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Review of the Three Gaming Platforms and How Monetisation Models are Changing and Converging
According to the latest research from Futuresource, global software spend across all gaming platforms (mobile, PC and console) is expected to reach $132 Billion in 2018. Whilst there is some overlap between the three platforms, they offer very different gaming experiences.
Mobile is the fastest growing and largest sector of the global video games market and this year $63 billion will be spent on buying games, downloading additional content (DLC) and subscriptions. What is most staggering about mobile gaming, is that in 2018 it will account for 48% of total worldwide video gaming spend, significantly more than console and PC and with DLC accounting for 90% of total mobile spend.
At the end of 2018 there are expected to be 4.1 billion smartphones in use around the world offering an enormous addressable market. Furthermore, global tastes in terms of gaming preference is converging, therefore content no longer needs to cater specifically for one market, country or cultural group. Take Candy Crush Saga, launched in November 2012 it remains in the top 5 grossing apps each month for the US, UK, Australia, Germany and many others. It is also in the top 100 grossing apps for leading APAC markets Korea, Singapore, China and Japan; countries with vastly different cultures to the western markets the game was launched in.
As well as enormous reach, the mobile handset is now a powerful gaming device, with current, top end smartphones now achieving more than double the graphics performance compared to the last console generation of the PS3 and Xbox 360. However, this is peak performance and very few mobile games are developed to max out these high-end phones. Mobile games publishers need to serve a wide range of devices of various capabilities as well as consider battery constraints and overheating.
In emerging markets such as India and South East Asia, Futuresource highlights the critical opportunity presented by these 'mobile first markets' - an important stage to consider in the consumer gaming adoption process. With mobile typically the first step taken by emerging market consumers into gaming and their thirst for ever greater and immersive gameplay fuelling progression onto higher value console or PC gaming. Excellent news for major games publishers.
Console gaming appeals a more casual gamer and remains limited to a few western markets for consumers who want a more involved and social experience compared to mobile. The market has seen the introduction of new and updated consoles with the Xbox One X, Nintendo Switch and PS4 Pro all helping to lift sales, software spend in 2018 is expected to finish up 15% to $36 billion.
However, with a new PlayStation and Xbox consoles expected to launch in in the next 2 years, this market is expected to be driven to new levels. Particularly as console gaming is beginning to learn some tricks from smartphone gaming. Whilst we have seen increasing revenue for console games driven from DLC, they have until recently always included an up-front purchase cost of up for $60 a title and as such DLC is just 15% of the total.
Mobile games are typically free at the point of downloading and the secret sauce of monetisation for publishers lies in many (many) small transactions, driving significant revenue from a large scale installed base. Fortnite remains a global phenomenon and at its peak was raking in $350 million a month in revenue from DLC (PC and Console predominantly, mobile also included). This business model has therefore been proven and as such is an exciting new chapter of console monetisation.
PC gaming remains the pinnacle of the gaming experience with the quality of gaming possible on a PC set-up vastly outperforming consoles. However, PC gaming is expensive, to achieve the same quality of gaming as an Xbox One X the windows PC hardware set up would cost circa $1000, over double. As such PC gamers are heavily invested, high spenders and global consumer spend is expected to reach $32 billion by the end of 2018.
PC gaming is 84% digital and unlike console has drifted further along the spectrum towards mobile in terms of the market composition with DLC accounting for 57% of consumer spend in 2018.
PC gaming is the platform which is benefiting most from the increasing wave of interest in esports. The largest esports championships in terms of prize pool are PC based. “The International 2018“ (Dota 2) had a prize pool exceeding $25 million with the next biggest being League of Legends 2017 which exceeded $5 million. Gaming is therefore becoming a popular pastime as a video service. The rise of esports means that gamers are increasingly spending time watching esports competitions but also are spending time spectating amateurs or professionals playing just for fun. In the first half of 2018, 630 million hours of Fortnite were watched on Twitch.
Which platform will come out on top? Let the games commence.
Here at Futuresource Consulting we deliver specialist research and consulting services, providing market forecasts and intelligence reports. Since the 1980s we have supported a range of industry sectors, which has grown to include: CE, Broadcast, Entertainment Content, EdTech and many more.