The electronic gaming industry completed its 35th year in 2018, and to celebrate the occasion Newzoo published a detailed report covering gaming from a worldwide perspective. We’ve drilled down to discover what we can learn from the last 35 years and what you should know for the years ahead.
2018: A $137.9 billion year
In 2007, the gaming industry was worth $35 billion. However, this number massively increased with the introduction of the iPhone. Mobile gaming quickly propelled the industry, and by 2018 gaming totaled $137.9 billion worldwide. In only ten short years, gaming has changed in dramatic and unprecedented ways, including the evolution to greatly impact a variety of industries other than gaming at both an organizational and business level.
According to Newzoo, “Ultimately, the consumer has determined the pace of change. No other form of entertainment or media gives as much power to the consumer as games. Today, not only do games empower people to actively participate, but allow them to enjoy their passion for gaming in ways that suit any mood, interest, lifestyle, location, and budget.”
Gaming puts players in control
Gaming is centered around player engagement because, after all, engagement is where the money is made. Gaming includes demographics from the casual mobile game player to Twitch streamers, all the way through to avid PS4 enthusiasts and build from scratch PC players. The typical gaming model no longer applies to the entire industry. From in-game purchases to streaming game viewers, the gaming industry has redesigned its business model to a situation where the highest level of anticipation wins the purse.
Newzoo has created categories to define a gamer’s spending habits and various identities. Newzoo writes that in 2018, they “introduced the term ‘game enthusiast’ to replace gamer, as gaming now encapsulates lean-forward playing (intensely or casually), lean-back viewing (content created by peers or provided by the professional gaming scene), creating unique content (influencers), sharing (streaming live or on demand), and owning hardware.” No longer is the gaming industry separated by makers and players, instead there are varying levels of interest and engagement.
Social networks changing the game
Research states that 95% of gamers play mobile games, either alongside console or PC games or mobile games alone. Revenue models around the globe are largely based on the attention model with most revenue created through in-app advertising, as many mobile-first countries lack the resources for the pay-to-play model often seen in the western world.
Instant games within social networking have bridged the gap for gamers not interested in purchases or downloads. Facebook, Google, and international companies including Tencent and LINE have spent the past year experimenting with instant games. Newzoo writes that instant games act as a two-fold benefit for both the game creators and social media networks. The report states, “The social networks themselves benefit from increased engagement on their platform and get a cut of every transaction in these games.”
Subscription-based gaming models
The report states that “subscription-based gaming breaks $60 AAA pricing on console,” which in the coming year will lead to an increased availability of platform and publisher participation in the subscription-based gaming phenomenon. Newzoo writes, “Sony, Microsoft, and Nintendo, platform owners who already control the hardware and the distribution channel for content and services, are especially well-positioned to offer game subscription services.” Whether publishers are offering all access to latest releases, like Xbox Game Pass, or a more traditional approach to the availability of older titles and complete catalogs, subscription services are heading towards mainstream gaming due to the lack of a pre-installation requirement.
The Global Market
As the largest segment of the games industry, estimates state that the Asia-pacific region will reach $71.4 billion in gaming for 2019, which accounts for 52% of total revenues as well as a 16.8% increase.
As the second-largest region, North America accounts for 23% of the global games market but is estimated in 2019 to only reach $32.7 billion, a 10% increase.
In 2018, EMEA represented 21% of the market and $28.7 billion of the total game revenue.
In 2019 it is estimated that Latin America will reach $5 billion in game revenue to hold 4% of the market.
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