The massive business of video games is only expected to get bigger, and it has highly anticipated titles and an uptick in younger ranks of gamers to thank, according to a new report.
The global games market is expected to generate nearly $188 billion in revenue in 2023 — up 2.6% from last year, according to a report from Amsterdam-based industry tracker Newzoo.
The growth of the industry is good news for California, home to video game publishers and developers like Activision Blizzard, Riot Games, Electronic Arts and Naughty Dog.
Although the console segment underperformed in 2022 because of development and release delays, consoles will be this year’s biggest revenue growth vehicle, analysts said, with sales increasing 7.4% from last year.
The growth is fueled by a release calendar full of highly anticipated titles that were initially slated for 2020 to 2022, including “Final Fantasy XVI,” “Hogwarts Legacy” and “The Legend of Zelda: Tears of the Kingdom,” releasing this year due to pandemic-related delays.
The study also signals an uptick in gaming engagement among younger generations, with more people playing games as current players age and new gamers enter the field.
At the same time, analysts said, this year’s “transmedia releases” — such as hugely popular “The Super Mario Bros. Movie” and HBO’s “The Last of Us” — will continue to legitimize the industry among those who don’t play games.
Last year was a corrective year for the market as the pandemic brought engagement and gaming revenue to unsustainable peaks, said Tom Wijman, lead games analyst at Newzoo.
“When people could enjoy more leisure activities, naturally, gaming engagement and revenue went down somewhat. We’re, however, still above the base level of 2019,” Wijman said in an emailed statement. “2023 is shaping up to be an amazing year for gaming, particularly console gaming, as many of the blockbusters that were set to launch in the previous years are now launching in a very short time frame.”
The gaming industry will continue to stabilize, Newzoo found, with the market projected to generate yearly revenues of $212.4 billion in 2026, bolstered by console sales and mobile games.
Here are key takeaways from the report:
Mobile games will keep growing — but not as much as before
The mobile segment will see an uptick of 0.8% in 2023 to reach $92.6 billion — lower than growth rates in prior years. The slowdown is due in part to privacy-related monetization and user-acquisition challenges that mobile game developers face from Apple and Google.
“Mobile developers and marketers have been forced to course-correct their strategies and experiment with new ones, stopping the segment’s trend of immense growth in its tracks,” the report said.
But mobile will remain gaming’s most significant segment by consumer spending, accounting for just under half of the entire global market, Newzoo projected.
“Mobile games keep growing because it is the primary platform of choice for new players entering the market,” Wijman said. “The middle class in many markets is growing, creating room for disposable income to be spent on gaming.”
More people will play games
The number of players worldwide will reach 3.38 billion in 2023, growing 6.3% over last year. Mobile is expected to contribute to most of this growth.
Payers — those who have spent money to play games on a PC, console, mobile device or cloud gaming service in the past six months — will grow by 7.3% globally to 1.47 billion in 2023.
“Every year sees gaming become more mainstream, and this year is no exception,” Wijman wrote. “Since our first report, we’ve said that gaming is at the heart of the entertainment industry, and it’s never been as easy to back up this claim as it is now. Gaming’s impact will go beyond the number of players and revenue generated within the scope of the industry. Transmedia strategies have showcased the power of games as a business, and that trend is only accelerating.”
Most global gamers come from Asia-Pacific region
Asia-Pacific accounts for more than half of players worldwide, Newzoo found, due to big markets in India and China, and highly engaged countries like Japan and South Korea. North America and Europe account for 20% of players.
Despite its market size, growth in the Asia-Pacific region lags behind the rest of the world with a projected revenue growth of 1.2% in 2023. Markets in the Middle East and Africa, as well as Latin America, will see the most player growth this year.
“Factors driving this growth include better (mobile) internet infrastructure, accessible and affordable (mobile) internet and the rise of the middle class,” the report said. “The availability of gaming as an affordable recreational activity, thanks to the free-to-play model and the increasing population of smartphone users, is also contributing.”
North America’s games revenues are projected to grow 3.8% to $51.6 billion, while Europe’s will grow 3.2% to reach $34.4 billion.
“Together, these two regions will account for 46% of 2023’s global games market revenues,” according to the report.