Videogames have grown to resemble competition-based, interactive movies, and the COVID-19 pandemic has propelled the industry to make more money than movies and sports combined.
Global videogame revenue is expected to surge 20% to $179.7 billion in 2020, according to IDC data, making the videogame industry a bigger moneymaker than the global movie and sports industries combined. The global film industry reached $100 billion in revenue for the first time in 2019, according to the Motion Picture Association, while PwC estimated global sports would bring in more than $75 billion in 2020.
Both of those industries suffered from the effects of the COVID-19 pandemic in 2020, however, while the videogame industry is expected to show double-digit growth this year following high-single-digit growth in the previous two years. Experts forecast that strong growth will continue in 2021, following the recent introduction of next-generation gaming consoles from Sony Corp. 6758, -3.46% SNE, -1.95% and Microsoft Corp. MSFT, +0.61% and new games to get the most out of those upgrades, even as COVID-19 vaccines are rolled out.
“I do think there will be a deceleration as soon as effective, cheap, globally available vaccines get out there over the course of 2021, but I’m quite sure at the end of 2021 there will still be billions of potential people that will need vaccines,” Lewis Ward, gaming research director at IDC, told MarketWatch in an interview. “So, my deceleration happens in 2022.”
The videogame industry has boomed in recent years because of the variety of ways to play games. Gone are the days when all one had to track were console sales and games sold for their respective consoles and PCs. With the rise of digital-copy game sales, mobile games, in-app purchase freemium games, cross-platform games that aren’t limited to a specific console, streaming game services like Microsoft’s Game Pass, games-as-a-subscription models, and online distribution services like Steam, along with varying levels of transparency, anyone wanting to make apples-to-apples comparisons encounters an unwieldy fruit basket.
While console sales will get a boost from new versions, that’s not the biggest chunk of the industry, nor the fastest-growing. The biggest gain is expected to come from mobile gaming, with China playing a big role in smartphone and tablet gaming revenue, Ward said. Excluding in-game ad revenue, world-wide mobile gaming revenues are expected to surge 24% from a year ago, to $87.7 billion.
A big reason why mobile game revenue is expected to widen its already large lead over console- and PC-based games in 2020 is a matter of economics. Mobile phones, which serve as the primary online connection for billions of people world-wide, can be cheap — or free with a usage plan — unlike dedicated gaming consoles such as Sony’s PlayStation 5, Microsoft’s new Xbox line and Nintendo Co.’s 7974, -1.30% NTDOY, -1.62% Switch, which can run from $300 to $500 before supply-constrained markups. In the middle lies PC gamers, since their play requires a multifunction device that’s more common than consoles but less common than smartphones, IDC’s Ward said.
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SOURCE: MarketWatch, Wallace Witkowski