If you’re not gaming already, there’s a chance you might be soon. The video game sector is booming – and it’s tipped to keep on growing.
The expansion is expected to make the global gaming industry worth $321 billion by 2026, according to PwC’s Global Entertainment and Media Outlook 2022-26.
The expansion is being driven by social and casual gaming after millions of people picked up their controllers to escape the boredom and isolation of COVID-19 lockdowns.
“People were looking for ways to both entertain themselves and maintain their social connections,” says Bartosz Skwarczek, co-founder and CEO of online gaming marketplace G2A.com. “Gaming has so often been painted with the wrong brush – stereotyped as being isolating and unsociable. However, the pandemic has shown this could not be further from the truth.”
Pandemic positives for gaming
Many players believe gaming helped their mental health during lockdowns. A survey of European gamers suggested 16% felt this way, with those spending time on multiplayer genres feeling especially positive.
So many existing and new gamers splashed out on games, consoles and other kit during the pandemic that the market expanded by 26% between 2019 and 2021. “The game industry’s swimming in cash,” Professor Joost van Dreunen of New York University told The New York Times at the height of the boom. “It’s just raining money on these people, on these companies.”
Some games were boosted by perfectly timed launches. Nintendo’s Animal Crossing: New Horizons came out in March 2020 and sold 13.4 million units in its first six weeks. It has gone on to become one of the best-selling Nintendo Switch games of all time.
Lockdowns delayed games releases
Lockdowns might have turned millions of us into gamers, but adapting to working from home (WFH) posed unexpected creative challenges for people employed in the gaming industry, according to Harvard Business Review.
The tech-savvy workforce – dealing almost entirely in digital goods – might have been expected to switch effortlessly to WFH. But in some cases, the lack of spontaneous collaboration slowed down product development, and highly rated new games missed release dates by weeks or months. The delays cost some games companies millions of dollars.
WFH creates “a creative hurdle”, according to Chad Grenier, who helped found American video game development studio Respawn Entertainment. “You lose the hallway conversations. You lose people sitting on a couch and discussing something for an hour or two. You miss the lunch conversations. All of that goes away and becomes scheduled instead of happening naturally.”
Growth expected in Turkey and Pakistan
Nonetheless, gaming revenues are expected to continue increasing, driven by higher investment in in-app advertising, according to PwC analysts.
Video games made up just 6.1% of global spending in the entertainment and media sector in 2017, but by 2026 they are projected to grab a 10.9% share as gaming becomes even more mainstream, the PwC report says.
China and the US dominated the market in 2021, accounting for about half of gaming and eSports revenues. But future growth could come from less wealthy countries with growing populations.
The PwC report predicts that the games market will expand fastest in Turkey, with average annual growth of 24.1% between 2021 and 2026. It will be followed by Pakistan, with expansion of 21.9%, and India on 18.3%.
‘Unacceptable’ price rises
One potential obstacle is the rising costs of games, which G2A.com’s Skwarczek is concerned could slow down progress. Writing for Forbes, he says: “We now sit on the verge of the $70 game becoming commonplace. At a time when many are experiencing financial challenges, this is unacceptable … current and projected future pricing is ostracizing a significant proportion of people that keep the gaming sector ticking.”
Although the long-term performance of the gaming sector looks strong, the kind of spending spree seen during pandemic lockdowns can’t last forever, according to UK-based market researchers Ampere Analysis, who forecast a 1.2% decline in 2022.
“After two years of huge expansion, the games market is poised to hand back a bit of that growth in 2022,” Research Ddirector Piers Harding-Rolls says. “Even so, the year will end well ahead of pre-pandemic performance, and the outlook for the sector as a whole remains positive.”
Keza MacDonald, Video Games Editor at UK newspaper The Guardian, says a market correction is to be expected. “People are playing less, and spending less, for a variety of reasons … I’ve been playing significantly less myself this year, now that I can do other things that I enjoy again, like live music and, y’know, hugging my friends.”