The global video games software market will exceed $100 billion this year, driven by phenomenal growth of both mobile and PC and new console launches from all three of the major players providing stimulus to the category finds Futuresource Consulting in its new Games Insights Market Report.
Consumer spending on mobile gaming will account for half ($45 billion) of all digital gaming software revenues this year as smartphone and tablet install bases are increasingly reaching their peak in developed countries, and developing nations growth is exploding.
“While sales of physical console games are declining, the speed of digital growth which includes forecasts of $30 billion in PC sales and another $12 billion in online console spend are more than offsetting this trend,” says Futuresource analyst and report co-author Tristan Veale.
The report identifies signs that the mobile gaming market in developed nations is plateauing as the installed base of devices approaches saturation point. The US will account for just 14 per cent of global revenues by 2021, with growth increasingly driven by APAC where mobile gaming spend represented over half of the global total in 2016 – a figure which is expected to rise over the forecast period.
Futuresource expects mobile as a proportion of the total video games software market will fall towards the end of the forecast period in part because of faster growth from console and online gaming. The recently launched Nintendo Switch as outperformed initial expectations and hardware demand has significantly outstripping supply. Over 20 million physical Switch games are expected to be sold this year with revenues bolstered further by Nintendo’s plans to launch an online subscription service.
Microsoft is to launch the significantly more powerful Xbox One X in Q4 2017 in a move which may well change the console market forever, as it potentially indicates an end to the traditional 6-8 year console cycle. The move has expected to cause an uplift of Xbox One games, by 13 per cent to 70 million in 2017, shipped worldwide.
“The PC market has mastered upgrading hardware yet retaining backwards compatibility and Microsoft seem intent on the same with this console launch,” comments Veale. “Newer, higher powered consoles may continue to be launched in the future, with games taking advantage of performance improvements and allowing users to create a significant library of games.”
Sony PlayStation 4 software sales are expected to be more muted in comparison to Nintendo and Microsoft, despite the introduction of the PS4 Pro and Slim models late last year. As such, Futuresource expects just a 3 per cent increase of PS4 game sales in 2017.
“Sony PS4 Pro is a more typical mid-cycle console upgrade,” says Veale. “Sony has taken few risks with exception of omitting to include a UHD Blu-ray player but has a dominant position having outsold Xbox by two to one in this generation.”
Sony is also placing greater emphasis on virtual reality than Microsoft, evidenced by its recent announcement of 1 million PlayStation VR headsets sales. “Global VR games demand is gradually expanding as head mounted display usage increases and games publishers boost their title rosters. It should be noted though that VR games demand remains at a low level in comparison to the scale of the overall games market,” adds Veale.