Market Environment

Newzoo market analysts1 estimate the volume of the global videogame market at 116 billion USD at the end of 2017, which represents a 10.7% increase over the 2016 year-end value. This is also in excess of original projections published at the beginning of 2017, where the market volume was expected to reach 108.9 billion USD by the end of the year. The stated reason for the revision was faster-than-expected growth of the mobile and PC videogame market

Long-term projections remain very optimisic. In its annual Media & Entertainment Outlook2 report PwC singles out videogames as one of the main driving forces of the global market (next to online video content, online advertising and Internet access). Newzoo analysts estimate that between 2016 and 2020 the market will continue to grow at an annual pace of 8.2% CAGR, reaching 134.5 billion USD in 2019 (upward revision by 15.9 billion USD) and 143.5 billion USD in 2020.

In terms of territorial distribution, Asia and Pacific countries currently account for 57.8 billion USD, which already represents 50% of the global market volume3. This corresponds to a y/y increase of 14.6%. The largest contribution to this figure is from China, with a market estimated at 32.5 billion USD. North America comes in second place, at 27.4 billion USD (5.1% y/y increase), of which 25.4 billion USD is attributable to the Unuted States (second largest market globally). Europe, the Middle East and Africa are jointly comparable to North America in this respect, accounting for 23% of the global market volume, i.e. 26.4 billion USD

Figure 1 2017 estimated global videogame market volume by territory (in %)


Source: Newzoo

No major changes occurred in 2017 at the top of the ranking: China continues to occupy first place and has solidified its lead over the United States (by 7.11 billion USD, compared to 0.9 billion USD in 2016 and 0.2 billion USD in 2015). Further down the list are Japan (14.04 billion USD), Germany (4.43 billion USD) and Great Britain (4.24 billion USD)4.

Figure 2 World’s largest videogame markets in 2017 (USD billions)


Source: Newzoo

Poland’s position remains unchanged – the country is ranked 23rd, with the domestic market valued at 504 million USD (17% y/y increase). In relative terms, the domestic videogame market remains small, contributing only 0.1% to the national GDP – compared to 0.13% for the United States, 0.23% for China and 0.26% for Japan and Sourth Korea5.

Figure 3 2017 global videogame market by platform (in %)


Source: Newzoo

With regard to client devices, smartphones currently have the largest market share (34%6). Gaming consoles come in second place (29%), followed by PCs (23%, representing both digital and physical game editions). Altogether, according to Newzoo analysts, portable devices (i.e. smartphones and tablets) account for 44% of the total market volume, which corresponds to 50.4 billion USD in sales. This segment has seen dynamic growth in the recent years (approximately 23.3% y/y), far outpacing console games (3.7%) and PC games (1.4%7). According to analysts by 2020 mobile games will constitute more than 50% of the global market.

The digital distribution market continues to gather strength, attracting scores of new customers, as evidenced by its increasing share in the total market volume8. According to data published by the Entertainment Software Association (ESA), in 2010 69% of all games sold in the USA were box editions, while in 2016 this segment shrank to 26%9. The PwC report entitled “Global Entertainment and Media Outlook 2014-2019” suggests that migration of customers towards digital distribution channels is ongoing and expected to persist in the future.

Another rapidly growing market segment is esports. SuperData analysts predict that its volume will reach 1.5 billion USD in 2017 and 2.3 billion USD by 202210. The reported increased popularity of esports goes in hand with expansion of online streaming platforms and channels which focus on esports events. The largest and most popular such platform – Twitch – currently accounts for 54% of the online videogame streaming market segment. YouTube comes in second, at 22%. Notably, Twitch users are more engaged and, on average, spend more money on accessing content than their YouTube counterparts11.

 

1 2017 Global Games Market, Newzoo: https://newzoo.com/resources/, accessed on 15 March 2018
2 Curtain up! User experience takes center stage. Perspectives from the Global Entertainment and media Outlook 2017-2021, PwC, https://www.pwc.com/gx/en/entertainment-media/pdf/outlook-2017-curtain-up.pdf
3 https://newzoo.com/resources/, Newzoo, accessed on 15 March 2018
4 Top 100 Countries by Game Revenues, Newzoo, October 2017 r., https://newzoo.com/insights/rankings/ top-100-countries-by-game-revenues/, accessed on 15 March 2018
5 Kondycja Polskiej Branży Gier 2017 (The State of the Polish Videogame Industry), Krakowski Park Technologiczny, p. 10, https://www.cdprojekt.com/pl/wp-content/uploads-pl/2016/03/kondycja-polskiej-branzy-gier17.pdf
6 New Gaming Boom: Newzoo Ups Its 2017 Global Games Market Estimate to $116.0Bn Growing to $143.5Bn in 2020, 28 November 2017, Newzoo, accessed on 15 March 2018 , https://newzoo.com/insights/articles/ new-gaming-boom-newzoo-ups-its-2017-global-games-market-estimate-to-116-0bn-growing-to-143-5bn-in-2020/
7 Here, the concept of “PC gaming” is understood to mean PC games distributed as box sets or digitally, as well as browser games.
8 Digital distribution covers subscriptions, full versions of videogames distributed digitally, expansion packs, mobile applications and social games.
9 Essential Facts 2017, Entertainment Software Association, http://www.theesa.com/article/two-thirds-american-households-regularly-play-video-games/
10 Esports Market Report: Courtside—Playmakers of 2017, SuperData, December 2017, https://www.superdataresearch.com/market-data/esports-market-report/ accessed on 15 March 2018
11 SuperData, Year in review, https://www.superdataresearch.com/market-data/market-brief-year-in-review/, accessed on 15 March 2018