The State of Play. The Xsolla Report: Winter 2024 Edition

State Of Play: The Last Five Years In Gaming

The gaming landscape has evolved rapidly over the past five years, riding the wave of global lockdowns, new tech, and game development advancements. This expansion has been steadily increasing for years, but the surge in social and casual gaming, fueled by millions seeking entertainment and social connections throughout the challenging period of COVID-19 lockdowns, has since propelled the games industry to booming heights. Not only was the gaming sector able to debunk common misconceptions of video games as isolating, but it also proved to be a vital conduit for social interaction during the pandemic. 

In fact, the rise in new and existing gamers spending on consoles and other kits during the pandemic was so significant that the market expanded by 26% between 2019 and 2021. These shifts have shaped the future trajectory of gaming, spotlighting the industry's steady growth, underscoring its global economic significance, and broadening its appeal across diverse demographics. 

COVID-19 Pandemic Sparks a Shift In The Games Industry

During the onset of the global pandemic in Spring 2020, gaming experienced an exponential rise in user engagement and spending. Between February and April of that year, gaming emerged as one of the most popular activities, witnessing a substantial uptick in both participation and expenditure, which highlights a considerable increase in time spent on video games across all regions. 

Latin American gamers, for example, increased their playing time by 52%, with the Asia-Pacific region following closely with a 42% rise in time spent gaming. And multiplayer games, particularly genres like fighting, MOBA, and battle royale games, experienced heightened popularity during this period. A survey among European gaming audiences revealed that video games provided a sense of connection, reducing feelings of isolation and contributing to overall happiness during lockdown. (Source: Statista)

Comprehensive data analysis by Xsolla experts reflects the substantial growth witnessed in the gaming industry during the pandemic. When comparing the period before the pandemic (2018-2019) to the COVID-19 era (2020-2021), there was a significant increase in both sales and total user count, with an impressive 120% growth in sales and a 74% increase in total user count, which both showcase the industry's rapid expansion. (Source: Xsolla)

As the world continues to move forward in the post-COVID-19 era, the positive momentum within the gaming industry has continued, albeit at a notably reduced rate compared to the peak pandemic period. Xsolla's data indicates a 44% growth in total sales and a 22% rise in total user count when comparing the latter part of the COVID-19 era (2020-2021) to the post-COVID-19 period (2022-2023). This signifies a sustained growth trend, although at a more moderate pace, which reflects the industry's resilience as it navigates the transition from pandemic-driven peaks to a stabilized, post-pandemic landscape.

Projections And Future Growth Of The Games Industry

Looking ahead from 2023 to 2026, the gaming industry is poised for continued growth and evolution. Revenues are projected to soar to $205.7 billion, indicating a steady ascent for the global games market. Notably, this period will see the full swing of the current console generation, bolstered by the release of new consoles like the successor to the Nintendo Switch. Additionally, mobile developers are anticipated to adapt more effectively to the evolving privacy landscape, further contributing to the industry's growth.

The growth of the gaming market will also witness shifts favoring digital sales over physical sales, with digital monetization driven by digital-only consoles, early-access options, and an expanding cloud gaming user base. These projections indicate a significant increase in digital video game revenue across all segments, with mobile games standing out at the end of the forecast period, estimated to reach 100 million users, which is more than double the estimated changes of other segments (around 4 million users). This surge in digital users aligns with the projected increase in digital video game revenue, emphasizing the digital landscape's pivotal role in shaping the gaming industry's future.

WHAT DOES THIS MEAN FOR THE INDUSTRY?

The comparison of gaming with e-commerce and entertainment underscores a fundamental shift in consumer engagement patterns, and the industry stands at the crossroads of expanded influence and market integration. To capitalize on these trends and maintain growth:

• Diversify content strategies. Gaming companies could explore innovative content formats, leveraging successful franchises to expand beyond traditional gaming and tap into broader entertainment avenues like movies and series.
• Adapt and be flexible. Adapting to evolving digital commerce trends and consumer preferences, particularly in mobile gaming, becomes crucial. The industry must remain agile to meet changing consumer demands.
• Tech integration and innovation. Continued integration of cutting-edge technologies, such as AI, VR, and AR, will further enhance gaming experiences, ensuring the industry remains at the forefront of technological innovation.
• Strategic partnerships and collaborations. Collaborations between gaming companies, entertainment studios, and streaming platforms offer opportunities to create immersive experiences and widen the industry's appeal.

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