- Companies seeking ways to be competitive in the market
- Strategy games the most popular
- Traditional game manufacturers must adapt
As the internet becomes more widespread, digital games are surpassing physical ones, although many traditional game-developers are selling digital copies of older games.
Growth will be fueled by the availability of a diverse range of gaming options, secure payment gateways and the proliferation of smartphones.
Market growth also can be attributed to ad campaigns, to a growing gaming base in Asia-Pacific and to the development of mobile augmented reality and virtual reality games.
The market faces some challenges including legal and regulatory hurdles in several regions, sustaining a revenue generating consumer base and generating brand loyalty.
When online games first debuted in developing economies, users initially preferred free games. Users were concerned about the safety of online payment gateways. However, users are turning toward online games they must pay to download or play, turning games into a loyal-revenue base.
Online games developers are exploring new revenue streams including subscriptions fees, pay-per-play, in-app purchases, royalties to premium account and upgrade remunerations.
North America was an early adopter of online games and the market is a mature one.
Asia-Pacific is forecasted to grow by the highest CAGR by 2025. Growth will be particularly high in China and India. The availability of low-cost smartphones and improved internet connection are also a factor.
Profitable Game Segments
Online games are available in numerous categories.
Strategy games and brain games are the most popular category by revenue. Among top grossing games in most countries are Clash of Clans, Game of War: Fire Age, and Puzzles and Dragons. These titles generate billions of dollars in revenue annually.
The second largest category by revenue is card games including poker, rummy and blackjack.
Meanwhile, e-sports is the category expected to experience the fastest growth.
Traditional Video Game Manufacturers Suffer
Established Japanese game companies, such as SONY and Nintendo, have seen business eroded because of the shift from dedicated game platforms to online games.
Nevertheless, these companies’ platforms and characters are a $50 billion industry, according to Eurotechnology Japan.
While traditional game companies are facing market changes, a number of startups are entering the online gaming market.
Global Games Software Market
- In 2015, the market had revenue totaling $42.1 billion. Between 2011 and 2015, this represents a CAGR of 5.1%.
- The largest proportion of sales came from online retail. In 2015, online sales totaled $16.1 billion, equivalent to 38.2% of the overall market’s value.
- Purchasing online is appealing because of e-retailers, downloadable add-on content and improvements in online infrastructure.