DFC Intelligence has great news for the video games industry. For the second time this year, they have significantly raised their five year forecast. They now expect game software revenue to increase from $64 billion in 2014 to $100 billion in 2018. This includes only the revenue coming from PC games, mobile games, and console games, and does not include purchases of game devices.
The market is growing on all fronts, according to DFC analyst David Cole, with new console systems doing well, but much of the anticipated growth coming from mobile platforms and BRIC countries. He says, “The game market in 2018 is likely to be split fairly evenly between console, PC, and mobile platforms.”
The mobile games market in particular is expected to soar from $10 billion in 2013 to $29 billion in 2018; 30 percent of total games software revenue. But this market remains both fragmented and overcrowded, even as it continues to grow. DFC analyst Jeremy Miller says, “Companies need to be very cautious about their platform strategy and understand which markets and platforms are best suited to their product.”
DFC intelligence takes a closer look at the freemium mobile game business as part of a more detailed report on business models, using actual usage data to offer revenue business models for the different game genres. The report is part of DFC’s custom game forecasting service, which gives clients the ability to build game revenue forecasts across multiple platforms to an individual country or region level.
They have changed their forecast for the console market considerably, raising it for Sony’s Playstation 4 and Nintendo Wii U and lowering it for the Microsoft Xbox One. Cole believes the main challenge for console systems is expanding beyond the core market. He says, “The Xbox One should carve out a solid share among dedicated action gamers, but due to some questionable business decisions, Microsoft’s broader entertainment strategy is in disarray despite the release of the new Kinect-less SKU.” They expect Playstation 4 to be the market leader in games systems for the next few years, but Cole questions whether Sony can continue to build on initial PS4 sales to reach an installed base similar to what they did with Playstation 2.
DFC Intelligence now is tracking hardware and software spending separately. Later this year, they will be releasing a new hardware forecasting service. Cole notes, “Core gamer spending on high-end PCs, dedicated game devices and accessories is starting to soar. When you add in mobile devices, the impact of the gaming consumer on total hardware spending is huge.” He expects this spending to impact all major players in the consumer electronics space.
These forecasts are part of DFC Intelligence’s Worldwide Marketing Forecasts for the Video Game and Interactive Entertainment Industry Service. The service offers a complete look at the overall market while providing information by region, country, platform, business model, genre and other dimensions. With individual reports and online analysis tools, the service can be customized to each client.
DFC Intelligence is a strategic market research and consulting firm. Their focus is on interactive entertainment and video game, online game, interactive entertainment and portable game markets.
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