This article first appeared in The Edge Malaysia Weekly on January 13, 2020 - January 19, 2020
GROWTH in the global games market is expected to rebound in 2020 after expanding at a slower pace for the second consecutive year in 2019, according to intelligence firm Newzoo.
Newzoo’s senior market analyst Tom Wijman said the global games market revenue, which grew 7.3% in 2019 to US$148.8 billion (RM608.6 billion), was expected to expand by 7.9% to US$160.5 billion in 2020.
“The global number of about US$150 billion is still very impressive, that is, bigger than movies and TV. Gaming is truly one of the leading entertainment industries right now,” he told a media briefing last November at ON.DXB, a three-day film, game, video and music festival in Dubai, UAE.
The slowdown followed China’s nine-month licensing freeze on new games until end-2018, as well as measures to reduce screen time among children thereafter.
Wijman said at the briefing that he was optimistic about the future growth of the gaming industry, especially with the expansion in mobile devices gaming revenue. “This year , we are looking at 46% of the global game market [being] generated by mobile gaming. It is by far the largest segment of the industry and also the fastest growing.”
Wijman said mobile gaming grew almost 10% year on year in 2019 and would continue to do so in the coming years.
“What is very interesting is, mobile gaming has been growing without cannibalising any of the market in the PC and console segments.
“When Apple launched its first iPhone in 2007, it did not even support gaming. In fact, Apple had no interest in the gaming industry at all until earlier this year , when they launched Apple Arcade.
“Despite Apple’s lack of interest, mobile gaming grew swiftly. In 2012, it was just 18% of the industry. By 2022, some three years from now, it will be almost 50%.”
Wijman explained that the significant growth in mobile gaming revenue is attributable not only to new smartphone launches, but also to the evolution of games, which now use more sophisticated technologies.
“We are in a very healthy industry. People now launch smartphones that are fully dedicated to gaming, but that is not the only transition for the industry.
“Games are at the forefront of entertainment. Game enthusiasts are among the most dedicated fan bases in the world. In the past two decades, game companies have turned this fandom into a competitive advantage by evolving into all-round entertainment companies.
“Pokémon, Mario and Tomb Raider all started as video games, and are now among the most recognisable and highest-grossing entertainment franchises in the world,” he added.
Wijman said driven by the standard set in mobile gaming, gamers have come to expect continuous updates and content additions to their favourite games.
“Not only does this greatly expand the lifetime of games, it also allows publishers and developers to monetise players long after the initial sale. Games-as-a-Service (GAAS) is now the industry standard on PC, mobile and console. As a side effect, players play a smaller variety of games, thus increasing the value of franchises and IP [intellectual property],” he said.
Wijman added that the latest industry trend will see consumers getting involved in the game development experience.
“It is not just companies that are creating content; with the rise of YouTube and Twitch in streaming content creation, consumers have turned into content providers for the industry itself.
“When we talk about gamers and players, we no longer just talk about people who are in the activity of gaming because people engage in game content in a very different way now. Previously, people used to just play; now they watch, own and do any combination of that,” he explained.
From a regional perspective, Wijman said Asia-Pacific remains important for the industry, as 48%, or US$71.5 billion, of all consumer spending on games in 2019 was expected to be from this region.
“Nearly half of global revenue was generated by players in this region, and it also hosts some of the largest gaming companies — Tencent, Sony, Nintendo. The gamers in this market are some of the most enthusiastic and professional as well,” he said.
In terms of spending by individual countries, Wijman noted that China and the US are the largest markets. Consumers in China were expected to spend US$36.5 billion in 2019, while those in the US were estimated to spend US$35.5 billion.
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