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Video Games Industry – Continued Expansion

Video Games Industry - Continued Expansion (Video for Classiarius and for Felix`s gaming clients)

Some estimates show that gaming is now a $130 billion business with over 2 billion players around the globe. Mobile gaming continues to grow, just look at the kids in  Seoul, Tokyo and Singapore – many have smartphones and access to the latest games on the market. 

More than half of the of the gaming revenues are now coming from the mobile market, a segment that continues to see strong growth. Now 80% of gaming is viewed on smartphones. 

The video game industry is expanding at a healthy pace and is, at the same time, going through a transformation. The home video game industry business model is shifting away from the “one-time sales model” to one that is more increasingly on line with a business model that focuses on additional content and more importantly, regular updates of  exiting games. These structural changes in the industry are giving it a boost as it sees global expansion in 2018 and is expected to continue in 2019. 

The market leaders are the fee-based PlayStation Plus, Xbox Live Gold and Nintendo Switch Online have subscriber services, and they are moving to new pay systems. Some  are now charging a fixed rate for unlimited access to games. Sony continues to sell well, leading the industry in subscribers. Note that Xbox One continues to trail Sony PS4 – but Xbox One is targeting both platforms, PCs and mobile devices. 

A $10.52 billion business in the United States. 

In the period from January to October 2018, the US home video game business was up 21% year on year to achieve that $10.52 billion mark, and it is still growing. The combined sales in dollar by these major players is up 7 consecutive quarters, as the growth is double digit and expected to continue in the coming year. 

According to the Consumer Technology Association (CTA), game consoles and software were strong sellers in the end of 2018, during the December period for holidays. The business model changes we spoke of earlier in this presentation are likely going to drive sales in 2019 and 2020 to even higher levels. These business models will generate steady and consistently high earnings according to analysts, and this is attributed to the new subscriber model incentives. 

On line game sales are becoming the drivers and a model that allows for ongoing updates after initial release of these games has taken hold. And there is of course the launch of various fee-based models with The Playstation Plus has over 30 million subscribers, while the Xbox Live Gold has over 20 million subscribers – note that Nintendo Switch Online started in September 2018, but is expected to see robust sales expansion. Nintendo`s Switch is expecting 5 million subscribers in 2019 with a target of 20 million buy 2023. 

Currently, US and Japanese software companies are changing and producing software but Japanese firms are not aggressively taking risk as they are concerned about losing power and control over their production. There is stiff competition from the console companies who are producers of content. 

We have been studying this industry and others and will add more reviews and content in the coming weeks and months. 



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