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Video Games Industry Driven by Online as Digital Delivery Comes to the Fore

Video Games Industry Driven by Online as Digital Delivery Comes to the Fore

Gaming Aug 1,2012 0

The video games industry across the USA and Western Europe will witness steady growth through to 2015, reaching $15.7 billion and €10.2 billion respectively in total retail value, according to a report from Futuresource Consulting. Across both regions, the packaged games market will start to witness a slow decline in value throughout the forecast period, but this decline will be offset by the growth in online and mobile gaming with online being most significant. show more/less

The rise in online gaming is spreading the popularity of gaming as an activity across a wider demographic, driven by the adoption of free app based games, casual online games and gaming subscription services. This is impacting negatively on consumer spend in the traditional packaged games sector, with a 15% and 12% decline expected in 2012 in the USA and Western Europe respectively as current consoles mature and smartphone, tablet and online gaming continue to gain in prominence. However, gaming hardware and content manufacturers are provided with a lucrative opportunity to generate revenue streams and reduce customer churn by delivering enhanced subscriptions and downloadable content to subscribers.

The retail value of online games is expected to hit $6 billion in 2015 in the USA, a rise from $3 billion in 2011, and in Western Europe value is expected to reach €3 billion in 2015, rising from €1.5 billion in 2011.

Growth in mobile gaming has been triggered by the widespread adoption of tablets and smartphones driving momentum in app-based, assisted by strong franchises supporting multiple operating systems, low prices and availability of free titles. However, this is negatively impacting the handheld gaming market and distracting casual gamers away from consoles.

Browser and social network based games are driving growth in PC online gaming and although they are often free, they can also support micropayments. Advanced PC-based services including Steam are also becoming popular, with multiplatform capabilities seen as a major growth area.

The anticipated launch of new consoles, including Sony Playstation 4, Microsoft Xbox 720 and Nintendo Wii U in late 2012 and late 2013 are expected to support packaged media and will provide a much-needed boost for console manufacturers and publishers alike, with the industry hoping to attract lapsed users and provide a brief reprise for packaged games. However, a slow decline will follow as few users will replace existing devices as gaming needs are increasingly being satisfied with non-dedicated gaming products, and digital delivery begins to fulfil the role of catalogue sales.

AAA titles will be key to maintaining packaged gaming revenues in the short-term as these are currently difficult to replicate in the digital environment. However, from 2015 onwards full games downloads will start to cannibalise packaged games sales as the market continues to be impacted by the contraction at retail as shelf space is reduced.

Tags: XboxPlaystation 3
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