Right from the early Nintendo and Bandai days, the gaming industry has been an evergreen market. While console gaming has been pivotal for the video game industry in terms of revenue generation, the Smartphone and tablet market has provided incredible new opportunities to developers, gamers and game enthusiasts in general.
To have a handheld device as one’s instrument of entertainment used to be a privilege in the days gone by, but now the cellphone has transformed into a device that only doubles up as your communicator but also triples up as your instrument of entertainment. It is common knowledge that the Smartphone and tablet industry is growing at the rate of knots. With worldwide Smartphone sales crossing 250 million, an opportunity to cash in on this growing number is just irresistible for game developers. This enthusiasm is being converted into traction and revenue.
As per a report by the Casual Gamers Association (CGA) in association with market research and consulting firm, Newzoo and their global app analytics partner Distimo, Smartphones and tablets will account for 27.8% of the global games market in 2016. The figure currently stands at 17.4%, which means a 10% increment in 3 years, and just to drive the point home, we are discussing the entire gamut of gaming, one word – wow!
In the year 2013, the number 17.4% is the equivalent of $12.3 billion of all global game revenues. In 2016, the number 27.8% would mean revenues worth $23.9 billion. The Compound Annual Growth Rate (CAGR) for the mobile games segment, for the duration 2012 to 2016, is almost four times the size of the growth of the entire game industry. This means that the growth of mobile games is far outperforming all other avenues of growth in game industry. The popular handhelds of the video game industry are likely to suffer the brunt of this unforeseen development. The tablet platform can take the credit for a lot of thisas it boasts of the highest CAGR (47.6%) compared to any other platform. Smartphones came in a distant second with a CAGR of 18.8% and the handhelds had the lowest CAGR at a negative 15% (-15%).
The report also touches upon a few startling facts. Here’s a quick rundown on the same :
- Even though the videos game console segment (TV/console) saw a positive CAGR of 3.5%, it is visible that annual growth rate of the console segment is very likely on the decline. Something is eating into its market share and it is very likely the Smartphone and tablet gaming segment.
- Social/casual gaming is likely to see a CAGR of negative 1.7% (-1.7%). Is that an indicator towards the decline of social games? (mostly games of the facebook platform?) Only time will tell.
- MMO or Massive Mass player Online games have always been popular and are likely to grow further by a CAGR of 10.4% by 2016.
- Games for the PC/Mac platforms are on the decline and a CAGR of negative 6.4% (-6.4%) is expected for this segment.
What the report clearly emphasizes is that growth of games on the mobile platform are eating into market shares of heavyweights like Nintendo (handhelds segment), Sony and Microsoft (TV/console) and the likes of facebook and Zapak (social/casual). These companies, especially the ones banking on handhelds must reconsider their strategy if they are to survive this storm.