The gaming ecosystem is undergoing major technology and business model transitions that will last beyond 2015. Gartner estimates that worldwide spending on the gaming ecosystem will exceed $74 billion in 2011, up 10.4% from 2010 spending of $67 billion. By 2015, spending will reach $112 billion.
Overall, Gartner estimates that the gaming software component will represent $44.7 billion in 2011, and it will continue to dominate the overall gaming market in the next five years as it absorbs almost two-thirds of consumers’ gaming budgets.
“This large market size means that many consumers embrace gaming as a core piece of their entertainment budget and will continue to play as long as game publishers deliver compelling and fun games,” said Fabrizio Biscotti, research director at Gartner.
Within the gaming software market, mobile gaming will experience the largest growth opportunity with its share growing from 15% in 2010 to 20% in 2015.
“As the popularity of smartphones and tablets continues to expand, gaming will remain a key component in the use of these devices. Although they are never used primarily for gaming, mobile games are the most downloaded application category across most application stores,” said Tuong Nguyen, principal research analyst at Gartner. “For this reason, mobile gaming will continue to thrive as more consumers expand their use of new and innovative portable connected devices.”
The segment that will drive the largest revenue will come from video game consoles (hardware and software). In 2010, it generated more than two-thirds of the gaming ecosystem revenue, and Gartner predicts revenue to grow 4% in 2011.
Over the next five years, gaming hardware’s market share will remain constant while software spending will lose share to online-gaming spending, the fastest-growing segment. Gartner estimates consumer spending on global online gaming (subscriptions and microtransactions) will show a compound annual growth rate of 27% through 2015, with consumer spending on subscription fees slightly declining while spending on virtual goods will grow exponentially.
“We find that subscription fees are giving way to ‘freemium’ models, in which the game is provided for free to gamers but is monetised through advertising (both in-game advertising and display advertising) and in-game microtransactions, such as the sale of value-added services or virtual-good purchases,” said Brian Blau, research director at Gartner. “This trend is prevailing given the rise of social gaming, in which online gaming is connected to social networking sites and social networking platforms.”
“Users have become multichannel-oriented by choice and expect vendors to continue to deliver quality content and experiences by extending their gaming possibilities across multiple platforms,” said Blau. “If today’s mobile technology does not evolve quickly enough, the gaming industry is set to see the rate of innovation severely decline. Alternatively, it will provide opportunities in technology and content genres that we can’t foresee today.”