Last week, we launched the November Games Market Update to subscribers to our Global Games Market Report subscription. In this article, we’ll share a high-level overview of our latest games market estimates and forecasts.
For the first time since Newzoo started tracking global games market revenues, we’re forecasting the market to decline year on year. Based on our extensive analysis of the financial results of more than 150 publicly listed game companies (for the first six months of the calendar year 2022), we now estimate that the games market will generate $184.4 billion in 2022, down -4.3% year on year.
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2022 Is a Corrective Year for the Games Market After Two Exceptional Years
Before zooming in on our 2022 games market forecasts for mobile, PC, and console, we want to emphasize that only 2022 will be a corrective year following two years of lockdown-fuelled growth for the global games market. Looking back at our pre-pandemic forecast for the games market (from January 2020), revenues in 2020 and 2021 were much higher than we anticipated back then, while 2022 is slightly lower. While this revised forecast may seem like a setback for the games market, we note that the sum of revenues generated from 2020 to 2022 is almost $43 billion higher than we originally forecast pre-pandemic.
PC Gaming Market Shows Resilience as Mobile and Console Gaming Revenues Decline in 2022
We forecast the PC games market to generate $40.5 billion in 2022, up +0.5% year on year. Browser PC games remain a sector in decline, even though the year 2020 saw a brief resurgence of these games. The segment will decline another -16.7% year on year to $2.3 billion, as more people migrate to mobile games and those remaining spend less on average. However, +1.8% year-on-year growth in the downloaded/boxed PC segment will be more than enough to offset this, pushing the combined PC games market to growth.
PC gaming’s revenues are not as hit-driven as console gaming; a year light on releases such as 2022 affects PC gaming revenues less, as the top-grossing games typically have been around for multiple years (if not longer than a decade). Similarly, PC gaming is still a place where independent publishers can flourish. Unlike the local mobile games segment, PC game revenues are still growing in China and Japan.
Download the free version of our 2022 Global Games Market Report for even more insights on PC & console.
We forecast the mobile games market to generate $92.2 billion in 2022, down -6.4% year on year. Our outlook for the mobile games market changed significantly compared to our previous forecast. While we anticipated that the removal of IDFA and pressure on people’s disposable income would dampen spending on mobile games, the first quarter of 2022 was still relatively strong. However, spending in the second quarter was significantly lower than last year’s, and signs show that it did not recover in the third quarter. The second half of 2021 was a particularly strong period for the mobile games market; we do not foresee the market being able to repeat these results, let alone show growth.
Mobile’s low barrier to entry (compared to PC and console gaming) also implies a lower barrier to exit. There are two main factors contributing to mobile players’ behavior this year. First, as other forms of entertainment and leisure spending became available once more, competing for players’ time and budget. Most players haven’t stopped gaming completely, but they play less and, therefore, pay less. Moreso, the current economic climate, especially inflation, limits people’s disposable income. These two drivers theoretically affect all spending on gaming. However, based on our research this year, we find it hits mobile more than PC and console. The more important the role of gaming in people’s lives, the less likely people will lower their spending on games in face of economic uncertainty or with alternative options for entertainment.
We forecast the console games market to generate $51.8 billion in 2022, a decline of -4.2% year on year. The console segment is having a slow year as the release schedule throughout 2022 remains light. More than other segments, console is a hit-driven market, and a lack of AAA releases hurts the market. While some blockbusters were recently launched (such as Call of Duty Modern Warfare II and God of War Ragnarok), we do not expect that these hits alone will offset the decline of the first half of the year.
Asia-Pacific’s Gaming Market Hit Hardest by Decline but Remains the Largest Region by Game Revenues
Despite the Chinese government cracking down on gaming in China, limiting new game releases and young people’s gaming time, the Chinese games market will still be the largest in the world in 2022, generating $45.8 billion. This is slightly more than the U.S.’s $45.0 billion, the second-largest market. Together, these two markets represent 49% of global spending on games.
Notably, revenues of breakout mobile hits of the past years, such as PUBG Mobile and Umamusume: Pretty Derby, are declining rapidly, and no new titles have been as successful. The corrective factor of this post-lockdown spending is especially notable in the three major Asian markets: China, Japan, and South Korea. We now forecast a decline in all three markets, and, largely because of this, the Asia-Pacific region is forecast to decline most out of all major regions. However, the downturn in the mobile market affects all regions; we now also forecast mobile gaming revenue to decline in Western markets.
Asia-Pacific will remain the biggest region by revenues by a massive margin, despite the performance of its biggest markets. It will generate $87.9 billion in 2022, a year-on-year decline of -5.6% and represent 48% of the global market. Revenues will also decline in North America (-5.1%) and Europe (-3.5%) year on year. Console is a massive segment in both markets, which means a slow year for console is a slow year in these two regions. We still forecast the market to grow in the emerging gaming regions of Latin America and the Middle East and Africa, driven by new players entering the (mobile) gaming ecosystem and better access to payment methods. However, average spend in these regions is still low compared to those listed in the previous paragraph. Therefore, growth in these regions does not offset the decline in mature gaming markets.
The free report contains 2022 revenue numbers, year-on-year growth, and qualitative insights on all the regions we cover. Download it here.
The Future of the Games Market Is Bright
The lockdown years may have pushed the games market to unsustainable levels of revenue, especially in the current economic climate, but the coming years look promising, particularly for console gaming. We forecast the games market to grow from $179.1 billion in 2020 to $211.2 billion by 2025, growing at a +3.4% CAGR.
Console gaming will grow rapidly in the coming years, as the next two years will bring loads of new content for a rapidly growing user base of PS5 and Xbox Series consoles. Furthermore, we expect a new Nintendo device somewhere around 2024-2025, as the Nintendo Switch will then have launched eight years ago.
While this year shows that price-sensitive players spend less during tougher economic times, engagement remains high across segments. The number of global players is still growing across the globe. Gaming proved resilient during turbulent economic times in the past; today, free-to-play monetization and subscription services mean that playing games is more democratized than ever before. Gaming is now embedded in consumers’ lives, and that will not change.
Reach out to us at questions@newzoo.com if you want to learn more about our best Global Games Market Report ever.
