Market Environment

Videogames are among the fastest growing branches of global entertainment.

According to the 2015 Global Games Market Report compiled by the Newzoo market analysts1 the global videogame market was expected to grow by 9.4% in 2015, reaching 91.5 billion USD at the year’s end. Newzoo analysts predict that if the current rate of growth is maintained, the market volume will reach 107 billion USD in 2017. Key factors responsible for this increase are videogames for tablets and mobile devices, PCs and consoles while from the geographical point of view growth will be concentrated in the Asia-Pacific and Latin America regions. For the first time China may emerge as the market leader in 2015 (the projected volume of the Chinese videogame market in 2015 is 22.2 billion USD, compared to 22.0 for the US). In the United States the videogame market is expected to outpace the corresponding markets for printed press (21 billion USD), radio (17 billion USD), motion pictures (11 billion USD) and music (9 billion USD).2 3

The observed dynamic growth is also due to steady expansion of the console user pool. According to recent reports total sales of current-generation gaming consoles have exceeded 55 million units within two years following their release4 – this is nearly 50% more than the corresponding figures for the previous generation of consoles.

Figure 1 Largest videogame markets in 2015 by volume (USD billions).

Source: Newzoo.com

According to Newzoo, the three largest videogame markets are China (22.2 billion USD), USA (22.0 billion USD) and Japan (12.3 billion USD) respectively.

The current volume of the Polish videogame market is approximately 408 million USD, which corresponds to 1.6 billion PLN (0.45% global market share). Poland ranks 19th in the world.5

Focusing on Eastern Europe, Poland ranks 2nd in the region, following Russia, which remains the unquestioned leader in this part of the world (1.3 billion USD). Further down the list are Ukraine (148.6 million USD), the Czech Republic (128 million USD) and Romania (123 million USD).

The Newzoo report indicates that PC games and MMOs6 currently hold the largest share (30%) of the global videogame market (27.1 billion USD – 8% y/y increase). The second largest segment comprises console games (25.1 billion USD; 27% market share), while the most rapid growth can be observed in the tablet segment (27% y/y increase, 2015 market volume: 9.4 billion USD; 10% market share).

Figure 2 Global videogame market by platform

The Polish videogame market continues to experience dynamic growth: according to Newzoo it will continue to expand at an average rate of 5.4% by 2018. 13.4 million players currently reside in Poland, while the corresponding global figure is 1.7 billion players (including 155 million Americans7). 160 videogame development studios are active on the domestic market, employing 6 thousand individuals. Given the observed growth, the videogame sector is well on its way to becoming the cornerstone of the Polish creative industry and a hallmark of the Polish economy8.

Continued growth is also projected in the digital videogame distribution segment (both for PCs and for consoles) – an increasingly important component of the market. According to the PwC Global entertainment and media outlook 2014-2019 report9 we are witnessing ongoing migration of consumers towards digital distribution channels. By the end of 2019 digital distribution of classic videogames is expected to generate 12.89 billion USD in revenues, representing 19.6% of total videogame sale revenues.

A particularly important factor characterizing nearly all videogames developed in Poland is the large contribution of exports to total sales. Consequently, the activities of the domestic videogame development industry feed the growth of national exports, particularly regarding IPR fees and royalties collected by domestic enterprises. In 2015 CD PROJEKT S.A. exports were valued at 660 475 thousand PLN, while the total volume of national exports listed in the “IPR fees” category of the 2014 Foreign Trade Statistical Yearbook published by the Central Statistical Office was 996 030 thousand PLN.

1 newzoo.com, 22 April 2015, http://www.newzoo.com/insights/global-games-market-will-grow-9-4-to-91-5bn-in-2015/
2 Studio market share – Box Office Mojo http://www.boxofficemojo.com/studio/?view=company&view2=yearly&yr=2015&p=.htm
3 SuperData Research, http://www.gamesindustry.biz/articles/2016-02-04-the-esa-must-adapt-or-
die?utm_source=newsletter&utm_medium=email&utm_campaign=european-daily

4 http://arstechnica.com/gaming/2016/01/ea-lets-slip-lifetime-xbox-one-and-ps4-consoles-sales/
5 http://www.newzoo.com/free/rankings/top-100-countries-by-game-revenues/
6 MMO or MMOG (Massively Multiplayer Online Game) – a game in which many players participate simultaneously via network links.
7 Essential facts about the computer and video game industry in 2015, Entertainment Software Association
8 Condition of the Polish videogame industry in 2015; Kraków Technology Park (Kondycja polskiej branży gier wideo 2015, Krakowski Park Technologiczny)
9 http://www.pwc.com/gx/en/global-entertainment-media-outlook/assets/2015/video-games-key-insights-3-shift-to-digital.pdf