(STL.News) – Heading into 2019, gaming industry leaders were confident of strong growth, intense competition and innovative flair. One of the strongest drivers of growth in the gaming industry is cloud-based gaming. Silicon Valley premier tech companies including Google, Amazon and Microsoft already manage expansive data centers of cloud-based servers. The gaming market is quick to adopt new technology and players are eager to make the transition from land-based servers to the cloud-based servers. Infrastructure development and investment initiatives are taking place at breakneck speed and gaming is front and center in their sites.
Cloud-based gaming activity is dominated by major tech companies, including China’s Tencent. As a case in point, this company generated cloud-based revenues of $864 million in Q1, Q2 and Q3 2018. This represents a doubling of revenue from 2017 to 2018. Alphabet Incorporated the parent company of Google has also invested heavily in cloud-based operations. This tech giant generates an estimated $10 billion per annum from its cloud operations. With a new CEO in place, Google is looking to venture out into the gaming realm to draw in players and expand operations. Unbeknownst to many, there are some interesting developments taking place between Google and Tencent in China. All of these activities point towards expansion in the online gaming market.
Cloud and Console Gaming Projections
A leading expert on online gaming, Dr. Serkan Toto offered interesting insights into the gaming industry for 2019. He believes that Nintendo will offset its weak 3DS sales with a Switch Lite console at an affordable price point to cut into the console market. This hardware upgrade will allow Nintendo – a major player in the console gaming arena to expand its reach among players in 2019. Additional third-party software will be launched, helping to bolster growth in the console gaining market.
Dr. Serkan has high hopes that major industry players Xbox and PlayStation will be focusing their business plans on cloud-based gaming and player subscriptions to drive growth in the
industry. With regards to gaming activity in different parts of the world, Japan and South Korea will lead the way with strong domestic growth on mobile. This will invariably facilitate a greater influx of game developers to the market, boosting a burgeoning gaming industry. The Japanese mobile gaming sector is likely to enjoy strong growth and significant profitability by the end of Q1 2019 and beyond.
Other analysts like Piers Harding-Rolls (IHS Markit) believe that consumer spending on gaming will grow by 6%, hitting $135 billion +. This is a bold prediction, but one which is shared with many industry aficionados. While growth appears to be slowing in mature markets, there is still enough momentum to propel the industry in 2019. China is pivotal to the gaming industry, and this country is leading the way with cloud-based services on a mass scale. Piers Harding-Rolls believes that further growth of the console gaming industry will continue, particularly with the Nintendo Switch console.
This year is likely to be the crucial in terms of cloud gaming. Various cloud service providers, telecommunications companies, electronics companies, and game publishers will be dipping their feet into the cloud-based gaming market to ply their trade. Of China, Piers Harding-Rolls believes that Chinese publishers will fast-track the release of games currently in backlog and bring them to market to normalize the industry.
The Leading Countries by Gaming Revenue
Several interesting statistics can be gleaned from the NewZoo analysis of the global video games market, notably the incredible growth that has taken place between 2017 ($78.61 billion) and
2020 ($19 billion expected). According to a study by the European Mobile Game Market (2016), there are an estimated 2.5 billion gamers worldwide, and 80% of revenue (2017) is derived from
software sales. Equally interesting is the adoption of mobile technology in the gaming market between 2015 and 2019. For example, tablet games contributed 9% towards GGR in 2015 and
are expected to contribute 11% towards GGR in 2019.
Smartphones and watches on the other hand have shown tremendous growth, with 24% contribution in 2015 and an estimated 34% contribution in 2019. Naturally, there is give-and-take in terms of distribution of the gaming market revenue. TV and console games have given up a large chunk of market share over the past 5 years, with 30% of GGR being generated by TV/console/virtual reality games in 2015. Fast forward to 2019, that figure is expected to be just 26%. An interesting observation is the contribution of PC and massively multiplayer online games towards global GGR. In 2015, PC contributed 28%, and by 2019 it is expected to contribute 25%.
The Game Developers Conference for 2018 released interesting statistics on the global gaming market, notably:
53% of developers are creating games for Mac and PC
30% of developers are creating games for tablets and smartphones
27% of developers are creating games for PlayStation 4 and Pro
24% of developers are creating games for virtual reality headsets
5% of developers are creating games for augmented reality headsets
4% of developers are creating games for Apple TV
3% of developers are creating games for Nintendo Switch
The total value of the PC gaming market in 2019 is expected to top out at $31,398 (in millions), and grow to $33,594 (in millions) by 2020. The top selling PC games heading into January 2018 included The Sims 3, World of Warcraft, Diablo III, Microsoft Flight Simulator, and StarCraft II. Combined, these games generated sales of over 34 billion units.
Mobile gaming in Europe, Canada and the US in 2019
It comes as no surprise that China’s rapid and unprecedented adoption of mobile gaming has led to a boom in the world’s #2 biggest economy. Western countries are also making the switch to
mobile, with the announcement by Blizzard that the next installment of one of their popular games would be on mobile. This will naturally lend to the furtherance of mobile gaming with multiple other software giants and gaming companies. The Google Play Store and the App Store are likely to enjoy a profusion of mobile friendly game titles for players, much to the satisfaction of their adoring base.
Of all the segments in the gaming industry, none has been as impressive as mobile. Between 2009 and 2019, mobile has overtaken PC, Mac and tablet devices as the go-to option for players. Thanks to the increasing mobility of players, the widespread availability of Wi-Fi, 3G, 4G, 5G Internet, and the dramatically reduced costs of smartphones, mobile is all the rage. The Global Games Market Report indicated that mobile has gone from being nothing more than an upstart in the gaming industry to being the dominant platform for players. Many of these mobile games are free to download and install, and players get to enjoy a feature-rich selection of attractions at their leisure.
Whether it’s popular MMO RPG games like Clash of Clans, social games like Candy Crush, or real money online casino games like online slots, mobile is spearheading the growth of the gaming industry. By the same token, other competitive sports such as eSports are also enjoying rapid adoption among players. In 2017, the industry generated $655 million, and by 2018 that figure was up around $900 million and growing fast. Clearly the online gaming industry is showing strong growth overall, despite pockets of sluggish growth with certain companies. This is evident with companies like EA, Take Two, Ubisoft and Activision which have had less than an illustrious start to the New Year, despite stronger than expected Q1 performance.
The above chart represents the year-to-date performance of 888 Holdings plc, a leading provider of online casino games, online poker games, online sports betting, and online bingo games. While the recent dip is evident in the latter quadrant of the chart, there are many periods of strong share price growth and a definite rising trend in 2019. This gambling-based company provides players with a host of games on PC, Mac, mobile (iOS and Android devices). The company’s flagship casino brand, 888 casino has shown strong growth prospects, with many recently signed deals. These include agreements with Yggdrasil Gaming, and Red Tiger Gaming to showcase a wider selection of immersive online games on the 888casino platform. Substantial investment in the online gaming industry is being fueled by increasing liberalization of online
gambling legislation in the United States and other important enclaves.