Industry Insider: Where Is The Video Game Industry Heading?
mahmoud alaa
After the success of games such as The Legend of Zelda: Tears of a Kingdom and Spider Man 2, one would think that the video game industry is on the rise, or at least, in a stable position. However, the thousands of layoffs, the strange, uncharted video game marketplace, and the gaming infrastructure that is creating a new pressure on these video games to produce more, making many buckle under pressure, says otherwise. Begging the question: What is the state of the gaming industry? In this article, A.N. Publishing will discuss the global games market, the various types of video games that are on the rise, or not, and how the gaming industry collides with Hollywood. By analyzing the Variety VIP+ article, “The State of the Video Game Industry,” written by Kaare Eriksen, media analyst at Variety, one will discover the complex state that the industry is in.
It is evident that the video game industry has a large market – there is always a flurry of excitement when a new game gets released or a Twitch streamer garners millions of views by playing classic games. While these games have a large industry, it has yet to reach a global market size of $200 billion. It reached a peak in 2020 and 2021 with the advent of COVID-19 but has yet to see those numbers – 2023 saw $184 billion, $8 billion less than 2020. This significant decrease can be explained by the types of video games that an individual plays; mobile video games, which comprise half of the market, saw a decrease of 1.6% in 2023. There is some good news, however, with consoles and PC usage increasing 1.9% and 5% respectively. The semiconductor chip shortage ending likely caused this increase.
According to Variety, “Mobile gaming’s decline in 2023 is attributed to regional market differences. Asia-Pacific was the only region that didn't grow after 2022, and it accounts for nearly half of the gaming market.” Thus, understanding the regional differences between the gaming industry is vital for understanding this market. With $47.3 billion (the United States) and $43.4 billion (China), these two superpowers hold the top spots in 2023, creating an intense competition. The United States had around 240 million gamers, which accounts for many top gaming publishers who operate in the North America region, while China had 1.8 billion gamers, which accounts for the large Asia-Pacific region.
2023 global games market share (in billions) by region
Ultimately, China earns the most gaming revenue annually, despite the 2023 revenues dipping due to regulatory measures. Companies such as Japan’s Nintendo and China’s NetEase are large corporations that work solely in the video game industry, creating popular and lasting content. The United States also operates large companies with Electronic Arts and Blizzard – Blizzard became a Microsoft subsidiary in October. China and the United States teeter between spots in the marketplace, oftentimes exchanging the top areas depending on the year or type of video game. For example, while China takes the lead over the United States with revenue, the United States still seems to earn the most with mobile games.
Furthermore, mobile gaming is the biggest sector of gaming. Simplicity and accessibility is what leads mobile gaming to its number one spot. The various free-to-play games that are easy to learn and available on any mobile phone are always likely to gain traction. Because of the App Store and Google Play, the United States has held the largest share, globally, of mobile games. The 30% of cuts that the storefront takes from purchases made in the app store is the main cause of the revenue created from mobile games.
2023 Global Games Type (in billions)
Like in the film and television industry, subscriptions or taking over the gaming industry: “Subscriptions are a more optimistic emerging front… with analysts expecting more than 200 million subscribers and $22 billion in revenue by 2027. The most popular services reflect traditional gaming leaders, with PlayStation Plus on top because of the brand’s large consumer base.” While it's a new frontier, the gaming industry can watch as popular companies, PlayStation and Xbox Games, handle the subscription model and see how loyal and willing consumers are.
Hollywood and the gaming industry often collide; however, the production companies willing and able to make video games are small. Sony and Warner Bros. are the only traditional studios making games. Many other companies simply license out the IP rights. Disney, however, has had recent success with EA’s Star Wars Jedi and Gameloft’s Disney Dreamlight Valley. Additionally, Netflix launched a mobile gaming app in 2021 and has integrated games into the core mobile app with its main 260 million subscribers, which is more than five times that of PlayStation Plus.
Hollywood adaptations, on the other hand, are getting use out of gaming IP in film and television. For example, Universal created the Super Mario Bros. movie, PlayStation and HBO created The Last of Us show, Peacocks’s Twisted Metal show, and Amazon’s Fallout show are all prime examples of video game adaptations that have garnered a lot of success with individuals who played and didn't play the games.
Despite not yet reaching the revenue peak observed in 2020, the gaming industry offers a dynamic landscape. By comprehensively analyzing market dynamics, including competition between global powerhouses like China and the United States, the diverse array of video game consoles and modes, the prominence of mobile gaming, and the evolving relationship between Hollywood and the gaming sphere, marketers gain invaluable insights to inform strategic decisions and prepare for the industry's future trajectory.
