DFC Intelligence has released its latest global video game consumer segmentation. This report looks at the total worldwide number of paying video game consumers. This number has soared past 3 billion. However, a large percentage of these users only use mobile devices to play games. Many products will only focus on the approximately 350 million consumers that play high-end PC and console games.
One of the biggest mistakes companies can make is buying into the hype over how much the video game market has expanded, according to DFC Intelligence. The market has grown significantly, but the total addressable market (TAM) for any given product is likely to be more limited than many imagine. DFC sees many unrealistic business plans that cite wide-eyed, unrealistic addressable market sizes.
Among the 3.2 billion consumers that buy video games, 1.4 billion (around 44 per cent) only pay for games on mobile devices, either smartphones or tablets. This is a fast-growing market segment but it has very little overlap with the traditional video game market. Furthermore, business plans that rely on cross-platform market appeal are always suspect.
Among core gamers, the PC and console platforms are primary. Many users play on mobile devices, but more as a secondary option. For example, many of our focus users gripe about when they have to play Minecraft or Fortnite on a mobile device.
In recent years there has not been a great deal of expansion in the console game market. There are an estimated 250 million core console game consumers worldwide. Over 200 million of these consumers are in North America or Europe (mostly Western Europe).
The PC game market is larger and more diverse. There is a major market in Asia that does have significant overlap with mobile games. However, the Asia market for PC games requires separate analysis from the North American, South American and European market.
Once again, many business plans throw in China and other parts of Asia as an opportunity. China is the largest market for games and has the largest number of video game consumers. However, not only is the average revenue per user much lower in China, but market entry into China is an entire separate issue. For most products, China should not even be considered in the initial TAM.
The reality is that worldwide there are about 350 million video game consumers that can be targeted for a high-end game. That is slightly more than about 10 per cent of the global market. However, most products will target a smaller segment of less than 10 per cent of that 10 per cent.
With a huge global game market, the challenge of segmentation has become more difficult than it was in the past. As always companies that are better with TAM, SAM and SOM analysis have a big advantage.