According to the recent Games Report Q1 2018 by Digi-Capital, video games software/hardware combined could be in the $165 billion to $170 billion range this year (if mobile outperforms again), and reach between $230 billion and $235 billion by 2022 if strong performance continues. If that happens then it might make game software/hardware bigger in 5 years than 150 countries’ individual GDPs today. Games software alone could drive around three-quarters of total market revenue in 5 years, with hardware taking the rest.
Three giant sectors to dominate market revenue
The report states mobile games software, PC games hardware and PC games as the three giants in the sector that could take just under three-quarters of total games market revenue by 2022. If mobile games software continues to outperform like recent years, it could deliver in the $55 billion to $60 billion range this year, and grow to $90 billion to $95 billion by 2022. PC games hardware sales could hit $30 billion to $35 billion in 2018, growing steadily to between $40 billion and $45 billion in the same time frame. Lastly PC games (online) could drive $20 billion to $25 billion this year, also growing steadily to $25 billion to $30 billion by 2022.
Fifteen sectors driving market growth (and decline)
Physical console game sales could still produce significant revenue by 2022, despite long-term decline. All the other sectors might be in the high to low single digit billions in 5 years, including steady growth in console games (digital sales), high growth in AR games (from a low base), long-term ex-growth in console games hardware, high growth in VR games (from a low base), solid growth in console games (online), steady growth in games advertising, low growth in PC games (digital sales), steady growth for VR hardware (from a low base), declining web games, strong growth eSports and declining PC games (physical sales).
At a platform level, mobile games could approach two-fifths, and PC games one-third of all games revenue by 2022. Console games remain huge fun, but could see less than one-sixth of all market revenue in 5 years. VR and AR games are both going to be big, but they’re not the same scale as the three major platforms. Web games are not growing, and eSports might still produce less than 1% of total industry revenue long-term.
USA, China, Japan and South Korea dominant
The US, China, Japan and South Korea together could take nearly two-thirds of global games market revenue in 5 years. But when grouped into regions with the 50 other games countries Digi-Capital covers, Asia should continue to be bigger than North America and Western Europe combined.
There are huge differences in games industry growth rates across countries, but at a regional level Asia’s combined scale and growth are driving the industry forward. Some of the highest revenue growth rates are also coming from countries which won’t hit the top 10 in 5 years, with several Eastern European, Latin American and Middle Eastern/African countries seeing significant revenue growth from a small base.
Record games investment in 2017
All of this scale and growth has led to two consecutive years of games investment growth, with VCs from Sand Hill Road to China pouring a record well over $2 billion into games startups in 2017. The biggest investments were in games core tech, mobile games and AR/VR games sectors. eSports also generated a huge amount of interest, but not the same level of investment.
In contrast, games M&A dropped back below $5 billion to its most recent low point of 2015 due to a lack of giant games acquisitions in 2017. To balance this decline, the games IPO market rebounded to a record high last year led by Netmarble, SEA (Garena) and Rovio. The next 12 months could determine whether the last decade’s 3 year games IPO cycles hold true, with one big year followed by two quiet ones. Altogether 2017’s total games market exits (M&A/IPO combined) delivered lower dollar value, but higher deal volume than the year before.
Three giant sectors to dominate market revenue
The report states mobile games software, PC games hardware and PC games as the three giants in the sector that could take just under three-quarters of total games market revenue by 2022. If mobile games software continues to outperform like recent years, it could deliver in the $55 billion to $60 billion range this year, and grow to $90 billion to $95 billion by 2022. PC games hardware sales could hit $30 billion to $35 billion in 2018, growing steadily to between $40 billion and $45 billion in the same time frame. Lastly PC games (online) could drive $20 billion to $25 billion this year, also growing steadily to $25 billion to $30 billion by 2022.
Fifteen sectors driving market growth (and decline)
Physical console game sales could still produce significant revenue by 2022, despite long-term decline. All the other sectors might be in the high to low single digit billions in 5 years, including steady growth in console games (digital sales), high growth in AR games (from a low base), long-term ex-growth in console games hardware, high growth in VR games (from a low base), solid growth in console games (online), steady growth in games advertising, low growth in PC games (digital sales), steady growth for VR hardware (from a low base), declining web games, strong growth eSports and declining PC games (physical sales).
At a platform level, mobile games could approach two-fifths, and PC games one-third of all games revenue by 2022. Console games remain huge fun, but could see less than one-sixth of all market revenue in 5 years. VR and AR games are both going to be big, but they’re not the same scale as the three major platforms. Web games are not growing, and eSports might still produce less than 1% of total industry revenue long-term.
USA, China, Japan and South Korea dominant
The US, China, Japan and South Korea together could take nearly two-thirds of global games market revenue in 5 years. But when grouped into regions with the 50 other games countries Digi-Capital covers, Asia should continue to be bigger than North America and Western Europe combined.
There are huge differences in games industry growth rates across countries, but at a regional level Asia’s combined scale and growth are driving the industry forward. Some of the highest revenue growth rates are also coming from countries which won’t hit the top 10 in 5 years, with several Eastern European, Latin American and Middle Eastern/African countries seeing significant revenue growth from a small base.
Record games investment in 2017
All of this scale and growth has led to two consecutive years of games investment growth, with VCs from Sand Hill Road to China pouring a record well over $2 billion into games startups in 2017. The biggest investments were in games core tech, mobile games and AR/VR games sectors. eSports also generated a huge amount of interest, but not the same level of investment.
In contrast, games M&A dropped back below $5 billion to its most recent low point of 2015 due to a lack of giant games acquisitions in 2017. To balance this decline, the games IPO market rebounded to a record high last year led by Netmarble, SEA (Garena) and Rovio. The next 12 months could determine whether the last decade’s 3 year games IPO cycles hold true, with one big year followed by two quiet ones. Altogether 2017’s total games market exits (M&A/IPO combined) delivered lower dollar value, but higher deal volume than the year before.
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