We’re thrilled to announce we’ve officially launched our 2020 Global Games Market Report! The annual report is the gold standard for understanding and sizing the world’s games market, featuring: a detailed deep dive into gaming’s revenues, player engagement, and the trends informing the future of this $159.3 billion market.
In this article, we’ll present key high-level findings from the full report, touching on engagement and revenue numbers from this year through to 2023, while exploring our new revenue breakdown.
Revenues Are King, but Engagement Is the Kingdom
As highlighted by some of the world’s highest revenue-generating games such as Fortnite, League of Legends, and Pokémon GO, engagement comes before revenues. As players become more engaged (emotionally and socially) with a title, they are naturally more willing to spend (or engage with brand activations) further down the line.
The games market will hit $159.3 billion this year and will exceed $200 billion by 2023
The Global Player Number Is Still on the Rise
By the end of this year, there will be 2.7 billion gamers worldwide, with 2.5 billion playing on mobile, 1.3 billion playing on PC, and 0.8 billion on console.
But thanks to growth markets in regions like Asia-Pacific, the Middle East and Africa, and Latin America, this number is on track for even further growth in the coming years.
The year 2023 will mark a major milestone for the global games market. That year, the global number of players will surpass the three-billion mark, representing a CAGR (2015-2023) of +5.6%.
Growth markets are—quite naturally—contributing more to this player increase (compared to more-mature markets). One major contributor to growth is the growing online population, driven by:
- Improved (mobile) internet infrastructure;
- More affordable (smart)phones across all specs; and
- A growing middle class.
In 2019, for example, the number of players in the Middle East and Africa outpaced the number in North America. In 2022, the Middle East and Africa will have surpassed even Europe’s player numbers.
However, it is worth noting that many players in these growth markets are entering gaming via mobile, whose free-to-play monetization model makes it notoriously difficult to convert players into payers. The image below shows how these 2.7 billion players are divided between regions:
The global number of players grew +5.3% year on year in 2020, predominantly driven by the regions with the most emerging markets.
An Expanded Revenue Breakdown for an Ever-Expanding Market
The games market is constantly evolving—as are the ways through which consumers engage with the market. This demands an evolving approach for breaking down game-related revenues. To that end, we updated our revenue breakdown for this year’s Global Games Market Report.
Globally and for each country/market/region, we now split revenues per platform by boxed full-game revenues, digital full-game revenues, and in-game revenue. The console revenue stream features the biggest change. For the first time, it is possible to isolate the segment’s subscription revenues.
The Gap Widens: In-Game Transactions Are Strengthening Their Hold on the Games Market
The games market is continuing to move away from boxed revenues. While the move from physical to digital distribution is definitely part of the equation, the increasing dominance of in-game revenues will shrink even full-game digital revenues in the coming years.
In the chart below you can see the growing share of in-game revenues—the core mechanic of the free-to-play monetization model. Free-to-play is the dominant monetization model for mobile and PC gaming, and is quickly changing how console games are monetized.
In the coming years, we expect in-game-transaction revenues to increase even further in popularity on console, especially as publishers and developers will look for alternative revenue streams when subscription revenues replace full games sales for many of them.
Unsurprisingly, in-game transactions generate the most revenues (share and absolute) on mobile by a wide margin. After all, there are no boxed games on the platform, and full-priced digital games are few and far between.
There is a growing market for premium (paid) games on mobile—for example, through subscription services like Apple Arcade, digital board games, and ports from other platforms—but that growth is marginalized by the growth of free-to-play games on mobile.
In fact, 98% of all mobile game revenues were generated through in-game transactions. We forecast this to edge ever closer to 100% as the years progress. Nevertheless, there will likely always be a market for paid games on mobile.
Subscriptions Will Account for 13% of Console Revenues This Year
Together, the subscription services on console will generate $5.8 billion in 2020, which accounts for 13% of the console market and 4% of the overall global games market.
Subscription revenues depend heavily on the availability of certain services in specific markets, which causes a significant difference in revenue share per country.
Services are usually available first in regions with the biggest spenders on console, which is why the share of subscription service revenues is highest in more-mature markets.
Subscriptions for Sony’s (PlayStation Plus) and Microsoft’s (Xbox Live Gold) online console services have been available in most countries worldwide since the launch of the previous generation, with both companies adding monthly free games to their respective services for close to a decade now.
More recently, Nintendo launched its own online service for the Nintendo Switch. And thanks to subscription services like PlayStation Now, Xbox Game Pass for Console, and publisher-specific subscriptions in the market, these services are already sizable on console.