Juniper Research predicts the global gaming sector will pass this milestone in 2023.
A white paper from Juniper, Will cloud gaming change the way we play? says the market is worth $155 billion (€131.4 billion) this year, but will grow to $200 billion in two years.
Mobile and cloud gaming will propel the growth, as the market shifts further towards recurring revenue, and purchase revenue declines by 5% over that period.
Money in the game
The new research, Video Games: Industry Trends, Monetisation Strategies & Market Size 2020-2025, notes that the popularity of free to play games like Fortnite and Call of Duty Mobile is intensifying the move to in-game monetisation.
The report shows that cloud gaming and other video game subscriptions will grow at an average rate of 9% per year; bringing in over $8 billion of revenue in 2023. However, this will not immediately compensate for declining purchase revenue.
“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,” remarked research co-author James Moar.
“The value of these platforms lies in keeping players within an ecosystem; ensuring that revenue across multiple games is captured by a single platform.”
Subscription services
The research found that as gamers sign up to subscription services like EA Access, Google Stadia and Xbox Gamepass they will buy fewer standalone games, and only mobile games will see a net increase in the number of games installed between 2020 and 2023.
However, 99% of mobile game downloads in the next three years will be free to play and fewer than 50% of game installations on PCs over that period will be paid for, due to a combination of free games and free to play business models. PC games will be the most lucrative segment for in-game purchases, approaching $32 billion in 2023.
Mobile games will have more purchases, but gamers using PCs will spend more on “value game expansion purchases” to boost in-game revenue growth strong.
Smartphone in-app revenue will grow at an average of 8% over the forecast period, as smartphone gaming in emerging markets grows.