According to market researcher Newzoo, the number of players around the world will exceed 3 billion by 2023. It may sound crazy to expect 39% of people to play games, but Newzoo says we already have 2.69 billion players thanks to mobile devices. And whether you like it or not, new players are born every day, and those who don't play become a smaller part of the overall cake.
Demographic change is driving this trend as most young people play games. The gaming market is expected to generate $ 159.3 billion in 2020 and exceed $ 200 billion by 2023, Newzoo said. The growth is driven by mobile games and big hits like Fortnite, League of Legends and Pokémon Go. The number is growing faster during the pandemic.
By the end of this year, we will have 2.7 billion players worldwide, including 2.5 billion on mobile devices, 1.3 billion on PCs and 800 million on consoles. (That adds up to more than 2.7 billion because people are playing on multiple devices). Thanks to the growth markets in regions such as the Asia-Pacific region, the Middle East, Africa and Latin America, this number is on the way to further growth in the coming years.
Growth markets do more to increase this number of players (compared to more mature markets). The growing online population due to the improved (mobile) internet infrastructure, affordable (smartphones) and a growing middle class are important drivers for player growth. For example, in 2019 the number of players in the Middle East and Africa exceeded the number in North America. In 2022, the Middle East and Africa will even outnumber Europe's players.
However, Newzoo said that many players in these growth markets are entering mobile gaming, whose free monetization model makes it notoriously difficult to turn players into payers. The global number of actors is expected to grow by 5.3% in 2020 compared to the previous year, which is mainly due to the regions with the most emerging countries.
The game market continues to move away from boxing revenue. While the transition from physical to digital distribution is definitely part of the equation, the increasing dominance of game revenue will even decrease digital revenue across the game in the coming years.
Newzoo said that in-game revenue – the core mechanics of the free-to-play monetization model – increases its share of the overall revenue picture. Free-to-play is the predominant monetization model for mobile and PC games and is rapidly changing the way console games are monetized.
In the coming years, Newzoo expects that in-game console earnings will continue to grow in popularity, especially as publishers and developers will look for alternative revenue streams when subscription earnings for many of them complete game sales replace.
Not surprisingly, in-game transactions by far generate the most revenue on mobile devices. After all, there are no boxing games on the platform, and there are only a few digital games at full price.
The market for premium (paid) games for mobile phones is growing through subscription services such as Apple Arcade, digital board games and ports from other platforms. However, this growth is marginalized by the growth of free-to-play games for mobile phones.
In fact, 98% of all mobile game revenue was generated through in-game transactions. Newzoo predicts that this will come closer to 100% over the years. Nevertheless, paid games always have a place on the phone.
Subscriptions make up 13% of console revenue this year
Together, subscription services on the console will generate $ 5.8 billion in 2020, which is 13% of the console market and 4% of the total global game market.
Subscription revenue is heavily dependent on the availability of certain services in certain markets, which results in a significant difference in revenue sharing per country. Services tend to be available first in regions with the highest console spending, which is why subscription service revenue is highest in more mature markets.