JUNE 25, 2014 • DFC Intelligence has announced that for the second time this year they are significantly raising their five-year video game forecast. Overall game software revenue is expected to go from $64 billion in 2014 to $100 billion in 2018. This includes revenue from PC games, console games and mobile games, but does not include hardware spending on game devices. By 2018 the game market is likely to be split fairly evenly between console, PC and mobile platforms. DFC forecasts that mobile game revenue will soar from $10 billion in 2013 to $29 billion in 2018, or 30% of total game software revenue. The forecasts were reported as part of DFC Intelligence’s Worldwide Market Forecasts for the Video Game and Interactive Entertainment Industry service, and a new report, Freemium Mobile Game Business Models.
Impact: DFC is now tracking hardware and software spending separately. Core gamer spending on high-end PCs, dedicated game devices and accessories are starting to soar. This spending will impact all major players in the consumer electronics space. In the console market we have raised our forecast for the Sony PlayStation 4 and Nintendo Wii U and lowered our forecast for the Microsoft Xbox One. The main challenge the console systems face is expanding beyond the core market. The Xbox One should carve out a solid share among dedicated action gamers, but due to some questionable business decisions Microsoft’s broader entertainment strategy is in disarray despite the release of the new $399 Kinect-less SKU. Meanwhile the PlayStation 4 is expected to be the leading game system over the next few years. The main question is can Sony continue to expand on initial PS4 sales to build an installed base similar to what they had with the PlayStation 2. These new console systems are doing well but much of the predicted growth is actually on mobile platforms and in BRIC countries. When you add in mobile devices the effect of the gaming consumer on total hardware spending is huge. The challenge with mobile games, however, is that even as the market grows it remains very fragmented and overcrowded. Companies need to be very cautious about their platform strategy and understand which markets and platforms are suitable for their particular product.
