Video games forecast to grow 7.7% this year, hit $130 billion by 2020
With the rise of the Millennial generation, video games have firmly established themselves as a mainstream form of entertainment that has massive potential. This year, forecasters expect the global video game market to grow by 7.7% to a figure of $108.9 billion. Through to 2020, they are predicted to grow at an average annual rate of 5.7% to $130 billion. This growth has a number of drivers, but paramount amongst them are the Chinese video game market and the mobile video game market.
Consoles and PCs are already multi-billion dollar propositions within the global video game market, but they will soon be eclipsed by the mobile gaming market: a sector that thrives thanks to widespread availability and convenience. While playing games on a console requires specific purchases and time set aside at home, mobile games have a far lower barrier to entry: they are cheap, they are easily accessible due to the proliferation of smartphones, and – again, due to widespread smartphone use – they can be played whenever the opportunity presents itself: on a commute, while waiting in a queue, or stuck in a traffic jam.
Mobile games are already driving the industry’s growth in China, though it has also benefited from a previously slow uptake. Video games in China have been held back by a lack of availability: not only were pricey games consoles a luxury that few could afford until recently, but censorship and governmental concerns over their effects made certain titles difficult to acquire. Though the latter concern persists, the success of mobile gaming giant Tencent demonstrates how it is diminishing in impact.
Tencent’s share price is up by an incredible 44% so far this year
SOURCE: Yahoo Finance
While mobile gaming and the Chinese market represent two of the major drivers of growth in the industry, video games as a whole are achieving widespread popularity. The continued effect of powerful trends like digital downloading, subscription-based revenue models, and the rise of eSports will continue to push it into a fundamental part of the entertainment landscape. And, as we have previously seen with TV and other forms of entertainment, once you get there, you stay there until something better comes along. Today’s young consumers are growing up surrounded by the games of their Millennial parents – for them, video games will be as much a part of daily life as television was for their grandparents.
Dominion holds a number of video game companies including Tencent, Activision Blizzard, Electronic Arts, Take Two Interactive and more in its Global Trends Ecommerce Fund.
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