020.
Both of those industries suffered from the effects of the COVID-19 pandemic in 2020, however, while the videogame industry is expected to show double-digit growth this year following high-single-digit growth in the previous two years. Experts forecast that strong growth will continue in 2021, with the introduction of next-generation gaming consoles from Sony and Microsoft, new games are going to get the most out of those upgrades, even as COVID-19 vaccines are rolled out. “I do think there will be a deceleration as soon as effective, cheap, globally available vaccines get out there (…) but I’m quite sure at the end of 2021 there will still be billions of potential people that will need vaccines (…), so, my deceleration happens in 2022.” Lewis Ward, gaming research director at IDC, told MarketWatch.
The videogame industry has boomed in recent years because of the variety of ways to play games. Gone are the days when all one had to track were console sales and games sold for their respective consoles and PCs. With the rise of digital-copy game sales, mobile games, in-app purchase freemium games, cross-platform games that aren’t limited to a specific console, streaming game services like Microsoft’s Game Pass, games-as-a-subscription models, and online distribution services like Steam, along with varying levels of transparency, anyone wanting to make apples-to-apples comparisons encounters an unwieldy fruit basket.
While console sales will get a boost from new versions, that’s not the biggest chunk of the industry, nor the fastest-growing. The biggest gain is expected to come from mobile gaming, with China playing a big role in smartphone and tablet gaming revenue, Ward said. Excluding in-game ad revenue, world-wide mobile gaming revenues are expected to surge 24 % from a year ago, to $ 87.7 billion. A big reason why mobile game revenue is expected to widen its already large lead over console and PC based games in 2020. Mobile phones, which serve as the primary online connection for billions of people world-wide, can be cheap -or free with a usage plan- unlike dedicated gaming consoles such as Sony’s PlayStation 5, Microsoft’s new Xbox line and Nintendo’s Switch, which can run from $ 300 to $ 500 before supply-constrained markups. In the middle lies PC gamer, since their play requires a multifunction device that’s more common than consoles but less common than smartphones, IDC’s Ward said.
China’s recently lifted ban on gaming consoles also contributes to the dominance of mobile games. China only makes up about 1 % of the console market, Ward noted, while it’s the largest contributor to mobile growth in the Asia and Pacific region, where that segment’s revenues are forecast to rise nearly 25 % from a year ago, to $ 56.6 billion. Two companies, Tencent Holdings and NetEase, account for more than half the market share of China’s mobile gaming market. Outside of China, the mobile gaming market is dominated by companies like Activision Blizzard, Zynga, and Glu Mobile.
Mobile growth is also good news for smartphone and tablet-based game distributors like Apple and Google parent Alphabet, which dominate how games get on iPhones and Android-based smartphones, respectively, as they take a significant cut of game revenue that passes through their app stores. That practice received a huge amount of attention beginning in August when Epic Games, which publishes the popular battle game “Fortnite,” got banned from Apple’s and Google’s storefronts when it sought to work around those fees.
Game console revenue, which includes the hardware and all game software and services, is expected to rise 20 % world-wide compared with 2019, to $ 52.5 billion, according to Ward. Looking at digital PC and Mac sales, global revenue is expected to rise 11 % from a year ago, to $ 39.5 billion. Unlike console gaming revenue, IDC’s mobile and PC game sales don’t take hardware sales into account. PC-gaming revenue would have been larger if not for widespread iCafe closures in China due to the COVID-19 pandemic, Ward said. ICafes are a popular option in China for PC gamers who can rent top-of-the-line machines they could not otherwise afford, and socialize with friends in person.
The benefit from new console releases is mostly felt in the U.S. For the first 11 months of 2020, total U.S. videogame spending rose 22 % to $ 44.5 billion from a year ago, according to data from NPD Group. While hardware sales rose 34 % to nearly $ 4 billion, software sales rose 21 % to $ 38.4 billion, and accessory sales -gaming keyboards, controllers, mice and the like- gained 22 % to come in at $ 2.1 billion. Those gains were more pronounced in November, when Sony’s PlayStation 5 and Microsoft’s new Xbox line were released along with some long-awaited game titles. November hardware sales soared 58 % from a year ago, to $ 1.4 billion, while software sales rose 32 % to $ 5.2 billion and accessory sales ticked up 8 % to $ 314 million, according to NPD. All three of the largest publicly traded U.S. videogame publishers have outperformed the S&P 500 index SPX, +0.35% in 2020, with shares of Activision Blizzard up 49 %, Electronic Arts up 30 %, and Take-Two Interactive Software up 64 %, compared with the S&P 500’s 14 % gain.
In a survey released this past summer, NPD videogame analyst Mat Piscatella said that 79% of respondents said they had played videogames over the past six months, or since COVID-19 was declared a pandemic in March, with an average of 14 hours of play a week, compared with an average of 12 hours a week from a year ago. Piscatella said with all the options out there, Activision Blizzard’s “Call of Duty” franchise “is the best example of an omni-approach.” “They’re the ones who are kind of leading the way on appealing to a bunch of different ways of engagement,” Piscatella said. Not only does “Call of Duty” go the traditional route of console and PC sales with its “Black Ops Cold War” and “Modern Warfare” titles, but the franchise has a free-to-play “Warzone” battle royale option similar to “Fortnite”, with all of those options available on a mobile platform.
ORIGEN AUTORAL: Wallace Witkowski