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Video Games Market Exceeds $100 Billion in Revenues | ASHARQ AL-AWSAT English Archive 2005 -2017
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A video gaming event at the Asian Games. (Reuters)

London – The revenues generated from the video games market exceeded the $100 billion barrier last year as the industry is now three times more profitable than the movie industry worldwide, said a research study published by “Atomico”. The report also expected the spending in the gaming industry to grow at an annual rate of 7 percent to hit $129 billion in 2020.

China, meanwhile, became the undisputed gamer capital of the world with over 600 million gamers in the country. Analysts attribute this increase to the large population, as well as other factors like internet, smartphones and increased interest in entertainment expenditure.

Analysts believe that based on this data, the entertainment sector in China has entered the golden era. Due to the increased interest in online shopping and games, smartphone users exceeded 700 million in 2016.

China takes 24 percent of the market value with $24.6 billion exceeding the US $24.1 billion, Europe $20.3 billion and Japan $12.5 billion. Saudi Arabia was among the top 20 countries with $647 million in revenues.

Thomas Chong, an analyst at “BOC International”, estimates that the video game, “Honor of Kings” will contribute to more than 50 percent of Tencent’s smartphone game revenues this year, recording a monthly gross revenue of 2.8 billion to 3 billion yuan in April.

China is somewhat a closed market for the foreign companies, according to complaints from US and European companies. They attribute the difficulty to penetrate this market to the language barrier and the need for a local agent.

Powered by mobile phone games, gaming industry revenue is set to grow at 6 percent CAGR to hit $129 billion in 2020. Mobile games reached 38 percent of the total revenues. They seem to continue on being a very appealing way to pass the time and the experiences they can offer are just getting better and better.

Net revenue generated by games on iOS App Store has grown eight times between 2012 and 2016 to hit $18 billion in 2016. This was underpinned by a huge expansion of spend in China. While regions such as Europe (three times) and the US (five times) have grown rapidly, the pace of growth is dramatically outstripped by the expansion of the Chinese market, which grew 72 times between 2012 and 2016.

The market share of European games publishing companies on iOS App Store in China has grown from 2.5 to 4.6 percent between 2014 and 2016, but thanks to the rapid growth in value of the Chinese market from $1.1 billion to $5.5 billion over this period, this is actually the equivalent of an increase in net revenues earned in China on the iOS App Store, according to the report.

In 2016, 93 percent of all revenue from iOS games in China was generated by games belonging to China-based game companies.

In related news, a report issued by “Chartboost” stated that women make up 62 percent of the mobile games market in the US.

The study, in partnership with Newzoo and TapFwd, analyzed a sample of over 64 million devices in Chartboost’s network in the US across Google Play and iOS.

The report suggested that the audience for mobile games is mostly women over the age of 25, and the biggest segment across both genders was ages 35 to 44, which makes up 27.33 percent of the mobile gaming audience.

The age group of 25 to 34 made up 18.42 percent, while the 45 to 54 segment represented 18.31 percent of mobile games players.

Much of the mobile games audience is made up of people from high income households, earning more than $50,000 a year, 60 percent in fact, according to the report.

Chartboost claimed that the top mobile games can attract bigger daily active audiences than the top US ad-supported TV networks. Games like “Draw Something”, “Candy Crush Saga” and “Pokemon GO” all had better daily peak active users than the daily average prime time views of “CBS”, “NBC”, “ABC” and “FOX”.

Overall, 69 percent of mobile phone owners play games at least once a month.