The global video game industry is a billion-dollar business and has been for many years. In 2022, the revenue from the worldwide gaming market was estimated at almost 347 billion U.S. dollars, with the mobile gaming market generating an estimated 248 billion U.S. dollars of the total. The gaming market is constantly evolving, and technological advancements are opening new possibilities for game developers to create more immersive and engaging experiences through emerging technologies like cloud and VR gaming.
Who are the Big 3 in video gaming?
The Big 3 in the video gaming industry are Nintendo, Microsoft, and Sony. These three companies are major video gaming hardware makers and currently dominate the console gaming market. Due to this infrastructure advantage, the Big 3 are the biggest video game publishers worldwide, making billion of U.S. dollars from video games every year. According to the most recent data , the Big 3 video gaming companies account for 29 percent of total gaming industry revenue, with Sony holding the biggest market share among the top companies.
Who are the major gaming industry players outside the Big 3?
Success in the gaming industry is not only limited to platform owners. Due to its success with mobile and online games, Chinese digital giant Tencent is also among the top companies by gaming revenue. Mobile gaming revenue is not even limited to publishing mobile games – despite not being traditional gaming companies, Apple and Google also make a lot of money from gaming apps due to their revenue cut from their respective app stores.
Video game developers and third-party publishers are also highly valued. In early 2023, Activision Blizzard (of Call of Duty fame) was the largest pure-play gaming company with a market capitalization of over 67 billion U.S. dollars. Other leading gaming industry companies include U.S.-based Electronic Arts (EA), Take-Two Interactive, and Roblox Corporation, as well as European gaming giants Ubisoft and Embracer Group. Additionally, Asia Pacific is home to some of the most well-established and renowned gaming companies like Bandai Namco, Capcom, Square Enix, NCSoft, NetEase, and Nexon.
Game releases from the biggest names in gaming usually sell millions of copies and dominate the year-end charts worldwide. Despite the significant difference in scale between the Big 3 and other gaming companies, many of the best-selling games worldwide are published by gaming companies that are not platform owners, with the Call of Duty (Activision Blizzard) and the FIFA (EA) series being two examples.
Gaming hardware as a basis for market dominance
Hardware makers Nintendo, Microsoft, and Sony hold a considerable advantage over other gaming companies as they own and operate the major console gaming platforms: the Nintendo Switch is one of the best-selling gaming consoles of all time, and current-gen consoles Sony’s PlayStation 5 and Microsoft’s Xbox Series X/S were both released in November 2020 and compete neck-and-neck for consumer attention. To date, the PlayStation 5 has sold almost 38 million units, compared to nearly 22 million Xbox X/S console sales.
As all these gaming consoles feature impressive graphics and major games, platform exclusivity is one of the main battlefields to win players over to one gaming environment. Of the most anticipated 200 upcoming new video games from late 2022 through 2024, 115 games were planned for PlayStation 5, and another 113 were going to be released for Xbox Series X/S. In terms of platform exclusivity, 22 games were projected to be PlayStation-only, and 26 planned titles were going to be released only on Xbox but not on PlayStation. Sony might have the lead on Microsoft with a more significant share of gaming content revenues, but the Xbox maker is trying to counter this by aggressively expanding its gaming portfolio through strategic acquisitions. One of these acquisitions is the blockbuster 69-billion-dollar purchase of Activision Blizzard, which as of June 2023, still has to clear regulatory approval.
Deal activity in the gaming industry
The Activision Blizzard deal is a sign of the times in the world of gaming. The gaming industry is already highly consolidated, and while gaming M&A and investment deals saw a post-COVID normalization, there still were an impressive 222 mergers and acquisitions within the industry in 2022.
Many of these mergers are all about the extension of gaming ecosystems. Microsoft's step to acquire Activision-Blizzard is a direct move to strengthen its gaming portfolio, which has been frequently criticized as lackluster in terms of exclusives, as well as to bolster its Game Pass subscription service. Other significant acquisitions have been a direct means to enter the mobile gaming market: Activision Blizzard’s success with its 2016 purchase of Candy Crush maker King is the template which Take-Two (the buyer of social gaming platform Zynga) and EA (took over Glu Mobile) hope to emulate.
Other industry mergers are based on gaming publishers wanting to enhance their reach along the gaming indues value chain. Game engines and development technology companies have seen major investments in recent years, and new technologies such as in-game advertising also feel the monetary love from gaming companies. Fortnite maker and Unreal Engine developer Epic Games saw a 2 billion U.S. dollar funding injection led by Sony and LEGO parent company Kirkbi. Epic and Lego are planning a Lego virtual world.
2023 gaming industry trends – cloud gaming, VR, multiplatform, oh my
For gamers, some of the most current industry trends involve new technologies. Is 2023 going to be the year when cloud gaming finally takes off? Industry experts surely hope so, with cloud gaming technologies and services having finally reached the point of mainstream awareness and an estimated annual cloud gaming market growth rate of 62.5 percent. Cloud gaming refers to video game streaming that allows players to play games on their devices through an online connection without the need for dedicated gaming hardware or local installation of games and could be a game-changer for players who do not want or cannot afford to upgrade their gaming hardware to keep up with the latest AAA releases.
The same goes for virtual reality (VR) gaming – global VR gaming revenues are projected to reach 3.2 billion U.S. dollars in 2024. Despite the high cost of the hardware required for the immersive gaming experience, the gaming industry is still putting money towards developing VR gaming headsets. Released in February 2023, PlayStation VR2 six weeks has sold nearly 600,000 units within six weeks, setting the headset on track to overtake the VR1 in terms of commercial success.
And finally, despite the platform wars for exclusive titles, it is actually multiplatform games like FIFA and Call of Duty that bring in major revenues. Crossplay titles are in rising demand with gamers who use multiple devices for gaming, and availability on several platforms only enhances audience reach and player engagement. Currently, Chinese game developers like Genshin Impact maker MiHoYo or Tower of Fantasy developer Hotta Studio have raised the bar for online multiplayer multiplatform games and Western companies want a slice of this success by entering strategic partnerships for Chinese gaming content.
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