With 2.3 billion avid gamers worldwide and an eyewatering global spend of $137.9bn in 2018, according to NewZoo, the global gaming industry is a very serious business indeed. And, as $16.2bn has been added to its value since 2017, it's a steadily rising industry that is not showing any signs of slowing, with Reportlinker forecasting steady growth of 6% CAGR between 2019–27.
As with any industry that has vast spending potential, the competition within the gaming world is intense and a number of names jostle for the top spot. These include the likes of Tencent, Sony, Blizzard, Nintendo – to name just a few – along with an intimidating pack of startups nipping at their heels, ready to break through and cause chaos if the established brands dare to take a breather.
And competitiveness crafts the perfect breeding ground for innovation, with the likes of AI, virtual reality (VR)/augmented reality (AR), blockchain and the IoT hosting unprecedented levels of gameplay and leaving players hungry for more. Ahead of our Gaming Analytics Summit, part of DATAx San Francisco, on May 14–15, 2019, DATAx counts down the five biggest trends in gaming in 2019.
The Fortnite effect
It is only fitting to start our list by outlining exactly what an industry titan looks like. Developed by Epic Games, Fortnite has been the breakout star of the last two years, with 200 million players across the globe and an impressive revenue of $2.4bn in 2018, according to SuperData.
Created in 2017, Fortnite is an online battle royale which mixes elements of a first-person shooter with the unbridled architectural freedom of a sandbox game. A total of 100 players land on an island and have to use their creativity and skill to stay alive as the game progresses, with the last player standing winning.
What really makes it stand out from the competition is the fact that Fortnite is completely free.
And it's not just its free-ness that has been such an economic shock. Fortnite also managed to bypass the Google Play store – an incredibly dangerous move given that the vast majority of key players rely on the store – and still achieve success, meaning the game's developers avoided paying an estimated $50m in fees.
It was successful for a number of other reasons, pinpointing exactly what pain points gamers often experience. For example, the platform has the ability for progress and in-game items to move from mobile to console to PC editions (cross-platform gaming being another mammoth trend to emerge in 2018). Even though it does not give players the ability to upgrade their skills, it gives them the option to use V-bucks to buy themselves snazzier outfits and new dance moves, among other things, all in the aim of making gameplayers' characters look "cooler".
In its wake, gaming giants have been left shaken, including industry colossus Blizzard who reportedly cut 800 jobs after struggling to ensnare gamers with the same finesse as Fortnite does.
But, as we all know, the industry could be blown wide open at any second. In 2019, leading brands will make moves to keep up with Fortnite's success, while the rest of the industry lays in wait for the next Fortnite.
A boom in APAC thanks to significant growth in China
Home to around 60% of the world's population, APAC has, in the last decade, gone from an emerging gaming market to full-blown global titan. The area's impact on every industry has been phenomenal, but the way the region hungrily consumes video games has been startling and has significantly propelled the market. In 2017, the gaming industry in APAC reached a revenue of $51.2bn and, in 2018, the region tipped the scales and accounting for 50% of global gaming revenue, according to NewZoo. APAC is a region with limitless potential which is only set to grow over the coming year.
And in the APAC region there has materialized one stand-out consumer: China.
With 619.5 million players in the country alone, China is the number one country for the gaming industry, according to NewZoo, with the 94% who purchase in-game items sending the gaming revenue in the country rocketing to an impressive $37.9bn in 2018. And its popularity extends to almost all platforms too. For example, 25% of the worldwide mobile gamers market – or 183 million mobile gamers – currently live in China, according to research by Cao, while Chinese market research firm Niko Partners describes the country as "the single most important market in the world for PC online games".
While 2018 saw a freeze in China on newly introduced games, leading to slow growth throughout 2018, this is likely to be lifted in mid-2019, according to iQu, sending the industry skyrocketing once more after the drought.
Niko Partners continues: "Global game companies, hardware providers and others must take the time to understand the incredibly complicated Chinese mobile games market and Chinese gamers' motivations, behaviors, demands and economic reality in order to build games and products that will soar to the top of the charts."
Growth of mobile gaming
PCs once dominated the gaming landscape, but, with the rise of mobile devices such as smartphones and tablets, PC has fallen to the wayside, dropping to the smallest gaming platform in 2018, according to NewZoo. Nudging its way centerstage, mobile accounted for 51% of the industry last year.
Mobile's moment in the sun is led by the popularity of smartphones, a sector which, last year, hit 2.5 billion users, according to Statista. The surge in demand has led to increasing technological advancements in phones, beyond what could have ever been predicted, and, with technological leaps leading to advanced graphics and enhanced gameplay, phones have become the most convenient game platform out there.
This turn toward mobile gaming was exemplified with the release of the wildly popular Pokémon Go back in 2016. It's a bandwagon a number of the gaming giants have been jumping on, leading to Mashable describing 2018 as "the year mobile gaming started to get serious". Returning briefly to the indisputable winner of 2018, Fortnite released Fortnite Battle Royale on iOS and Android in 2018 as it competed in the charts with other huge releases such as Madden NFL 19, Marvel's Spider-Man and NBA 2K19.
The moral of the story? If you want a successful game, make it cross-platform and make it mobile.
You cannot talk about the gaming industry in the last few years without acknowledging the breakout success of the previously-touched upon Pokémon Go. The game had made $268m in revenue by August 2017 – a year after it was released – and had a whopping 20 million+ daily active users at that time, according to its developer Niantic.Inc.
This could be put down to the sentimentality a lot of millennials feel toward the Pokémon series they grew up with – and that's certainly a factor – but a huge reason for its success was the fact it was one of the first games to use AR, and to great effect.
AR's ability to superimpose computer-generated images onto screens and use vision-based recognition algorithms to create sound, video, graphics and even smell has the ability to truly bring gameplay into the real world, adding a new dimension to gaming – literally.
A number of industry giants saw the potential of this technology and began investing in creating AR headsets such as Microsoft's HoloLens, a mixed reality smartglass. There are also numerous startups working on developing AR headsets and other methods of incorporating the technology into gameplay as seamlessly as possible.
AR is expected to have one billion users by 2020, according to AngelList, so even if you have yet to see its impact on the industry, it looks like 2019 is set to be the year this trend truly explodes.
Indie games will shakeup the industry
With so many mammoth names in the admittedly bloated industry, it's an incredibly intimidating sector for "newbies" to try and break through the noise.
However, as we've already established, adapting to consumer demand is key to success and new innovations have proven to be, time-and-time again, a thorn in the side of lumbering incumbents. And new innovations require new blood.
While breaking into the industry is not an easy task – according to Jake Birkett, owner of Grey Alien Games, the average "good" indie game makes just $25,000 in its first year – there are still a significant number of exceptions. Take the 2013 experimental game "The Stanley Parable" created by 24-year-old Davey Wreden and teenager William Pugh. Granted, it's not one everyone will have heard of, but Valve, the company behind stream, approved the game and it went on to make a cool $6.3m for the two young developers.
But the best example of an indie game "making it" is without a doubt Minecraft (you'd have to have been living underneath an extremely pixelated rock to have not heard of this one). With entirely unique, stripped-back graphics and endless gameplay, it stood out immediately from all other games released in 2011 and sailed past one million purchases in less than a month after its early access beta. Designed by relatively unknown Swedish developer Markus Persson and a small team at Mojang, it is now the second best-selling game of all time and reigns as the indisputably biggest success of any indie game ever.
It is clear that, in an industry with limitless potential, countless brands jostling for attention and endless factors to account for, thinking outside the box is key. And with so many players and so much revenue up for grabs, it's now anyone's game.