2015 has proven to be a banner year for the $100B global video game industry. The latest console generation has started to mature, mobile continues to grow at a frenetic pace, eSports became a thing, and VR promises to take gaming into the future. The industry can be difficult to navigate because unlike other Internet categories such as marketplaces, ecommerce, or online education, the gaming industry tends to be more diverse and multi-faceted. Regardless, I have distilled a short list of trends that will help us understand where the industry is today and where it might head in the future (credit to NewZoo's recent white paper on the industry).
The types of games consumers play are changing...
In the past decade, the way gamers "consume" content has drastically changed. Gamers today care less about professionally created content, and instead enjoy watching each other with an increasing desire to create, share and be a part of the experience. The growth of eSports, Twitch, and the sharing of video game content illustrates this point. Due to this trend, the games with the most potential are usually competitive or creative in nature. This is why creative games like Trivia Crack and Minecraft have thrived, as well as a plethora of competitive titles geared towards eSports.
...So it's no surprise that eSports is finding its legs
I've previously detailed the rise of eSports and some of the impressive numbers behind the industry. There are over 200 million viewers worldwide who tune in at least occasionally, and 40% of all eSports viewers do not even play the games themselves. This viewership has caused sponsorship and tournament prize pool dollars to swell. Naturally, big companies have taken notice with EA, Activision, Microsoft and ESPN all creating their own eSports operations. Activision recently announced the acquisition of Major League Gaming (MLG), an organizer of professional gaming circuits and tournament streamer, with hopes to create the ESPN of eSports. While many have questioned whether eSports was a fad, it's become clear in 2015 that eSports is here to stay.
Despite the eSports hype, mobile continues to be the driving factor in the industry...
Mobile games will grow to account for one third of the global games industry in 2015. Because mobile gaming is possible on two of the four consumer screens (smartphone and tablet), it wouldn't be a surprise to see it grow even more as mobile platforms surpass the more traditional PC and TV. Mobile games continue to grow across all regions, with APAC taking over half the market. The region's 760 million mobile gamers generated $13.6B revenue, or 55% of the market, in 2014. North America is the second largest market in terms of revenues, generating $5.7B in 2014.
...And within mobile, China is particularly massive and unique
China continues to growth at a rapid clip and is set to surpass US mobile games revenue in 2016. China is also very unique in its mobile ecosystem (as well as it's entire internet sector for that matter). App distribution is highly fragmented with dozens of different providers boasting some level of market share. Adding to China's uniqueness is the fact that gamers also gravitate towards different types of games. Digital card games and role-playing games are two genres that happen to be extremely popular.
However, PC gaming is still bigger than you think (and Valve/Steam dominates)
When we talk about gaming, we often talk about mobile, eSports, or consoles. PC gaming usually gets the cold shoulder, but it should really get more love. The industry is almost as big as mobile at $27 billion and much of the hardcore gaming and eSports viewership happens on PC. The platform continues to be fundamental to the lifestyle of gamers everywhere. Within this ecosystem, Steam (made by Valve) is the dominant platform, serving at the de facto PC game distribution hub. SteamSpy has a great overview of some of the impressive numbers behind Steam. Short summary for 2015 below:
-Over 3,000 new games (compared to 1,900 in 2014) -Number of concurrent users up to 12M from 8M -Paid Steam games market worth over $3.5B in 2015 (which is an underestimate since some developers are selling outside of Steam and it also doesn't include free-to-play revenue) -PC worldwide core games market is estimated to be around $27B, meaning Valve is controlling roughly 15% of it -Top games on Steam generate as much revenue as top movies at the box office
But don't forget about consoles!
The next-gen consoles are starting to mature. Sony just announced that the PS4's installed base jumped to 36M over the holidays, and while Microsoft doesn't disclose Xbox One sales figures outright, some estimates put them at 18M units. The consoles are selling at a healthy pace and game sales are setting new records. In fact, Fallout 4 sold 12 million copies in the first 24 hours post-launch, generating $750 million in sales. Activision and EA are probably the biggest benefactors of the new console generation and they continue to profit from a wide array of video game franchises.
Virtual reality and beyond
Between PC gaming, mobile, eSports and consoles, there is certainly a lot going on in the game industry. Yet, there is still much more on the horizon. VR certainly holds a lot of promise, but the game industry is notoriously hard to predict. Whatever gaming's next act is, I'm sure it will be exciting.