The games market continues its transition, with leaders consolidating their positions as the balance of power shifts across sectors. The coming years could be both “steady as she goes” for some, and a rollercoaster (up and down) for others. Games software revenue could grow from over $90B in 2016 to top $115B by 2020. Big, solid numbers, but long term growth appears to be slowing to a steady 7% CAGR (a fancy term for annual growth). The current single digit growth games market looks very different to the go-go years gone by, so let’s see who’s up and who’s down.
Changing of the guard
The games market changed dramatically in the last 5 years, with the rise of mobile growing the market overall and cannibalizing other sectors. The next 5 years could see mobile games go from $35 billion in 2016 to $48 billion by 2020, with mobile games growth slowing to just over 8% long term. VR games software (and to a lesser extent AR games software) could see a rapid rise from hundreds of millions in 2016 towards the $10 billion range by 2020. Other sectors could continue to deliver solid results, with MMO/MOBA growing market share and console software losing some. eSports is another bright spot for growth, but the question of overall scale remains.
US largest country, Asia largest region
Asia became the dominant games region in recent years, with China, Japan, South Korea and the rest of Asia forecast to take over $4 of every $10 spent on all games software by 2020. So while the US could be the largest single games country (with the potential for Chinese innovation to change that), the regional running order for the games market through 2020 continues to be Asia, Europe, North America, and everyone else.
For mobile games specifically, China’s strong domestic Android app stores and Apple’s surge in the last year mean that it should remain a market leader. Asia as a whole could account for more than half of all mobile games revenue by the end of the decade.
The markets to watch closely aren’t surprises, as mobile marches on and VR games begin to change the world two eyeballs at a time. The big question is can the market break out of its transition back to the high growth of the go-go years. They were fun, and who doesn’t like fun?
You can read more about where the market’s going in detail in tech M&A advisor Digi-Capital’s new Games Report 2016