The World's 2.7 Billion Gamers Will Spend $159.3 Billion on Games in 2020
The Market Will Surpass $200 Billion by 2023 - By Tom Wijman
Last week, we published our latest games market estimates for subscribers to our Global Games Market Report (and also via Newzoo's Analytics Platform). We forecast that 2020's global games market will generate revenues of $159.3 billion, a healthy year-on-year growth of +9.3%.
In this article, we'll explore the 2020 revenues for mobile, PC, and console gaming. We also provide our outlook for the overall games market, diving into our revenue estimates towards 2023.
The world is currently undergoing a harrowing and unprecedented event : the Covid-19 pandemic. During these trying times, gaming has become a means of escapism and time filling for many.
As a result, one of this year's growth drivers is an increased interest in gaming due to Covid-19-related lockdown measures. However, the launch of the next-generation consoles toward the end of the year is also a key contributing factor.
Coronavirus Lockdown Measures Will Result in Higher Consumer Spending on Games, Especially on Mobile
All game segments saw an increase in engagement and revenues as a result of the Covid-19 measures, but mobile gaming saw the biggest increase. In total, mobile games will generate revenues of $77.2 billion in 2020, growing +13.3% year on year.
There are a few reasons why mobile will enjoy more growth than both PC and console gaming :
- Mobile gaming has the lowest barrier to entry : more than two-fifths of the global population owns a smartphone-and many mobile titles are free to play.
- Mobile gaming as an alternative to PC cafes : the closure of these cafes has led many to (temporarily) churn to mobile gaming.
- The mobile development process is less complex and, therefore, less likely to suffer delays from Covid-19-related disruption.
We expect engagement for mobile games to rise even more rapidly. After all, it is infamously difficult to convert players into payers on mobile. Overall, there will be 2.6 billion mobile gamers in 2020 ; of which, just 38% will pay for games.
We also expect the correction following the pandemic to be most visible for mobile gaming-again, due to the lower barrier to entry (and the resulting lower barrier to exit).
Console and PC Are Still on Track for Healthy Growth
Meanwhile, console gaming will grow +6.8% year on year to $45.2 billion, boasting over 729 million players. Engagement and revenues are set to grow due to the lockdown measures, at least in the short term, but Covid-19 is also having negative effects on console gaming.
Physical distribution, massive cross-company collaboration, and certification are a major part of console game development, which may result in game delays in the future or games scaling down scope or features to hit release windows.
In Q2, PlayStation 4 exclusives The Last of Us 2 and Ghost of Tshushima were already delayed due to distribution issues (resulting from the pandemic). Even ported games are affected, with Switch ports of The Outer Worlds and The Wonderful 101 : Remastered also receiving Covid-19-related delays.
These delays will also impact the games scheduled to accompany the launch of next-generation consoles, as the development process for next-gen games was a relatively unknown quantity for developers-even before the pandemic.
Growth in the console market has slowed down significantly compared to the heights it reached in 2018. Anticipation for the next-gen consoles already led to lower-than-expected spending on console last year. Due mostly to this, we adjusted our 2019 global games market estimate to $145.7 billion.
While there is a short-term uplift this year due to the lockdown measurements, the next-gen consoles and associated content are essential to kickstart a new phase growth in that segment.
Finally, PC gaming, driven by its 1.3 billion players, will grow +4.8% year on year to $36.9 billion in 2020. This growth can be almost fully attributed to the lockdown measures. Unlike console gaming, new releases for PC rarely reach revenues that significantly change the market's outlook.
Many of PC's most popular games have been at their respective positions for at least three years, with some retaining popularity for over a decade.
What's more, the PC ecosystem moved to digital (from physical) much quicker than console did, so physical distribution is almost a non-issue for PC. That said, the PC segment isn't completely unaffected : PC titles are also getting delayed due to Covid-19, including the port of Death Stranding.
Across all three segments (PC, console, and mobile), almost half of consumer spending on games will come from China and the U.S. in 2020. However, growth will be driven by emerging markets in regions like Latin America and Asia-Pacific in the years to come.
What Is the Future Outlook for the Global Games Market ?
The games market will continue to grow in the following years, exceeding $200 billion at the end of 2023. By then, we forecast the games market to grow with a +8.3% CAGR to $200.8 billion.
Due to the new generation of consoles, growth in console game revenues will steadily grow every year, although we do not foresee revenues reaching double-digit growth before five to six years into the launch. Mobile gaming will continue to be the fastest-growing segment overall.