The gaming industry, currently valued at $173bn, is expected to almost double its value by 2027, according to a forecast by Mordor Intelligence and is expected to exceed $200bn in revenues by 2023, noted a report by GWI, an audience targetting firm.
“The gaming market is growing with the increasing per capita income, growing interest, and the rising number of dual-income households, augmenting the transformation of the global market. With the increasing usage of smartphones and consoles and cloud penetration, the market shows high potential growth in the future,” noted the Mordor Intelligence (MI) report.
Developments in technology regarding smartphones thus becomes an important growth factor for gaming companies.
The high-profit margins seen in the past years have increased the number of gaming companies, giving rise to some high profile acquisitions as bigger players try to maintain market share.
Scope for businesses
The gaming sector is expected to reach $314.4bn by 2027, the MI report added, attracting big players to the industry. The beginning of 2022 saw some expensive acquisitions in this field.
- Microsoft bought Activision Blizzard in 2022 for $69 billion – the most expensive takeover in gaming.
- Take-Two Interactive acquired Zynga for $12.7 billion
- Sony acquired Bungie for $3.6 billion.
One of the strategies to increase the level of income from each gamer is through in-app purchases and add-ons.
The GWI report states that there is plenty of opportunity in this area: “ but for any publisher looking to land with these more premium gamers, it’s crucial to first understand who’s buying different types of add-ons to reach them effectively”.
For example in the third quarter of 2020 Activision Blizzard made revenues of $1.95bn based solely on in-game purchases.
Gaming and social media
According to GWI, the expansion in social media has been a key growth driver in the gaming industry. Out of all gamers the report surveyed, 84% said they get their gaming information from YouTube. As much as 72% got their details from Facebook while around 58% got it from Instagram and 40% from Twitter.
Streaming videos were important to this ecosystem, with 38% of all gamers watching regular gaming streams on either YouTube or Twitch – 12% of gamers even stream their own live videos.
“Gaming rarely stops at playing games; there’s a vast ecosystem of custom content, online communities, and experiences to be aware of, and targeting gaming audiences requires as much an understanding about these behaviours as their motives for playing in the first place.”
YouTube has understood the importance of gaming communities on their platforms and has begun signing exclusive deals to capitalise on this. In 2020, YouTube (owned by Alphabet) signed a multi-year deal with Activision to host multiple e-sporting events such as Overwatch league, call of Duty League and Hearthstone Esports.
Smartphones have changed the game
Smartphone games are one of the biggest sources of revenue in the industry, per Mordor Intelligence. This is due to the accessibility of the device.
Advancements in smartphone technology such as augmented reality, virtual reality, cloud gaming and 5G are all going to be beneficial for the gaming experience.
Fortune Business Insights also point to the spike in consumer interest in mobile gaming. Their report states that improvements in technology in smartphones has led to impressive user experience in mobile games: “Hence, these games attract players of multiple demographics worldwide and act as a driving factor for growth”.
Netflix realised the importance of mobile devices early on when they decided to make the most of this trend by providing its mobile app users with gaming services since November 2021.
The pandemic stripped away many pastimes, but interestingly, the growth trend in the number of gamers worldwide has stayed the same per Statista.
A GWI study of gaming audiences noted that gaming was a big deal for some time now. Their data shows that 86% of internet users play games on any kind of device, and this percentage has not changed since 2015. The most used devices used for gaming is smartphone and PC/Laptop.
The myth of a young audience
“It’s a cliché almost as old as video gaming itself, but the stereotype persists that gamers are young, often antisocial, men. It’s an image that’s been reinforced by negative depictions of the audience in TV and film,” noted the report by GWI titled ‘The gaming playbook’.
Between 2018 and 2020 the biggest growth in the number of gaming audience came from 55-64 years old, this age group saw a 33% increase in audience numbers.
Nevertheless, Gen Z remains the group with the largest percentage of players, with 91% of them saying they play video games regularly, compared with 84% of millennials, as outlined by Fortune Business Insights.
As gaming becomes more widely used as a form of entertainment, there are also professional arenas opening up for players. There is also an increase in the number of people who follow e-sports. As much as 58% of Gen Z gamers and 61% of millennial gamers follow professional gaming.
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