Mobile, cloud to drive videogame market growth

Global videogame revenue is forecast to hit $200 billion a year by 2023 according to Juniper Research, which predicts revenue this year will come in at $155 billion.

Growth is expected to be led by mobile and cloud gaming, as the market shifts away from single-purchase revenue towards recurring revenue from subscriptions and microtransactions.

Indeed, cloud gaming and subscription services revenue is expected to grow 9 percent per year, reaching $8 billion by 2023. Meanwhile, single-purchase revenue is expected to decline by 5 percent between 2020 and 2023.

The problem is though, a monthly subscription to a service like Google Stadia – which offers access to a broad choice of popular titles for a single fee – are of course lower than the retail price of an individual game.

“At current gaming subscription prices, it will take an average of ten months of a subscription payment to cover the retail cost of a single AAA game,” noted Juniper Research analyst James Moar, in a research note.

The market is heating up too: new cloud gaming platforms from online players, like Apple Arcade and Google Stadia, are making a big splash. Some telcos – like Deutsche Telekom with its Magenta Gaming service – sense an opportunity. These relative newcomers are pitting themselves against entrenched videogame heavyweights like Sony, Microsoft and Nintendo, which have traditionally relied on sales of dedicated gaming hardware to capture and hold onto customers.

“The value of these platforms lies in keeping players within an ecosystem; ensuring that revenue across multiple games is captured by a single platform,” Moar said. With more platforms flooding the market, a shake-up looks likely.