With the recent announcement of the PlayStation 5 and its intended release ahead of the important holiday sales period, the video games industry is gearing up for a head to head battle between two new consoles.
The exciting prospect of a straight fight between consoles like this is a fairly rare occurrence, although the PlayStation 4 and Xbox One were also released within a week of each other in November 2013.
Sony has been forecasting sales of 6 million units by March 2021, with a large chunk of these occurring before Christmas. This alone will generate revenues of around $3 billion. Without a doubt, the release of the PlayStation 5 and the Xbox Series X will be a huge boon to the video games industry in 2020, but they certainly aren’t the only factors.
Huge Uptick in Demand
Demand for video games has been up across the board in the first half of 2020. In February, Activision’s Call of Duty: Mobile continued its strong performance from 2019 and shot past 150 million downloads, outstripping many of its rivals. Meanwhile, casual games like PokerStars and Mini Metro have also been enjoying strong growth.
Demand for and use of mobile games increase by around 17%, while certain categories of games saw demand grow by more than 30%. As a result of this growth, there are now more than 2.5 billion gamers worldwide.
This trend has been driven by several factors.
More Casual Gamers
Video gaming was once seen as a distinctly male activity, with most video game ads geared towards men under 30. This has been slowly changing for the last decade or so, driven in part by Nintendo and its release of the Nintendo DS and the Wii consoles that offered more casual games that appealed to a broader demographic, including many that had never played video games before.
Smartphones, which were released a few years later, have also been driving growth in casual gamers. Some of the biggest casual titles for mobile include Farmville, Plants vs Zombies, and Candy Crush. These types of games are called “hyper-casual” as they offer instant gameplay, simple mechanics and can be played over and over again.
Casual gamers may not put in several-hours-long gaming sessions, but they do play regularly for short periods of time. Around 55% of gamers play for less than one hour at a time, although the mean average weekly playing time is 5.96 hours.
Free-to-Play Games
Casual gaming is being primarily driven by free-to-play games. Almost 85% of gamers download new free-to-play titles more than once per year, while only 55% were willing to pay for games.
Downloads of free-to-play hyper-casual games increased by a whopping 150% in 2019. Less casual games that are free-to-play, like Apex Legends and Fornite are also immensely popular.
It’s not just downloads that are growing because of the switch to free-to-play games, they’re actually more profitable for developers. According to Forbes, “most” of the revenue generated by the video gaming industry comes from microtransactions that let players buy in-game items.
In 2018, Fornite generated more than $1 billion from microtransactions, accounting for almost half of its annual revenue.
Esports
Esports are helping to grow the video games industry too. These competitive video game leagues and tournaments are great marketing tools for publishers of popular titles like League of Legends, Call of Duty, and Dota 2.
In 2018, gamers spent almost two hours a week watching others play video games on streaming platforms like Twitch and YouTube and an additional hour watching professional tournaments. That’s close to the amount spent watching traditional sports.
Esports competitions are generating huge revenues too. The industry is expected to be worth $1 billion by the end of 2020 thanks to an ever-increasing number of viewers and a large number of big-name sponsors that are spending millions to be associated with esports.
No Sign of Stopping
While 2020 is set to be the biggest year yet for video gaming, it’s likely to be eclipsed in the coming years. Annual global revenue was $135 billion in 2018 and is expected to eclipse $180 billion by 2021, most experts expect to it to keep on climbing from there too.
