The video games industry is forecast to post sales growth of over US$23 billion globally over the 2013-2018 period. With a 6% CAGR over the forecast period, video games is expected to be far more dynamic than traditional toys and games, which is expected to record a CAGR of 3% over the same period. Many factors will contribute to this exciting growth, including new product development, key company competition and innovative payment models.
It is the first time in history that the new static console launches from Sony and Microsoft have been so close to each other, with healthy competition between the two largest console manufacturers being instrumental in growing the overall video games market. Both have endeavoured to win the most market share, stretching themselves in the race for dominance. In the first year with next-generation consoles, the Sony PlayStation 4 (PS4) has seemingly come out on top over the Xbox One globally. However, a regional battle rages as Microsoft topped the static console charts in North America in 2013, whereas the PS4 reigns in Western Europe, suggesting more competition and subsequent growth in the industry is yet to come.
Enter the matrix: Virtual reality arrives
Virtual reality offers gamers an almost completely immersive experience and, in such a high-tech industry, new product innovation is always going to be at the forefront of companies’ growth strategies. Both major console manufacturers have invested in new product development, with Sony still perfecting its Morpheus virtual reality headset, while Microsoft has already released its new and improved Kinetic motion tracker. However, with the Kinetic now being sold separately to the Xbox One, so that it can compete with the PS4, this technology feels more supplementary than intrinsic to Microsoft’s strategy, perhaps giving Sony an edge. Nevertheless, Sony will still have to fend off its main competition in virtual reality, Oculus Rift. If these new technologies are able to take off, they will inevitably contribute to overall market growth.
New pricing models in the form of “free to play” have continued to grow in order to capture as much revenue as possible from consumers. Online games continued to embrace free to play in 2013, as more and more games adopted the lucrative payment model. World of Warcraft is still the world’s most famous online gaming platform, but it continued to lose subscribers over the past few years. This may be due to the fact that World of Warcraft remains a subscription game, while the majority of other online games are now free to play. However, with gaming prowess becoming more important among gamers, especially in Asia, a revival of subscription models has begun, enabling gamers to now purchase bundles of in-game products in the form of a monthly package, accelerating their abilities within the game. This subscription format is forecast to be one of the key drivers in digital gaming, and, subsequently, video games over the forecast period.